Obligations & compliance
The Nexus Scheme Rulebook provides detailed obligations for Settlement Account Providers. At a high level, these obligations include:
Settlement Account Providers must be members of an IPS and therefore need to adhere to the local IPS system rules and admission criteria.
The SAP must sign the adherence agreement with its local IPS.
The SAP needs to onboard the FXP and comply with local laws and regulations, including (but not limited to) due diligence on the FXP. See the section on [Onboarding FXPs].
The SAP has total discretion over whether it offers services to a specific FXP or not, and on what terms. The terms of service between the SAP and FXP will be agreed bilaterally, outside of the Nexus Scheme.
The SAP must provide the FXP with an account denominated in the local currency, and the tooling to manage the balance on the account.
SAPs are obliged to ensure they have sufficient liquidity in the IPS at all times. SAPs need to take extra care in the case other payment streams, such as domestic payments, make use of the same liquidity.
It is best practice for the Destination SAP to check the balance of the FXP’s account before approving or reject payments that reference the FXP’s quote. An FXP may be penalized if payments against their quotes fail because of a lack of liquidity in their account at a Settlement Account Provider.
SAPs must comply with all applicable regulations in the jurisdiction they are based in.
The SAP must confirm that all payments the SAP receives through Nexus will be screened against the sanctions lists applicable in the SAP’s jurisdiction (and that the SAP will apply with any other regulations and laws applicable in the SAP’s jurisdiction).
The SAP also must have real-time sanctions screening ability.
The SAP must ensure the SAP’s internal systems can handle and process the Nexus pacs.008, which may be more data-rich than the domestic format.
The SAP must undertake a robust testing process with the IPS Operator and FXP to ensure that all systems are working as expected before go-live and before any significant change.
Where an FXP is a member of an IPS and therefore acts as their own Settlement Account Provider, the FXP is responsible for screening the payment against applicable sanctions list, as per any SAP.
SAPs must commit to providing services to an FXP for a certain minimum duration (to be defined in the Nexus Scheme Rulebook) and must give a period of notice if they wish to stop providing those services. This is to avoid unexpected disruption to Nexus payments, which could occur if a SAP withdrew its services at short notice.
There will be certain cases where Nexus payments must be reversed at a later date. The SAP must allow these reversals to be made. The number of reversals is expected to be small or negligible relative to overall payment flows.
The following obligations will be taken care of by Nexus:
- Notifications to FXPs: Nexus will update the FXP after each transaction with an fxtr.017 message, so the SAP does not need to update them of changes to balances in real time (but can do, in addition).