The daily reference (or "information", or "nominal") exchange rates published by financial institutions, newspapers, central banks and providers such as those which can be accessed by Currency Server are usually either based on concertation procedures which occur every week day at a certain time between central (national) banks, or on an analysis of a high volume of foreign exchange trading during the previous day. In this latter case, information providers analyze, over a period of time, bid and ask currency prices provided in real time by suppliers such as Reuters, Bloomberg, Dow Jones Telerate, Knight-Ridder, Tullet Tokyo, Bridge, etc. This raw data is validated with consideration to frequency, unusual peaks, possible errors, etc. The average of these filtered bid and ask prices over a certain period of time is called median price. Usually only the mid rate (i.e. the arithmetic average of the bid rate and the ask rate) of the median price is provided. Where bid and ask rates are provided instead, the mid rate can easily be calculated (Currency Server does this automatically, depending on the data it receives).
Official exchange rates, e.g. rates published by institutions such as national central banks, usually change once a day during weekdays (with no updates during week-ends). Private providers of exchange rate data, which for example may base their data on real time trading sources rather than on official reference data, may publish new rates more frequently.
Information providers such as Oanda Corporation and Xenon Laboratories Incorporated represent examples of professional organizations which provide data for an extremely high number of currencies based on their own analysis of the market. Their data, which is provided on a subscription-basis, is updated several times a day.
Public institutions such as national central banks provide exchange rate data about fewer currencies (i.e. only for major trading partners), and usually only once every weekday, but the information is free, and their perceived authority tends to be superior to that of private companies. On the other hand, not all of these public institutions offer a service level guarantee. For example, they may change the format of the data or the address at which the data is published without notice, in which case Currency Server would issue appropriate warning messages, to which the administrator could respond by setting a different FX feed, or by downloading an updated FX feed filter from Cloanto, or by modifying a filter for which source code is available (full documentation is included with the software).
As part of the Currency System family of products and services, Cloanto also offers a basic exchange rate data feed, which is provided at no charge to customers of Currency Server. The data consists of a selection of exchange rates for major currencies, aggregated from the daily reference rates provided by multiple official sources.
The number of providers of exchange rate data which can be found by doing an online search can be confusing, and it is not always easy to recognize quality. One factor to consider, and which can easily be verified by simply contacting the provider and testing the service, is whether the data that is provided is "clean" or "dirty". "Clean" data is legal and accurate. "Dirty" data may contain or consist of an unlicensed copy of data provided by a commercial data feed under a non-redistribution license, and simply "grabbed" and redistributed. Asking the provider where the data comes from may help clarify some doubts. "Dirty" data may also include "exchange rates" for currencies which ceased to be legal tender, or duplicates of the same currencies with different codes and names. The result may consist of an impressive number of currencies, which is as easy to assemble from multiple unverified sources as it is difficult and costly to promptly remove or update currencies when they cease to be legal tender, change name or code, etc. When this data is loaded into Currency Server, a quick look at the Legal Tender and Active columns of the All Currencies tab of Currency Server Manager can reveal the presence of currencies which ceased to be legal tender, as well as the absence of new currencies.
Unless it is important to specifically use a given provider, the difference between the major providers of exchange rate data usually ends up being one of reputation and cost vs. number of currencies, reliability and support. When a customer of an e-commerce site asks where the exchange rates applied to an order came from, it may be easier to answer "We used the official exchange rates published by the National Central Bank for that day" than to indicate a private organization. On the other hand, if a professional foreign exchange analysis company offers better technical support and overall services, that may be a reason to prefer such a service. In either case, it should be reassuring to know that the software was designed to offer the best possible support for a plurality of data providers, while shielding the interface from the FX feed, so that choosing a different provider is as easy as the selection of an entry in a drop-down menu in Currency Server Manager.