One dollar, many prices: dealer-specific pricing of synthetic dollar funding

Does the price of synthetic dollar funding depend on which dealer intermediates the trade? We answer this question by comparing FX forwards in the same dollar currency pair, half-hour, and maturity bucket, which removes the common forward curve and isolates dealer-specific pricing. These dealer-specific prices vary substantially: their standard deviation is about 4 basis points per year, and the large dispersion is present both across dealers at a point in time and over time for a given dealer. Dealers charge 2.5 basis points more for buying dollars forward than for selling them, and the gap widens to 11.8 basis points at maturities under one month. The asymmetry survives controls for client-dealer relationships and trade characteristics. Differences in funding costs account for little of the observed price dispersion. Synthetic dollar funding therefore has many prices, reflecting dealer clientele and pricing power more than underlying funding conditions.