As part of broader international official sector work to review the design of foreign exchange (FX) reference rates, and the way market participants use them, the Bank of Canada is undertaking a review of the market practices relating to the indicative FX rates published on the Bank of Canada’s website.1 The findings of this review, together with those of the international work, will provide input into decisions regarding what, if any, changes should be made to the calculation and/or publication policies for these rates.

The Bank provides indicative FX rates for a range of currencies against the Canadian dollar, both at noon and at 16:00 Eastern Time, for all business days when the Bank of Canada (Ottawa) is open. These FX rates are obtained from transaction prices and price quotes from financial institutions. They are intended to be broadly indicative of market prices at the time of publication and do not necessarily reflect the rates at which actual market transactions have been or could be conducted. As such, they may differ from the rates provided by financial institutions and other market sources. These exchange rates are released for statistical and analytical purposes only and are not intended to be used as the benchmark rate for executing FX trades.2

The Bank began publishing its FX reference rates at a time when FX markets were much less transparent than they are now. Since then, the emergence of electronic trading platforms has greatly improved pricing transparency, for both market participants and the broader public. FX rates are now readily available from multiple trading platforms and Internet-based sources. 

The Bank is aware that various government agencies, commercial enterprises and members of the public use the rates it publishes for a variety of purposes. Accordingly, the Bank wishes to better understand how these rates are currently being used before making any changes to the calculation and/or publication practices.

Against this background, the Bank invites public comment on a range of issues relating to the publication of its indicative FX rates. All interested parties can submit written responses to the survey found on the link below. The questions cover how the Bank of Canada’s indicative FX rates are currently used, and what the impact would be if the calculation and/or publication of these rates were changed. Please provide your response by 9 July, 2014.

Any changes to the calculation and/or publication of the Bank’s indicative FX rates will be communicated through a notice on the Bank’s website, as well as on the website of the Canadian Foreign Exchange Committee (CFEC).