Roles vs Entities: Possible Configurations of FX Providers and Liquidity Providers
The FX Provider, Source Liquidity Provider and Destination Liquidity Provider are all roles played within a Nexus payment, but they are not necessarily separate entities (ie separate companies). In some cases, the same entity will play all three roles – ie an FX Provider that is a member of both the Source and Destination IPS).
The table below shows most of the possible configurations of the five different roles played in a Nexus payment. Depending on the configuration, between two and five separate entities (ie different banks or financial institutions) may be involved. This flexibility ensures that a wider range of participants can play roles in the Nexus network, supporting competition in FX provision. It also allows non-banks to play the role of FX Provider, so long as they have relationships with at least 2 Liquidity Providers (who must be IPS members).
Note the ability to be an FX Provider is specific to a particular currency pair. For example, one FX Provider may be able to offer FX rates for the Singapore-India currency corridor. However, if they don’t have a Liquidity Provider or IPS membership in Sweden, they will not be able to quote on payments between Singapore and Sweden or between India to Sweden.
Possible Configurations of FX Providers
Last modified 2mo ago
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