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Posted by Colin Lambert. Last updated: July 1, 2026
The Foreign Exchange Professionals Association (FXPA) has published new industry guidance designed to promote a common understanding of the role and interpretation of spread grids in FX markets.
The paper, FXPA Guidance: The Role and Interpretation of FX Spread Grids, was developed through discussions within FXPA’s Buy Side Working Group and, the association says, reflects perspectives from market participants across the global FX ecosystem.
Spread grids have long been used by market participants as a reference tool for understanding expected trading costs across currency pairs, tenors, notional sizes and market environments. FXPA observes, however, that differing interpretations of their purpose and application can sometimes lead to misaligned expectations between liquidity providers and market participants.
The guidance clarifies that spread grids are intended to provide indicative, contextual information regarding expected execution costs under representative market conditions. They are not firm quotes, contractual commitments, service-level agreements, or substitutes for executable price discovery and transaction cost analysis.
“Spread grids have been a longstanding feature of the FX market, providing valuable context around expected trading costs and liquidity conditions,” says Richard Turner, senior trader at Insight Investment and chair of the FXPA Buy Side Working Group. “However, as execution workflows become increasingly data-driven and sophisticated, it is important that market participants understand both what spread grids can tell us – and what they cannot.
“This guidance is intended to promote a common understanding of their role as reference tools, helping support more informed execution decisions, more constructive dialogue between counterparties, and stronger execution-quality assessment across the market,” he adds.
The paper outlines the appropriate use of spread grids from both liquidity provider and buy side perspectives and highlights common misconceptions regarding their application. Most notably, the guidance stresses grids are not designed to impose fixed spread commitments on LPs, rather they are intended as contextual reference tools.
The paper also offers a data-driven alternative – execution-based benchmarking – noting that RFQ history, streaming price observations, TCA and counterparty performance tracking datasets can offer a more accurate basis for comparison of LPs than a static grid.
FXPA says it believes that greater clarity regarding the role of spread grids can help reduce friction in pricing discussions, improve buy side and sell side alignment, and support stronger execution-quality evaluation frameworks across the FX market. The paper reinforces this by noting that there may be value in “developing a shared understanding across market participants” regarding spread grids’ intended role, their limitations, and the appropriate interpretation of their use within execution workflows.
“Spread grids remain a useful and widely understood mechanism for providing transparency into expected trading costs and liquidity conditions across FX markets,” the paper states. “Their value lies in offering contextual guidance and helping market participants establish informed expectations regarding execution under normal market circumstances.
“At the same time, spread grids should be interpreted within the broader context of dynamic market conditions and evolving execution practices,” it concludes. “They are not designed to serve as fixed pricing commitments, performance guarantees, or standalone benchmarks for evaluating liquidity providers. Modern execution analysis increasingly relies on observed transaction data, transaction-cost analysis, and historical performance metrics to assess execution quality and counterparty performance.”
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One of the downsides of a data-driven world is how content, that is not intended to be such, is often interpreted as hard data, which is why this is a timely reminder from the FXPA that spread grids are indicative.
The concept gained popularity during the extended low volatility period in the 2010s, although they had existed before and were largely driven by the buy side’s desire to be able to better compare their LPs. That is fair enough, but the problem is, as the paper notes, in some cases they became de facto rules that, while they might survive a zero-interest rate environment with no vol, are going to come under pressure when the world gets a little more chaotic – as it has!
It is probably worth noting that where spread grids have become a problem, it is not always because of customer insistence. Several banking sources over the years have told me that they have been used as part of the chase for volume, effectively a marketing tool that the FX teams were expected to abide by.
FXPA is to be praised for raising this relatively low-key issue, because it is helping to take a small element of friction out of the market, by effectively ending the creep of spread grids as a service contract. We all know how information services and reference data can be translated into hard services by banks, so it is important to stop that creep, or at least warn of it, where possible.
After all, moving away from the FXPA paper, we would not want, for example, tens of billions of dollars being actually traded on what is meant to be a reference rate…
