FX, Settlement & Transaction Infrastructure challenge
Nostro accounts, netting, settlement risk and payment-versus-payment.
Treasury / FX · Interactive Transaction Model
FX & Settlement Cost Calculator
Spread · Fees · All-in rate
Change the settlement assumptions and see what drives the bill — the FX spread charged on value, the per-payment fees charged on count, and the netting that removes obligations before anything is settled at all.
Total value converted or paid cross-border in a month, before any netting.
Gross count before netting. Many small payments cost far more in fees than a few large ones.
bps
Difference from the interbank rate, in basis points. One basis point is 0.01%. Corporate spreads commonly run from a few points to well over fifty.
Share of gross value and payment count that never reaches an external bank because obligations offset inside the group. Netting only removes FX cost where the offsetting obligations are in the same currency; across currencies the conversion still happens.
Start from an example: Fifty million a month, 25 basis points, no netting →
Advanced parameters1
- —Gross volume
- —Netted away
- —Actually settled
- —Spread
- —Fees
- —Monthly cost
- —Monthly cost
- —Annual cost
- —All-in rate on gross volume
- —Cost of the spread
- —Cost of the fees
- —Value actually settled
- —Payments actually made
Move a parameter and the month answers: what the spread costs on the value, what the fees cost on the count, and what the two come to as a rate on everything sent.
The link carries the figures you entered, in the part of the address that is never sent to a server.
Change one assumption at a time. The model updates from the same calculation used for the reported result.
Try this
Keep gross monthly flow fixed. Increase netting before changing the FX spread and compare which change removes more external settlement cost.
How the model works
- The spreadThe bank's margin on the exchange rate is charged on value. It is quoted in basis points, each a hundredth of a per cent, which is how a quarter of a per cent comes to sound like nothing.
- The feesSettlement fees are charged per payment, whatever its size. They are invisible on a large payment and most of the cost on a small one.
- NettingWhat never leaves the group never costs a spread or a fee. Netting removes payments from external settlement, and both charges fall with it — which is why it moves the bill further than negotiating either one.
- The all-in rateBoth costs expressed as a rate on everything sent is the number worth comparing between providers — and the number a quoted spread alone will not tell you.
Want this against your own bank statements?
We can analyse your real payment and FX flows, quantify what netting would actually remove, and build the treasury tooling that runs it every cycle.
Calculation basis 4 steps · view the method →
Value settled = gross volume × (1 − netted share)—Cost of the spread = value settled × spread ÷ 10,000—Cost of the fees = payments settled × fee per payment—All-in rate = total cost ÷ gross volume × 10,000—
Assumptions & limitations Screening estimate for treasury cost review and netting business cases · 6 assumptions →
This is a screening estimate for comparing options, not a quotation. Real cost depends on the currency pair, the time of day, the tiering in your bank agreement, lifting and receiving charges at the other end, and what the counterparty's bank deducts. Confirm against your own statements before negotiating on these figures.
- One average spread is applied to all currency pairs and to every time of day.
- Netting is assumed to remove the same share of value and of payment count, and to remove FX conversion with them — true for obligations that offset within a currency, optimistic where they do not.
- Receiving, lifting and intermediary charges deducted by the counterparty's bank are excluded unless you include them in the fee.
- No cost is attributed to running the netting cycle itself, which needs a process and a system.
- Hedging cost, funding cost and the value of any float are excluded.
- Currency movement between trade and settlement is not modelled.
Worked examples
- Fifty million a month, 25 basis points, no netting
Open with these figures → - The same flows with 60 per cent netted inside the group
Open with these figures →
What this model reveals
Settlement cost is driven by more than the quoted FX spread. Gross obligations can be reduced before external settlement through netting. What remains is then exposed to spread and transaction fees. The model lets you separate the cost of settlement itself from the volume that did not need to reach settlement in the first place.
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