Key Points

This section on Settlement Access Providers is highly technical and is only likely to be of interest to IPS Operators and PSPs who are considering becoming SAPs.

This guide describes:

• the role of a Settlement Access Provider (SAP) in enabling FXPs and some Source PSPs to manage FX conversion, even if they are not members of a country's payment system

• the process and criteria for a financial institution to act as an SAP in Nexus

• how SAPs engage with and onboard FXPs

• scheme obligations on the SAPs

• how Nexus payments are processed through the SAPs

• how the SAP should manage its liquidity

60-SECOND SUMMARY

• Settlement Access Providers (SAPs) provide accounts to:

  • third-party Foreign Exchange Providers (FXPs) who are not participants in particular Instant Payment System (IPS)

  • some Source PSPs from other countries (foreign PSPs) who wish to act as FXP to themselves (by holding the Destination Currency) but are not members of the Destination IPS

• SAPs play an important role by ensuring that a wider range of FXPs can participate in Nexus.

• An SAP only deals with their own domestic currency.

• To be an SAP, a financial institution must be a member of the local IPS. Therefore all SAPs are also PSPs, by definition (but not all PSPs are SAPs). Any PSP can act as a SAP, subject to conditions outlined in this guide. See Joining Nexus as an SAP.

• FXPs (or foreign PSPs) enter into bilateral arrangements with SAPs to open accounts. The prices charged by the SAPs to the FXPs is outside the scope of the Nexus scheme. See SAP onboarding of FXPs (or foreign PSPs).

  • It is the FXP (or foreign PSP) who informs Nexus which SAP accounts they wish to use. However, the Nexus staff team will verify that the FXP does indeed own the account at the SAP, and that the SAP is willing to act as SAP to that FXP.

• When Nexus issues a quote on behalf of an FXP, the quote will include information about the accounts at SAPs that the payment will flow through.

  • These are defined as Intermediary Agent Accounts in the pacs.008 payment instruction.

• In each specific payment, there can be a Source SAP and a Destination SAP. Processing payments as the Source SAP is relatively simple, as it is very similar to processing payments as a Destination PSP. However, processing payments as the Destination SAP can be slightly more complex, and the process may vary depending the IPS and SAP in question. See Processing payments as an SAP

• FXPs are responsible for making sure they have a sufficient account balance (or line of credit) at their respective SAPs. In turn, SAPs are responsible for ensuring they have sufficient liquidity in their IPS settlement account to honour payments on behalf of their customer FXPs. Given that Nexus payments will be 24/7, this may require the SAP to pay additional attention to liquidity management outside of core business hours and at weekends. See Managing Liquidity as an SAP.