Role of the Settlement Access Provider (SAP)

SAPs provide accounts to third-party Foreign Exchange Providers (FXPs) who are not participants in particular Instant Payment System (IPS). They also provide accounts to some PSPs from other countries who are not members of the SAP's own IPS. This allows:

• third-party FXPs to provide FX to a wider range of corridors, without needing to become full members of each domestic IPS (which can be prohibitively costly)

• PSPs who want to provide FX conversion for their own payments to do so without needing to become a full member of another country's IPS

By providing this service, Settlement Access Providers play a crucial role in enabling efficient and competitive FX provision in the Nexus network.

The Settlement Access Provider only deals in its own “domestic” currency. It does not swap one currency for another and therefore is not an FX Provider (although it does provide services to the FX Provider).

Any PSP (ie participant of a specific IPS) can act as an SAP - providing access to their domestic IPS - if they choose, subject to the conditions and obligations outlined in this Guide (and any requirements set by their domestic IPS).

Where an FXP is a direct member of the IPS, they do not need to use a separate SAP. Instead, they effectively act as SAP to themselves (for that specific IPS) and are acting as an SAP for Nexus. In this case, the FXP must also comply with the obligations that apply to SAPs, and should also read this guide. The responsibilities for FXPs are described in the separate FX Provision guide.

Acting as a SAP to a third-party FX Providers

For a specific Nexus payment, the SAP is only engaged at the point when a Source PSP has selected an FX Provider’s quote and submitted a payment instruction to the Source IPS referencing that quote. The Nexus pacs.008 payment instruction will reference the accounts that the FXP holds with SAPs in the Source and Destination Country.

Acting as a SAP to a PSP from another country

For a specific Nexus payment, the Source PSP will specify the account at the Destination SAP at which they hold the Destination Currency. Nexus will check its own records to confirm that this account is owned by the Source PSP before sending the payment to the Destination IPS.

Relationship between IPS, SAPs and FXPs

An SAP must be a member of at least 1 domestic IPS so that they are able to send and receive payments. Therefore, an entity must be a PSP (as defined in Nexus) in order to become an SAP. (All SAPs are PSPs by definition, but not all PSPs will choose to act as SAPs.)

Nexus does not select or appoint SAPs. An SAP must be chosen by an FXP (or foreign PSP):

• The SAP must provide an account to the FXP (or foreign PSP) in which the FXP can holds funds, denominated in the IPS’s currency. (The FXP's account holds bank deposits, not central bank money.)

• The SAP makes and receives payments on behalf of the FXP.

• The terms between the SAP and FXP (or foreign PSP) are agreed bilaterally, outside of the Nexus scheme.

In terms of the relationships between IPS, SAPs and FXPs (or foreign PSPs):

• Within each IPS:

  • there must be at least one SAP, but can also be multiple SAPs

  • one SAP may provide services to one or more FXPs

  • each FXP (or foreign PSP) must select only one SAP per IPS

• Each FXP (or foreign PSP) who is already a member of the IPS is by definition a PSP, and can act as SAP to themselves. They do not need to select a separate SAP to access that IPS.

• An FXP can use different SAPs in different IPSs.

• The Source SAP and Destination SAP do not need to be the same entity or part of the same corporate group, and do not need to have any relationship with each other or communicate with each during payment processing.