BIS Innovation Hub
Nexus - Short ReportAbout the BIS Innovation Hub
  • Introduction
    • Nexus Overview
    • How to use this site
    • Overview Report
    • Terminology
  • Payment Setup
    • Key Points
    • Scope of Nexus payments
    • Steps 1-2: Country, Currency & Amount
    • Steps 3-6: Exchange Rates
    • Steps 7-9: Addressing, Proxy Resolution & Confirmation of Payee
    • Steps 10-11: Sanctions screening
    • Step 12: Ask the Sender for approval
    • Step 13-16: Set up and send the payment instruction
    • Step 17: Accept the confirmation and notify Sender
  • Addressing & Proxy Resolution
    • Key Points
    • Overview of Payment Addressing in Nexus
      • Addressing via Proxies (Aliases)
      • Addressing via Account Details
    • Address Types & Inputs
      • Address Types
      • Address Inputs
      • Financial Institution Identification
      • List of PSPs
      • Examples
    • Proxy & Account Resolution Process
      • Step 1: Sender inputs proxy or account details
      • Step 2: Proxy Resolution Messaging Sequence
      • Step 3: Account Resolution Messaging Sequence
      • Step 4: Source PSP processes the results
      • Masking of Display Names
    • Role of the Proxy Directory Operator (PDO)
      • Obligations on the Proxy Directory Operator
      • Obligations of PSPs using the Proxy Directory
      • Onboarding a Proxy Directory Operator onto Nexus
  • FX Provision
    • Key Points
    • Role of the FX Provider
    • How Third-Party FX provision works in Nexus
    • Joining Nexus as a third-party FXP
    • Accessing Instant Payment Systems
    • Onboarding PSPs
    • Obligations & Compliance
    • Revenue model for FXPs
    • Rates from Third-Party FX Providers
      • Improving rates for larger transactions
      • Improving rates for specific PSPs
    • Quotes
    • Managing Liquidity
  • Payment Processing
    • Key Points
    • Accounts & Relationships
    • Maximum value of a Nexus payment
    • Payment Flow (Happy Path)
      • Detailed Flow in Source Country (Sending)
      • Detailed Flow in Destination Country (Receiving)
      • Booking flow for Source PSPs
      • Notifying FXPs of completed payments
    • Validations, Duplicates & Fraud
    • Time critical vs non-time critical payments
    • Special Scenarios
    • Payment setup for PSPs who provide their own FX
    • Unsuccessful Payments (Exceptions)
      • Rejects
      • Recall Requests
      • Returns
      • Investigation & Enquiry
      • Disputes
      • Reconciliation reports
    • Fees
    • Role and responsibilities of the Instant Payment System Operator (IPSO)
    • Ensuring settlement certainty
    • Annex: 4-step vs 5-step Processes in Domestic Clearing and Settlement
    • Annex: Sponsoring PSPs and Sponsored Entities
  • Settlement Access Provision
    • Key Points
    • Role of the Settlement Access Provider (SAP)
    • Joining Nexus as an SAP
    • SAP onboarding of FXPs (or foreign PSPs)
    • Costs and Revenue for SAPs
    • Obligations on the SAP
    • Processing payments as an SAP
      • Payment Process for the Source SAP
      • Payment Process for the Destination SAP
      • How the Destination IPS initiates the payment via the Destination SAP
    • Managing Liquidity as an SAP
  • Messaging & Translation
    • Key Points
    • General Usage of ISO 20022
      • Adherence to CPMI Harmonised ISO 20022 Data Requirements
    • Compatibility with Instant Payments Plus (IP+)
    • Message transformation by Nexus
    • Specific Message Elements
    • Purpose Codes
    • Message Guidelines (Excel)
    • MESSAGE acmt.023 Identification Verification Request
    • MESSAGE acmt.024 Identification Verification Report
    • MESSAGE: pacs.008 FI to FI Customer Credit Transfer
      • pacs.008 Differences from CPMI Harmonisation Requirements
    • MESSAGE pacs.002 Payment Status Report
      • pacs.002 Differences from CPMI/CBPR+ Guidelines
    • MESSAGE: pacs.004 Payment Return (Not yet supported)
    • MESSAGE: camt.054 Bank to Customer Debit Credit Notification
    • Translation To/From Domestic Message Formats
    • Translating To/From ISO 20022 Codes
  • APIs
    • Overview
    • Countries
    • Currencies
    • Address Types and Inputs
    • Financial Institutions
    • Fees and Amounts
    • Intermediary Agents (SAPs)
    • Quotes
    • ISO 20022 Messages
  • About
    • Contact the Nexus Team
  • LEGAL
    • Terms and Conditions of Use
    • Privacy Notice
    • Cookies Notice
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On this page
  • Option 1: IPS Membership
  • Option 2: Indirect access via Settlement Access Providers
  • Choosing between Access Models
  • Examples
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  1. FX Provision

Accessing Instant Payment Systems

PreviousJoining Nexus as a third-party FXPNextOnboarding PSPs

Last updated 8 months ago

This page relates only to third-party FX Providers.

For Source PSPs that provide their own FX, a different process applies. See Payment setup for PSPs who provide their own FX for details.

A third-party FXP must be able to send and receive payments in a specific IPS in order to offer rates on payments to/from that IPS and currency.

There are two options for the FX Provider to access an IPS:

  1. membership of the IPS, or

  2. through an account held with an existing IPS member (who plays the role of “Settlement Access Provider” to the FXP).

Option 1: IPS Membership

In this model, the FXP is a member of the IPS. This means that:

  1. the FXP already holds a settlement account at the central bank which provides settlement services to the IPS. This account may currently be used for processing domestic instant payments.

  2. the funds in this settlement account can also be used for processing Nexus payments (in addition to domestic payments)

  3. the FXP is able to directly submit payment instructions to the IPS

In this case, the FXP can act as an SAP to themselves.

This option is only available to banks and non-bank PSPs who are eligible for membership of a specific IPS. Eligibility requirements to join an IPS varies between countries, so an entity that is eligible in one Nexus country may not be eligible in all countries.

Option 2: Indirect access via Settlement Access Providers

FX Providers who are not a member of an IPS may choose to access the IPS indirectly via a “Settlement Access Provider” (SAP). In this model an FXP holds an account at an existing IPS member. This means that:

  1. The IPS member (an existing PSP) that provides the account to the FXP plays the role of SAP to the FX Provider.

  2. The SAP provides an account in which the FXP can holds funds, denominated in the IPS’s currency. (The FXP's account holds bank deposits, not central bank money.)

  3. The SAP makes and receives payments on behalf of the FXP.

Choosing between Access Models

For each FXP, the choice of access model may differ depending on the country:

  1. An FXP may not be eligible for membership of the IPS. In some countries, only banks (licensed credit institutions) are eligible to join the IPS, so non-bank PSPs who act as FXPs would need to arrange indirect access via an SAP. Other non-banks, such as non-bank FX dealers, are usually not eligible for access in any IPS.

  2. An FXP may be eligible for IPS membership, but the cost of membership may outweigh the benefits. Typically IPS membership is geared towards institutions that will process significant volumes of domestic payments, and so there are significant requirements around the security and resilience of an IPS member’s technology and a lengthy onboarding process. However, for Nexus an FXP only really needs the ability to hold funds in that IPS. If they do not intend to process significant volumes of domestic payments on behalf of customers in a specific country, the costs of becoming a member of that country's IPS may be prohibitive. In this case, it would be easier and cheaper for the FXP to use an SAP.

An FXP may use different options in different countries. For example, they could have direct membership in one IPS and indirect access in another IPS to facilitate an FX currency pair.

In general, an FX Provider is more likely to use direct access to an IPS for countries where they are already established (for example as a domestic PSP), and indirect access for other countries.

Examples

In the diagram below, the FXP is a major international bank. It is a member of both the Source and Destination IPSs, as it has a significant presence in both those countries. It can accept funds in the Source IPS and pay out funds via the Destination IPS (and vice versa for payments in the opposite direction). It therefore acts as an SAP to itself in both the Source and Destination Countries. The obligations that apply to SAPs (as defined in the Nexus Scheme Rulebook) also apply to this FXP.

FXP-B is a regional bank. It is a member of the Source IPS, in the country where it is headquartered and so acts as Source SAP to itself. It does not have a significant presence in the Destination Country, so cannot justify the expense of joining the Destination IPS. Instead, it uses an SAP to get access to the Destination IPS. The obligations that apply to SAPs (as defined in the Nexus Scheme Rulebook) also apply to FXP-B.

The FXP below is a non-bank FX dealer, and therefore not eligible for access to any IPS. It uses SAPs for every IPS that it wishes to access. It must comply with the obligations upon FXPs, but not the obligations for SAPs.

​

An FX Provider may be a participant in an IPS
An FXP that is not a participant in an IPS can make use of Settlement Access Providers