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Moscow, 22nd March 2006
SWIFT
Standards and the
Securities Markets
John Falk
SWIFT
20060322_Moscow
Slide 1
SWIFT in figures – February 2006
204 countries
7,863 live users
2.5 billion messages/year
Over 12 million messages on last peak day
Availability:
- FIN messaging systems:
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99,999 %
Slide 2
The SWIFT community
securities market
data providers
banks
found SWIFT
1973
- broker/dealers
- central depositories
& clearing institutions
- exchanges
travellers cheque
issuers
fund administrators
money brokers
MA-CUGs
1996
- treasury counterparties
- treasury ETC service
providers
- registrars & transfer
agents
- custody providers
- trust or fiduciary
services companies
investment
managers
- securities MIs
- payments MIs
trading
- proxy voting agencies
institutions
treasury securities ETC
- non-shareholding
financial institutions
service providers
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Creating STP momentum for the industry
Slide 3
SWIFT contribution to industry value
Connectivity
and messaging
STP &
automation
Standards
and market practices
Business Solutions
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Slide 4
UNIFI (ISO 20022)
Relation with SWIFTStandards
SWIFTStandards
Securities
Other markets
UNIFI (ISO 20022) (syntax = XML, such as Investment
Funds, Cash Reporting, Bulk Credit Transfers, …)
ISO 15022 (syntax = enhanced
Traditional FIN
FIN, such as MT 502, MT 54x, ..)
(e.g. MT 103)
ISO 7775 (syntax = traditional
Traditional FIN
FIN, such as MT 521, MT 500, …)
(e.g. MT 100, MT 202, …)
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Slide 5
UNIFI (ISO 20022)
The main objectives
Despite increasing business complexity:
 Improve
quality
 Reduce
costs
 Better
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time to market
(make it better)
(make it cheaper)
(make it faster)
Slide 6
Securities market: equities and fixed income
Pre-trade / Trade
Post-trade
Buyer
Presettlement
Corporate
actions
Seller
Proxy
voting
Presettlement
Reconciliation
Reconciliation
Settlement
Settlement
Reconciliation
Reconciliation
Custodian
I/CSD
MT-based
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Corporate
actions
MX-based
Clearing
agent
Slide 7
Funds messages - summary
Prospectus
data
Fund management
company
Institutional
investor
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Subscription + redemption + switch orders
Order confirmation + Order status
Statements holdings + statement transactions
Transfer in + Transfer Out instructions
Transfer status + Transfer Confirmation
Account management
Portfolio Transfer
Commission report
Request for Statement
Request of Pending Transactions
Live on SWIFTNet
Piloting
Available for piloting
2007
Fund accountant
Price report
Transfer
agent
Fund cash
forecast
report
Investment
manager
Slide 8
Standards, market practice & business
practice harmonization around ISO 20022
Canada
FundServ
US
DTCC
ICI
UK
Standards
WG
France
SWIFT user
group
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EFAMA
Luxembourg
SWIFT user group
+ ALFI /TA Forum
SMPG
Germany
SWIFT user group
SWIFT
Standards
WG
Industry groups
Singapore, Hong-Kong
Taiwan
Switzerland
NMPG WG
swimEC
Australia
Slide 9
SWIFT Solution
SWIFTNet Funds
Many-to-many
 Messages
– ISO 20022 (XML)
– Store & forward
– Non-repudiation
– Validation
– PKI
 STATUS
– 9 firms live
– 24 implemented
– 76 ready to implement

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SWIFTNet
Fund Distributor
Investment Management
Institution
Hub
Fund Administrator /
Transfer Agent
Fund Company’s Banking
Institution
Slide 10
Recommendations, Barriers or Regulations
G30Recommendation
Recommendation
2001 CPSS-IOSCO,
16 2
“Securities Settlement Systems should use or accommodate
relevant
international
communication
procedures
& global
“All market
participants
should
adopt ISO15022
as the
standards…”
standard
for straight-through securities messaging across the
2003 Giovannini,entire
Barrier
1
securities
life cycle”
“Define EU wide protocol to eliminate national differences in
IT & interfaces
used
Clearingto
& describe
Settlementstandardised
providers”
“XML should
become
the by
language
messages”
2003 G30, Recommendation
2
“Harmonise message standards & communication protocols”
“Market
participants Standard
should support
and use communication
2004
ESCB-CESR,
16 (draft)
networks that adopt open, standardised, IP-based protocols for
“Entities providing securities clearing and settlement services,
securities
transactions”
and participants
in their systems
should use or accommodate
relevant international communication procedures and
messaging and reference data standards………”
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Slide 11
Giovannini Protocol Content : Example
Element 1 : Data Standards
– EU Cash & Securities: Securities Clearing & Settlement Systems,
C&S Infrastructures and CCP’s should implement relevant ISO
data standards in support of ISO15022/20022
– Such as but not limited to:
– ISO 3166 - Country Codes
– ISO 4217 - Currency codes
– ISO 6166 - ISIN
– ISO 8601 - Date/time format
– ISO 9362 - BIC
– ISO 10383 - MIC
– ISO 10962 - CFI
– ISO 13616 - IBAN
– ISO 16732 - IBEI (Provisionally)
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Slide 12
Industry Body Recommendations
“ISO 20022 is recognized as the single European
standard for funds messaging going forward and
should be the basis for all electronic
communications in this area” - EFAMA/FEFSI
“Communications between players within the asset
and fund management sphere should utilise ISO
Standard Messaging” - IMA
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Slide 13
Conclusion - The Industry Experience
 Profitability
“Our cost of processing orders has reduced by 66%
since implementing SWIFT”
Gary Janaway,Schroders
 Scalability
SWIFT allows us to position ourselves for an increase
in dealing volumes, without having to increase headcount
Kathy Shackle, Fidelity
 Customer Service
“ Straight-through processing lets us improve customer
service; we can extend cut-off times at our branches,
giving our sales people a longer selling window."
Maureen Low, Citibank Asia
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Slide 14
What Can and Does SWIFT bring
to the Securities Markets?
 Standards
 Security,
Reliability and Risk Resilience
 Co-Operation
 Services
 Provides
 SWIFT
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VALUE to the market
has done it before
Slide 15
Conclusion
Cost Reduction and Improved Performance
Revenues/
Portfolio
Lack of Systems
Integration
Multiple
Standards
Multiple Links
Complex
Products
Legacy
Systems
Manual
Processes
Net Profits/
Portfolio
Performance
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Slide 16
uestions
&A
nswers
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Slide 17