Choosing an FX provider for a fund

What should we check before choosing an FX provider?

Start with the legal entity and its FCA authorisation, then safeguarding, financial strength, credit terms, cut-offs, controls and reporting. The table below is the checklist we use ourselves.

What is the difference between a bank, a payment institution and an e-money institution?

A bank takes deposits onto its own balance sheet. Payment and e-money institutions do not take deposits; they must keep client money separate from their own, which is called safeguarding.

Many FX providers hold more than one authorisation, or run payments and FX through different companies in the same group. Check which entity holds your money and under which rules.

Is safeguarding the same as deposit protection?

No. Safeguarding means the provider must keep your money separate so it can be returned if the firm fails. It is not a compensation scheme, and the costs of returning the money can be deducted from it.

The FCA tightened the safeguarding rules for payment and e-money firms in policy statement PS25/12, published on 7 August 2025. The new rules, in a new chapter of the client assets sourcebook known as CASS 15, came into force on 7 May 2026. They require firms to reconcile safeguarded funds every business day, send the FCA a new monthly safeguarding return, keep a resolution pack so money can be returned quickly in an insolvency, carry out due diligence on banks and others holding the money, and, for certain firms, arrange an annual safeguarding audit.

For most funds the comparison with a bank is closer than it looks. FSCS deposit protection stops at £120,000 per eligible depositor, temporary high balances aside, and most fund entities and fund managers are not eligible at all, because the PRA rules exclude deposits from collective investment undertakings, investment firms and financial institutions. So for a fund, the quality of a provider's safeguarding and the strength of the firm matter more than the label.

What happens to our money if an FX provider fails?

Safeguarded money should come back, but not straight away and not always in full. It is returned through an insolvency process, which takes time, and the costs of that process can be taken from the safeguarded funds.

The recent example is Argentex LLP, a non-bank FX provider authorised by the FCA for e-money and payment services. The FCA says Argentex stopped carrying out regulated business on 17 July 2025 and entered special administration on 21 July 2025. Customer money had to be held separately from the firm's own, and the special administrators set out to return it, with their costs deducted from the relevant funds. The FCA also noted that the FSCS does not cover e-money and payment services.

The practical lessons for a fund are to check how safeguarding works before you sign, to keep a second provider set up so payments can continue, and not to leave large balances sitting with any one provider for longer than you need.

How strong is the firm behind the platform?

Read the latest filed accounts and the FCA Register entry before the sales material. Profitability, the auditor's opinion, ownership and any FCA requirements tell you most of what you need.

• Is the firm profitable, and has revenue been steady or dependent on a few large clients?
• Did the auditor give a clean opinion, and is there any going concern note?
• Who owns it, and would they support it in a bad year?
• Does the FCA Register show any requirements or restrictions on the firm?
• Has there been recent adverse news, a change of owner or a change of safeguarding bank?

Will the provider want collateral or a credit line?

Not for ordinary spot payments, which are normally paid for before they are sent. Collateral or a credit line comes in when a fund books contracts that settle at a later date.

If rates move against an open contract, the provider may ask for more collateral, often at short notice. That cash earns little and cannot be invested, and a margin call during a capital call cycle can squeeze liquidity. Read the terms for when margin is called, how quickly it must be paid, which assets count, and what happens if it is not paid in time.

What should we check about settlement and cut-offs?

The cut-off time for each currency you use, whether same-day payment is possible, and how payments reach the beneficiary. Completion days and capital call deadlines are where this matters.

• Cut-off times by currency, and how they shift around holidays in either country.
• Whether payments go through local payment systems or international routes with intermediary banks and their fees.
• How quickly you receive confirmation that a payment has left, and in what form.
• Whether accounts and payments show the fund's own name, which beneficiaries and administrators expect.

Our guide to currency for deal completions has a completion day checklist.

Which controls and reporting do fund finance teams need?

Two-person approval, clear user roles, approval of new beneficiaries, an audit trail and statements your administrator can use. Check them in a live demonstration, not a brochure.

• Dual authorisation with limits by user and amount.
• New beneficiaries approved by a second person before money can be sent.
• Strong sign-in, and a simple way to remove leavers the same day.
• An audit trail of who created, approved and changed each payment.
• Statements and confirmations in formats your administrator can load, and an API if you need one.

How does FundFX choose the providers on its panel?

We only work with firms authorised by the FCA as banks, payment institutions, e-money institutions or investment firms, and we check each one against this list before any introduction.

For every provider we record the legal entity, FCA status and firm reference number, other licences, ownership, latest filed accounts, how it safeguards client money and at which bank, the services and currencies it offers, its experience with funds, onboarding times, minimums and fee model. We recheck each provider at least once a year and whenever there is adverse news, and we date every check.

We give you the facts we checked so you can decide. We do not tell you a provider is safe, because nobody can promise that. We will publish the names of the providers on our panel once agreements are signed and each provider has agreed how it is described. Until then, we share the relevant provider details with you as part of each quote.

How we are paid by providers, and how we keep that separate from which provider suits you, is set out on our how we are paid page.