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Tier-based improvements for larger transactions

Tier-based improvements for larger transactions

In Nexus a specific FXP can offer better rates for larger transactions. This works as follows:
  • For each specific Source Currency, the FXP can define a number of “tiers” at which better rates apply.
  • For each tier, the FXP will define how much the base rate (as provided in the POST /rates/ API) should be improved, in basis points.
  • For payments smaller than the lowest tier, the base rate (provided in the POST /rates/ API) applies. (This is recorded in Nexus as a rate with a threshold of zero.)
Note:
  • An FXP can choose whether or not to set tiers for a specific currency, and how many tiers to set.
  • Different FXPs can set different thresholds for their tiers
  • After submitting a new tier or changing the rate on a tier, changes to an FXP's tiers will only be applied to newly submitted rates. Nexus will not retroactively apply changed rates to existing rates.

TABLE: Structure of a single tier

ELEMENTS
USAGE
EXAMPLES
Id
Autogenerated primary key of this tier, unique to a specific FXP, Source Currency and threshold (minimum amount)
20515
FXP Id
Internal Nexus ID for the FXP (not external ID such as BIC or LEI, which is used in the API requests and responses)
1301
UnitCcy
ISO 20022 term for Source Currency. Thresholds relate to value of the payment in this currency only (not Destination Currency)
EUR
Threshold
Minimum transaction value IN SOURCE CURRENCY at which the improvement applies. The payment value must be equal-to-or-greater-than (>=) this threshold value.
50,000.00
Improvement
An improvement, recorded in basis points, which is applied to the base rate.
100.00
DateTimeExpired
Initially blank. Will be set when an FXP provides a new improvement for this threshold.
WORKED EXAMPLE - TIER IMPROVEMENTS
The Source Currency is Euros. The maximum payment permitted through the TIPS payment system is EUR 100,000. The FXP could therefore choose to set the following tiers:
FXP Id
SOURCE CURRENCY
TIER THRESHOLD (Minimum transaction size at which the improvement applies)
IMPROVEMENT in basis points (applied to the base rate in the FXP’s quote)
FXP-A
EUR
25,000
50
FXP-A
EUR
50,000
100
FXP-A
EUR
75,000
150
This means that for a payment of 50,000, the rate will be improved by 1%, and so the amount received by the Recipient will be 1% greater than it would have been with the base rate.
If FXP-A quoted the base rate for EUR>SGD at 1.500, then the improvement would be calculated as:
Improved rate = Base Rate * (1 + (basis points / 10000)
= 1.5000 * (1 + (100 / 10000))
= 1.5000 * (1 + 0.01)
= 1.5000 * (1.01) = 1.5150
Note that for transactions below the 50,000 threshold, FXP-A’s base rate, as provided in the initial POST /rates/ API call, will apply.