Question 1

What is a scheduled exchange?

Accepted Answer

Scheduled exchanges are the unique mechanism by which we are able to achieve mid-market rates of exchange. By using peer-to-peer technology and aggregating our client’s requirements into one exchange we can optimise the opportunity to match currency and deliver the best possible rate for all involved.

Here’s how we do it:

Step one: clients transfer funds into their segregated Freemarket escrow account

The nature of the scheduled exchange requires us to operate a pre-funded model, as this is how we are able to match our clients’ currencies – achieving mid-market rates. This means that client’s must transfer the required funds in their entirety prior to the scheduled exchange taking place.

https://malcolm-en-gb.s3.eu-west-1.amazonaws.com/instances/fnDSsgZVaa/resources/3junOv9K5E/Screenshot-2019-10-23-at-11.31.35.png (Customer transfer overview)

Step two: clients book their payment order via the platform

After the exchange procedure is complete, you let us know whether you want to buy or sell, the currencies you want to use for the transaction, and where you need the funds allocated. You will then be included to the following exchange that is scheduled.

https://malcolm-en-gb.s3.eu-west-1.amazonaws.com/instances/fnDSsgZVaa/resources/jzzkEQKGAE/Screenshot-2019-10-29-at-13.34.16.png (Booking exchange instruction overview)

Step three: The scheduled exchange takes place

Depending upon the currency pairing and demand we operate exchanges at periodic intervals throughout the day, with a minimum of one scheduled exchange at midday.

We aim to achieve mid-market rates as often as possible, for as many participants as possible. If your funds are wholly matched with other participants, you both achieve the mid-market rate. If an exchange is incompletely matched, you benefit from our market buying power. We pass on the institutional rate from our network of global banks onto all parties and provide a true banking as a service.

https://malcolm-en-gb.s3.eu-west-1.amazonaws.com/instances/fnDSsgZVaa/resources/pPLqgSm3BO/Screenshot-2019-11-14-at-10.15.00-1024x226.png (Step 3 overview)

Step four: we pay out to your nominated beneficiary

That's it; we transfer the transferred funds to your chosen bank account.

Question 2

Do you add fees for negative interest rates?

Accepted Answer

Custody Fee/Negative Interest

As of 1st October 2022, the applicable total negative interest ‎rate is 0.00% (0.75% ECB rate + -0.25% markup = 0.50%, however, as we are a Payment Institution, not a Bank, we are not permitted to pay interest on funds held on account with us, so the EUR custody fee is adjusted to 0.00%) per annum on the average daily balance in a calendar month on Account held in EUR. Freemarket reserves the right to charge custody/negative interest fees with respect to any other currencies which attract negative interest rate fees in the future.

Why do we charge custody/negative interest fee?

This fee is charged to recover our costs associated with holding funds in a particular currency. It includes negative interest reference rates, which are set by central banks, such as the ECB for funds held in EUR. In addition to the negative interest rates, our mark-up over the reference rate includes certain additional cost components we have to consider, including any other costs such as ECB deposit facility rates passed on to Freemarket by its banking partners.

Normally, banks do not pass their costs on to their customers as they can use the deposit base for lending activities, but due to regulatory restrictions all funds held for payment service providers like Freemarket must be 100% liquid, and so these additional costs are charged to clients like Freemarket.

Thus, as an example, the ECB base reference rate for EUR is currently +0.75% and mark-up is -0.25%, giving a total negative interest rate of +0.50% per annum for EUR balances held on account. However, as we are a Payment Institution, not a bank, we are not permitted to pay interest on funds held on account with us, so the EUR custody fee is adjusted to 0.00%.

Negative Interest Fee Illustration:

A transfer to your account of €100,000 was made on 1st April 2022 and you have given us instructions for an onward transfer of €50,000 on 16th April 2022. There have been no withdrawals from your Freemarket account since then. The remaining balance on your account on 30th April is €50,000. The average daily balance for the month is therefore €75,000 (€100,000 for 15 days and €50,000 for 15 days) The applicable total negative interest rate is 0.25% per annum based on the average daily balance in a calendar month on account held in EUR. Thus, you would be automatically charged €15.63 (€75,000 * 0.25% / 360 *30).

Effective Dates: the new rates as set out in the table below are effective as follows:

New Clients:

Corporate: 1st October 2022

Small Charity & Micro Enterprise: 1st October 2022

Existing Clients:

Corporate: 1st October 2022

Small Charity & Micro Enterprise: 1st October 2022

*As of the Effective Date and Subject to Change without notice.

**Total Interest Rate as of the Effective Date. The total interest rate is indicative only and subject to change without notice.

***Actual 360 is the method that calculates interest daily by counting the number of days in the calendar but uses a fixed 360 length.

****Adjusted to 0.00 as no custody fee is chargeable as total interest rate after applying Bank Mark-up is positive.

Question 3

Is there a minimum or maximum amount that I can exchange?

Accepted Answer

Whilst we do have a minimum in place for transactions with us, which is £5,000 (or currency equivalent), we don’t have a maximum that you can transfer or exchange.

Most of our clients transact with us daily and their volumes alter month-by-month. We aim to be the only platform they use for currency exchange and international payments.

Enjoy a single platform that offers the speed, security, and resilience you need to unlock more currencies and markets for your business, while streamlining your cross-border payments processes.

Question 4

How does it work?

Accepted Answer

The Freemarket process flow broken down into four stages.

Question 5

Why hasn’t my exchange happened yet?

Accepted Answer

We endeavour to fulfil all orders and reconcile trades same-day. However, there may be some occasions where this doesn’t occur.

The exchange may have been booked after the cut-off time or the funds from the bank transfer have not been allocated to the exchange (the account number was used so the funds have been added to the balance but not the exchange reference number which is why the funds were not allocated to the exchange automatically).

For more information on our exchange and execution policy click here.

Question 6

How do I know if my exchange has been completed?

Accepted Answer

We will send you two emails detailing the exchange breakdown and when we start to process the payment order. The first email will inform you as we have started to process your instruction and you will receive another email when the exchange is complete. The second email from support@wearefreemarket.com will include a statement with the full transaction details, including a breakdown of the rate achieved for the transaction.

Question 7

Which currencies can I access with my account?

Accepted Answer

Depending on the agreements you have in place with us, you could be given access to additional currencies. We may alter our risk tolerance and profile depending on the client's needs. The prior transactions in any currency that has been paid in the past will be displayed on the platform's balances tab. Along with the prior transactions, it will also display the fees or charges associated with the payments.

For example; you may have access to AED, CAD, EUR, GBP, USD with Bank A, then CHF, HKD, THB, ZAR with Bank B, then BWP, CZK, HUF, INR, JPY, SEK with Bank C. By using Freemarket, we aggregate the service offered by our partner banks, so you can rest easy that your money is safe and secure. Once onboarded you gain access to all the currencies listed, on one platform & one contract instead of having multiple agreements in place with each different bank, and different commercials.

You can view our currency calendar here.

Question 8

What is a foreign exchange spot transaction?

Accepted Answer

A spot FX trade is when the exchange or trade takes place at the same point the transaction is settled. You buy and sell the currency at the current market rate, also known as a spot price. Settlement usually occurs within the days preceding but due to our buying power, and us holding balances in different currencies, we can do this instantly.

Currency pairs may differ, you may trade, G10 currencies, minor pairs, emerging markets, or exotics. It’s worth noting that some currencies are less liquid than others, which might lead to a larger difference in the buy and sell price.

You can read more on FX trading from IG, CityIndex, Investopedia, CMC Markets & Refinitiv.

Question 9

I searched the exchange rate and the rate from Freemarket is not the same, why?

Accepted Answer

An exchange rate determines the price at which one currency will be exchanged for another and has an impact on international trade and international transfers. Depending on the supply and demand for the currency, the rate may increase or decrease.

Every transaction you make will be subject to a charge or spread added by each supplier. The rate you see online is the one that the market has decided is appropriate at the moment, taking into account a number of variables like economic data, the GDP, interest rates, unemployment rates, and political unpredictability.

Providers like Freemarket try to change this because we believe everyone deserves to be free from cost and pricing restrictions. Occasionally, only large businesses and institutions had access to the best rates.

Question 10

Why is the amount which reaches the beneficiary sometimes less than the amount sent?

Accepted Answer

Since you gave us the order to exchange the currency, the exchange rate may have fluctuated. We don't cover this then recoup since we don't grant you credit; instead, we ask that you have a 2% buffer in place.

Our global network of banks and NBFIs, with which Freemarket has partnered up, gives us access to mid-market rates in real-time. This enhances your options and enables us to join bigger trading pools, ensuring that you receive the best prices possible.

Before completing a transaction, you will always get an updated quote when you make an exchange.