Post 4 of The Authority Rule Series
“But Charlotte, exchange rates come from Reuters. Bloomberg. The ECB. They’re published externally. We don’t decide what EUR/USD is trading at—we just look it up. How can that possibly be master data?”
I hear this objection constantly. And I understand it. Exchange rates feel like reference data. They exist in markets. Multiple authorities publish them. You can’t just make them up.
But here’s the thing: Exchange rates are master data.
And the confusion about this sends people looking for answers in the wrong places.
The Authority Rule Question
Let’s apply our test: Who has the authority to define what this means, and do you need others to accept that definition?
For currency codes, ISO 4217 decides that Euro = EUR, US Dollar = USD. You cannot redefine EUR to mean something else. Every system in the world must accept ISO’s definitions.
This is reference data.
For exchange rates, you choose which source (Reuters? Bloomberg? ECB? Your bank?). You choose which timing (opening? closing? daily average? intraday?). You choose which methodology (spot rate? forward rate? adjusted for fees?). Nobody else needs to accept your choices.
This is master data.
What You Actually Control
When you “use an exchange rate,” you’re making four business decisions:
- Source authority: “We use Bloomberg rates.”
- Temporal authority: “We take the 4 pm London close”
- Methodological authority: “We use bid-side for payments, mid-side for reporting.”
- Exception authority: “During market disruption, we use yesterday’s rate.”
Each of those is your choice.
Your business decision.
Your definition.
The rate Bloomberg publishes at 4 pm is a fact. Which rate you use for which purpose? That’s your policy.
Where Authority Actually Sits
Here’s what matters most.
Exchange rate policy sits with your CFO and C-Suite, not with data governance or IT. It’s not a data steward decision. It’s not a reference data maintenance task. It’s not an IT configuration choice.
It’s a business decision about financial policy. When someone asks, “Which exchange rate should we use for this new product line?” the answer isn’t in a data governance committee. It’s in a conversation with Finance leadership or the C-suite about risk tolerance, accounting requirements, and business strategy.
When the classification is confused:
Finance teams submit “data change requests” for what should be executive decisions.
Data governance committees debate financial policy they shouldn’t own.
IT teams make business decisions by default when configuring rate feeds.
Business decisions get stuck in data maintenance workflows.
The Real-World Test
Tomorrow, your CFO can say: “We’re switching from Reuters to Bloomberg, and we’re moving from daily close to intraday rates for all FX trades over €1M.”
And they can just… do it.
You need to comply with regulatory requirements – if regulations say “use observable market rates,” you must use recognized sources. But within those constraints, the specific choices are yours. The regulator doesn’t approve that you switched from Reuters to Bloomberg. They just care that both are legitimate market sources that meet their requirements. Your external auditors don’t verify which timing convention you chose. They verify that your chosen approach is consistently applied and appropriate.
The regulatory framework is reference data (you must follow it).
Your implementation within that framework is master data (you control the specifics).
If your CFO said, “We’re redefining EUR to mean Japanese Yen,” regulators would shut you down immediately. You can’t redefine currency codes because ISO has that authority, and regulators require you to follow ISO standards.
That’s reference data – an external authority you must accept.
Why Classification Matters
Knowing what it is tells you where to seek your answer.
When someone asks, “Can we change how we handle exchange rates?”:
If you think it’s reference data:
- Data governance committees
- Reference data stewards
- IT maintenance teams
- External source verification
If you know it’s master data:
- CFO and Finance leadership
- Business policy owners
- Risk management
- Strategic decision makers
The classification doesn’t just organize your data catalog.
It tells you who has the authority to make decisions. Which tells you where to go for answers.
Common Confusions
“But the rate exists independently of us!”, “But we have to use market rates for compliance!”
You choose which source, which timing, which methodology. Compliance constrains; it doesn’t eliminate your authority.
“But everyone uses the same rates!”
They don’t. Some use opening, some closing, some averages. Some use mid-market for reporting but bank rates for transactions. The variety proves the authority is distributed.
What About Rate Tables?
You maintain a table of exchange rates in your database.
Doesn’t that make it reference data?
No. (See Post 3: “Just Because You Master It…”)
You’re maintaining your copy of your business decision about which rates to use. The fact that you update it daily doesn’t change who has authority over what the data means.
The rate value came from an external source (that’s a fact). Which source you used is your decision (that’s policy). When you captured it is your decision (that’s policy). How you apply it is your decision (that’s policy). Whether to override it in specific cases is your decision (that’s policy).
All policy. All yours. All master data.
And all CFO authority, not data governance authority.
The Governance Implication
If you govern exchange rates as reference data:
- Finance decisions route through data committees
- Business policy becomes “data change requests”
- CFO authority gets obscured by process
- Time wasted seeking wrong approvals
If you govern exchange rates as master data:
- Financial policy sits with Finance leadership
- Business decisions flow appropriately
- Authority is transparent and efficient
- People know who to talk to
The Pattern
This pattern repeats everywhere.
Tax codes = reference (government decides) → monitor external changes
Tax rates = reference (government decides) → monitor external changes
Your tax configuration = master (Finance decides) → business approval workflow
Security identifiers (ISIN, CUSIP) = reference (authorities decide) → monitor standards
Security prices = fact in markets → capture data
Which prices you use for valuation = master (CFO decides) → financial policy
Country codes = reference (ISO decides) → follow standards
Your market segmentation = master (executives decide) → strategy decision
The external fact existing doesn’t make it reference data. Your authority over how you use it makes it master data.
And that authority lives somewhere specific in your organization.
What This Means For You Today:
Stop routing rate policy questions through data governance.
Document who owns rate sourcing methodology.
Separate rate values from rate policy in your architecture.
When someone asks “which rate should we use,” redirect them to Finance leadership.
Recognize that knowing the source and type matters more than the label – but knowing the label tells you where to go for decisions.
Why This Matters
The confusion doesn’t just clutter your data catalog.
It sends people to the wrong decision-makers. When Finance teams think exchange rates are “just reference data,” they defer to IT or data governance for decisions that should be theirs.
When data teams think exchange rates are reference data, they implement what should be executive-level financial policy.
The Authority Rule cuts through the confusion: Can you redefine your rate sourcing methodology tomorrow? Yes. Do you need anyone else to accept it? No. It’s master data. And that means the authority sits with your CFO, not your data steward.
The external fact that rates exist in markets doesn’t eliminate your authority over how you use them.
And recognizing where that authority lives tells you exactly where to go for answers.
Next Week: The True Cost of Ignoring Reference Data – When one “innocent” deviation from an ISO standard costs thousands every year
The Authority Rule: Can you redefine what this means, and do you need others to accept your definition? If you need others to accept = reference data. If you don’t = master data.
Read the full series at authorityrule.com/
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