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Steer clear of banks in international prize money stakes

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Since Cheltenham last year, over £317 billion has been wiped from the FTSE100, with major contributors being a 38% slide in the price of oil as well as the dramatic speed at which China’s economy is slowing down. As we rapidly approach this year’s festival, the economic outlook is even less predictable and currency markets are no more immune to volatility than anywhere else.

With an ever growing Irish dominance, the conversion of Cheltenham prize money from Sterling to Euro is likely to be a popular activity in the weeks following on from the festival, and bearing in mind the current fickleness of the global economy, Owners, Trainers and Jockeys will want to get the best exchange rate possible

An example of how rapidly the GBPEUR rate can change came at the end of 2015; at the start of October, the exchange rate was around 1.3500, then moved to 1.4300 in mid-November. At the end of December, the price went back to 1.3500, where we saw a maximum change of 6%. So, when buying €100,000, there would a difference of €6,000, depending on the date of purchase. If the same were to happen over the coming months, for foreign winners at Cheltenham, victory would be somewhat dampened by receiving fewer Euros on the other side of their conversions.  

Once you move away from your regular bank to an independent currency provider, you
immediately notice how much more prize money you receive on the other side of the conversion.
— Bryan Cooper, Racing FX Ambassador and Irish Jockey.

On top of this, Owners, Trainers and Jockeys should also be aware of the provider they use to convert their winnings. Typically, High Street Banks will charge 3%-5% on the interbank exchange rate, compared to independent currency and payment providers, who have the advantage of being able to offer clients more flexible rates, with some bespoke companies presenting their racing and equine clients with prices around 0.3%-0.5%.

To put this into perspective, if for argument’s sake, the interbank exchange rate for GBPEUR was 1.3500 and a client was charged 3% by their bank when converting £100,000 worth of prize money, the client’s rate would be 1.3095 and the amount of Euros they’d receive would be €130,950. If the same person converted their money with an independent provider instead, they are more likely to be charged around 0.5% on the mid-market rate, receiving a quote of 1.3432 and would obtain €134,320 on the other side of the conversion, saving them €3,370.

I frequently have horses racing around the world, and you’d be surprised how significantly the market can affect the exchange rate you receive and, effectively, how much it costs you to convert your winnings.”
— Willie Mullins, Irish Champion Trainer.

A mouth-watering total of $30 million will also be up for grabs at the Dubai World Cup at the end of the month and with competitors travelling from Japan, France, Australia and everywhere in between, the sums of currency being converted are likely to dwarf those of Cheltenham, with the difference in returns for connections using independent providers compared to a bank, being huge. 

With over £4 million in prize money at Cheltenham and $30 million from the Dubai World Cup, the number of currency transactions within the racing industry this month looks set to be phenomenal, and the potential savings that could be made are unquestionable. As always, there’ll be winners and losers throughout the week, but by moving away from the banks, those who gain festival glory could be even more victorious.

For more information as to how you can save money on your next currency transfer, please visit www.racingfx.co.uk