Role of the FXP
Every cross-border, cross-currency payment requires an actor who is willing and able to swap one currency for another. In Nexus, the entity providing this service plays the role of FX Provider.
This is one of the three key roles that a financial institution can play in Nexus:
- Payment Service Provider (PSP), sending and receiving payments on behalf of customers
- FX Provider (FXP), providing FX rates and FX conversion to PSPs
- Settlement Account Provider (SAP), who provide FXPs with accounts which can send and receive payments through a specific Instant Payment System (IPS)
In Nexus, each corridor (currency pair) will have one or more FX Providers, who are in competition with each other to provide the best rates.
Any FX Provider that meets the eligibility requirements and adheres to the Nexus Scheme may provide FX to Nexus payments.
Playing multiple roles in Nexus
An FXP could choose to play more than one role, subject to eligibility. For example:
- Where an FXP is a member of a specific IPS (see Accessing instant payment systems), the FXP in effect acts as Settlement Account Provider to themselves. In this case, the obligations that apply to an SAP also apply to the FXP.
- A PSP that is a participant in Nexus can also act as an FXP for certain corridors, subject to the prerequisites above. Such a PSP would be able to select their own quotes for the corridors for which they provide FX, and therefore provide FX conversion to their own payments. (See Annex: PSPs who are also FXPs)