Roles vs Entities: Possible Configurations of FX Providers and Liquidity Providers

The FX Provider, Source Liquidity Provider and Destination Liquidity Provider are all roles played within a Nexus payment, but they are not necessarily separate entities (ie separate companies). In some cases, the same entity will play all three roles – ie an FX Provider that is a member of both the Source and Destination IPS).
The table below shows most of the possible configurations of the five different roles played in a Nexus payment. Depending on the configuration, between two and five separate entities (ie different banks or financial institutions) may be involved. This flexibility ensures that a wider range of participants can play roles in the Nexus network, supporting competition in FX provision. It also allows non-banks to play the role of FX Provider, so long as they have relationships with at least 2 Liquidity Providers (who must be IPS members).
Note the ability to be an FX Provider is specific to a particular currency pair. For example, one FX Provider may be able to offer FX rates for the Singapore-India currency corridor. However, if they don’t have a Liquidity Provider or IPS membership in Sweden, they will not be able to quote on payments between Singapore and Sweden or between India to Sweden.
Possible Configurations of FX Providers