What is FX rate creep?
It is the gap between the rate you were shown to win your business and the rate you are given a year or two later for the same kind of trade.
Most FX pricing has no separate fee. The provider's margin is built into the exchange rate, so a trade confirmation shows one number and no breakdown. When the margin moves from, say, 8 basis points to 15 on the same pair and ticket size, nothing on the confirmation changes except the rate itself, and the rate moves every second anyway. Unless someone measures the spread against the market mid, the change goes unnoticed.
Banks and lenders sometimes describe the same pattern as front book and back book pricing: keen terms for new clients, wider terms for existing ones who are unlikely to leave.
Why does our provider's rate get worse over time?
Because the price that wins an account is not always the price that is kept. Once the account is set up, switching looks like work, and some providers price on the bet that a busy fund will not move.
The ways it happens are usually small and individually defensible, which is why they add up unnoticed:
- Introductory pricing that lapses after the first few months or the first year.
- Tiered margins reset after a quiet quarter, so a dip in volume moves you into a more expensive band that never moves back.
- New fees, or higher existing fees, for sending or receiving payments.
- Wider spreads on smaller tickets or less common currencies that were never part of the original quote.
- Forward points marked up more heavily than at onboarding, where the fund uses forwards.
- Rates agreed by phone or email at busy moments, where the dealer has more discretion than on a platform.
Not every provider does this, and some put their margins in writing and stick to them. The point is that without measuring, you cannot tell which kind of provider you have.
How do we know if it is happening to us?
Work out your spread to mid for each trade, then compare the same pair and size band quarter by quarter. A steady climb while your volumes stay similar is the sign.
Export your trades
Date, time, pair, amount and rate for the last 12 to 24 months, from the provider's platform or your administrator.
Find the mid at each trade time
A timestamped mid is best. Daily reference rates give an estimate, which is enough to show a trend.
Calculate the spread
spread (bps) = |your rate − mid| ÷ mid × 10,000
Group like with like
Same pair, same size band, same product. Comparing a £200,000 trade in one quarter with a £5 million trade in the next tells you nothing.
Plot it by quarter
Look at the median spread for each group. A flat line is reassuring. A line that steps up after the first year is rate creep.
| Quarter | Median spread | What it suggests |
|---|---|---|
| Quarter 1 after onboarding | 8 bps | The rate that won the account |
| Quarter 2 | 9 bps | Within normal variation |
| Quarter 5 | 12 bps | Drifting, worth a question |
| Quarter 8 | 15 bps | Nearly double the starting margin |
Illustration of the method, not client data. On £80m a year in that size band, the move from 8 to 15 basis points is 7 basis points, or £80,000,000 × 7 ÷ 10,000 = £56,000 a year.
If you would rather not build this yourself, our FX cost review does it for you and includes the spread by quarter view. You can also check a single trade with the quick spread check on that page.
What should we ask our provider?
Ask for your margin in writing, by ticket size and currency, and ask what has changed since you started. A provider with nothing to hide will answer both.
- What margin over mid do you apply to our trades, by size band and by currency?
- Has that margin changed since we onboarded, and if so when and why?
- Can we have a written pricing schedule that you will review with us once a year?
- Which fees apply to payments in and out, and have any been added or increased?
- How are forward points priced, and can you show the market points alongside ours?
- Will our confirmations show the time of execution so we can check the mid ourselves?
Have the conversation with evidence in hand. A spread by quarter table from your own trades is much harder to wave away than a general complaint that rates feel worse.
How do we stop rate creep coming back?
Make re-quoting routine, keep pricing in writing and keep a second provider live. Providers price differently when they know someone is checking.
- Re-quote your main flows once a year. A blind quote shows what the market would charge for the same trades without tipping off your current provider.
- Agree a written pricing schedule by ticket size and currency, and diary a review date.
- Keep a second provider open, even with modest volume. It gives you a live comparison and a fallback if the first provider has a problem.
- Ask your administrator to send you a short spread report each quarter, or ask us to.
Should we switch provider or renegotiate?
Try renegotiating first, with evidence. If the provider will not commit to a written schedule, or the gap to current quotes is large, it is usually time to move.
Blind quotes give you that evidence without your provider knowing you are looking. If you do decide to move, our 90-day switching plan keeps your existing account running until the new one has handled real payments, so capital calls and completions are never at risk.
What does FundFX do about rate creep?
We measure it, we re-quote your main flows every year, and we show you every price that comes back.
After you have chosen a provider through us, we do not walk away. Once a year we put your main flows back out to the panel on a blind basis and compare the results with what you are paying. If your pricing has drifted, you will see it in numbers, and you can take that to your provider or move.
We are paid by providers, not by your fund, and we explain exactly how on our how we are paid page. That is also why we show you every quote, including those that would pay us less.
Request a blind quote Ask for a cost review
Sources
- European Central Bank, Euro foreign exchange reference rates, checked 1 November 2026.