Ensuring a competitive FX market
Nexus is designed to ensure a competitive FX market:
- FX Providers are in competition with each other to provide the best exchange rates.
- PSPs have free choice over which FXP they use (so long as they have completed the initial KYC and onboarding process with that FXP)
- PSPs are able to see all quotes available in the Nexus market, including those from FXPs with whom they have not yet onboarded (although they will not be able to use these quotes)
- When an FXP posts a quote to Nexus, they are informed of the current leading market rate for that corridor (but not the FXP offering that rate), so they can assess whether the rates they offer are competitive against the market.
FXPs do not have the technical permissions to use the
GET /quotes/API and so are unable to see the full breakdown of rates offered by their competitors, as this is commercially sensitive data. FXPs who are also PSPs will have two separate sets of API credentials and must not share the information from the
GET /quotes/response between the payments and FX departments.
To have competitive pricing, there must be more than one FX Provider for a specific corridor. Without this, the sole FX Provider will have a monopoly on that corridor. Rates in a monopoly corridor will be less competitive, although users could switch to using other payment methods, so there is still some pressure on the FXP to offer rates broadly in line with the wider FX market.
Nexus is designed to enable a wide range of actors to play the role of FX Provider. For example, Nexus enables institutions who are not members of an IPS to access that IPS through Settlement Account Providers. This ensures that FX provision is not limited to the largest international banks (who are members of multiple IPSs). It also makes it more likely that there is FX provision for lesser-used or “exotic” corridors.