Let's say I have a 3mv6m tenor basis swap that is quoted at a spread of x bp (and it is a spread on the 3m leg while the 6m leg is the flat leg). Nowadays, I think the convention in most currencies is to compound the 3m rate so that there is a single payment only at the 6m schedule. For this case I have 2 questions related to the spread and handling of the compounding:
1) is the spread of x bp quoted as a 3m compounded spread (like it was before when there was no compounding) or a 6m compounded spread (to be directly added to a 3m rate compounded to 6m)?
2) assuming the x bp spread is a normal 3m spread: is the implied 3m cashflow (incl. spread cashflow) compounded with the 3m rate flat (i.e. no compounding with spread included)?
Anybody trading tenor basis swaps here?
TIA for any feedback.