Managing Liquidity

FX Providers are responsible for managing their liquidity in various IPSs to ensure that payments from their Destination SAP (or from their own Destination IPS account if they are a member) can always be made.

• Nexus assumes that FXPs who have active rates hold sufficient funds to honour payments.

• Nexus will enable FXPs to manage their liquidity by informing FXPs immediately after each payment is processed.

• When Nexus successfully processes a payment which references an FXP’s quote, Nexus will send a notification to the FX Provider. These notifications allow the FXP to update their internal records and monitor the balance of each of their accounts.

• The FXP is responsible for processing these notifications in order to update their internal systems to keep track of their liquidity and taking any action as required to manage that liquidity.

• It is the FXP's responsibility to ensure it manages its liquidity and ensure it is always able to process payments.

• An FXP may be penalised if payments against their quotes fail because of a lack of liquidity in their account at a Settlement Account Provider (or their settlement account, if they are a member of the IPS). (A Destination SAP is likely to check the balance of the FXP’s account before approving or reject payments that reference the FXP’s quote.)

Managing liquidity when markets are closed

Each FXP must also ensure they have the liquidity to meet expected payment flows over the weekend, either in their own IPS accounts or at their Settlement Account Providers. This may require active or automated management of the level of funding in their settlement accounts. The FXP could also actively or automatically alter the rates offered by the FXP to alter the flow of payments that the FXP is selected for; this will have an impact on how their holdings of each currency increase or decrease. This is a matter for each FXP to manage individually.