“Peer to peer foreign exchange (P2P FX)”

definition

P2P foreign exchange (peer-to-peer foreign exchange) is a sector within foreign exchange, which cuts out the middleman – banks and brokers – and the associated costs by connecting two parties to an exchange directly.

Connecting companies on both sides of an exchange through P2P foreign exchange can therefore cut out the “spread” that banks and brokers typically apply to the exchange rate.

The exchange rate offered for currency transactions and for cross-border payments is therefore the mid-market rate. This allows businesses and individuals to reduce transaction costs, cut down on administration time and increase transparency.

Peer-to-peer platforms, however, rely on traditional liquidity providers to match the transactions that cannot be settled with P2P counterparties.