Make FX settlement efficient and Safer Faster
Eliminates the settlement risk in cross-currency payment instruction settlement through WalletsNet® by linking settlement bank Real Time Gross
Challenges in FX settlement
Due to the characteristics of a foreign exchange contract, three main risks emerge during settlement: market risk, credit risk, and liquidity risk.
Market risk
Each party is exposed to market risk during the time of the conclusion of the contract up to the irrevocable release of each party’s payment. In case one party fails in this phase of the settlement the counterparty would have to replace the contract possibly delayed and at higher costs.
Credit risk
After the irrevocable release of one party’s payment, this party is exposed to credit risk which amounts to the full value of the contract. The exposure lasts until this party gets acknowledged receipt of the owing funds. This might take up to three business days. If the counterparty fails during this phase, the face value of the contract is lost.
Liquidity risk
In case the counter-payment is delayed, liquidity risk occurs because the other party has expected to receive the owing funds on time. As a consequence it might not be able to meet its existing payment obligations due to the delay of the incoming funds. Prevalently it is operational risk such as technical disruptions that give rise to liquidity risk.
Our Solution
Payment-versus-payment (PvP) FX Settlements
PvP is a settlement mechanism that ensures that the final transfer of a payment in one currency occurs if and only if the final transfer of a payment in another currency or currencies takes place. We removes principal risk by using PVP - you get paid only if you pay.
How it works?
Payment-versus-payment (PvP) FX settlement service makes settlement safer and faster.
Benefits.
Our settlement services help digital financial institution success by reducing risk, improving efficiency and increasing liquidity.
Risk reduction
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Due to PvP the settlement risk for FX trades is eliminated.
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One standardized process for all FX trades reduces the operational risk.
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The compliance risk is reduced.
Efficiency maximization
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Enhanced increases operational efficiency.
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The risk of errors is reduced in internal processes, settlement and in interaction with external parties since all processes are handled automatically.
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Monetary and physical resources are allocated more efficiently.
Regulatory compliance
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A market standard for settling FX trades.
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Follow the global FX industry’s best practice for obtaining operational control and overview.
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Enables you to comply with regulatory requirements.
More benefits
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Risk mitigation and management.
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Capital and liquidity efficiencies.
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Operational and IT efficiencies.
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Boost your business growth.
Get Started
Eliminate FX settlement risk, make settlement efficient, safer and more cost-effective.