Obligations & Compliance

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.

The Nexus Scheme Rulebook provides detailed obligations for FX Providers. At a high level, these obligations include:

Compliance

FX Providers must comply with all applicable regulations in the jurisdiction they are based in, as well as any applicable regulations in the jurisdiction to which they are providing FX.

Sanctions screening

Unless otherwise required by a specific country’s regulatory regime, a third-party FXP is not obliged to perform sanctions screening on individual Nexus payments. The FXP’s counterparty is the Source PSP to whom they sell the Destination Currency, and the FXP does not deal with (or have information on) the Sender or Recipient.

However, when an FXP is a member of an IPS and therefore acts as SAP to themselves, the entity is responsible for screening the payment against applicable sanctions lists in their role as SAP, subject to local regulations. (See Settlement Access Provision.)

Minimum commitment

FXPs must commit to providing FX to Nexus for a certain minimum duration (to be specified in the Nexus Scheme Rulebook) and must give a period of notice if they wish to stop providing FX.

FXPs may choose to permanently withdraw from providing FX to Nexus.

The Nexus Scheme Rulebook defines the process and minimum notice period for withdrawing from the scheme.

Market maker role

In general, FX Providers are expected to play a similar role to that of a market maker; this means that they are expected to always provide a quote for the payment corridors that they provide. If they do not wish to be committed for new payments, they may set a quote that is below the rest of the market, but they should not “exit the market” by providing no quote at all.

This expectation is necessary to ensure that there is always liquidity available for Nexus payments and to avoid a situation where all FX Providers for a currency channel choose to “sit out” of the market (making payments through that channel impossible). The obligation to always quote also helps to ensure that FX rates will be dynamic and are likely to be broadly in line with other FX markets.

An exception may need to be made for FXPs who do not have the technical capacity to quote 24/7. For example, some FXPs who do not have a global presence may only be able to quote in their country’s business hours. In this case, they would be expected to always provide active rates during their business hours but would be able to “exit” the market by withdrawing all their rates at the end of the business day. Over time and as they gain experience with Nexus payment flows, such FXPs should be able to develop the ability to automate rate provision and liquidity management outside of business hours, in order to start quoting 24/5 (Mon-Fri) and ultimately 24/7 (including weekends).​