Slide 1 Introduction to ISO – Universal financial industry message scheme ISO_20022_LV_v132 ISO 20022

Slide 2 Agenda  ISO 20022: –Value proposition –The standard –The actors –The registration process –The Repository  ISO registration platform  Cross industry harmonisation  Interoperability within the financial industry  Q&A ISO_20022_LV_v132

Slide 3 The ISO value proposition (1/5) Objective To enable communication interoperability between financial institutions, their market infrastructures and their end-user communities ISO_20022_LV_v132 Major obstacle Numerous overlapping standardization initiatives looking at XML financial messages: MDDL, FIX, FinXML, VRXML, RIXML, XBRL, FpML, IFX, TWIST, SWIFT, RosettaNet, EPC, OAGi, ACORD, etc.

Slide 4 ISO_20022_LV_v132 The ISO value proposition (2/5) Proposed solution A single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives ISO 20022

Slide 5 ISO_20022_LV_v132 The ISO value proposition (3/5) Convergence into ONE standard is the long term objective… … but in the interim several standards need to coexist to enable quick response to competitive pressures and regulatory demands

Slide 6 ISO_20022_LV_v132 The ISO value proposition (4/5) RosettaNet TWIST Proprietary format SWIFTIFX EDIFACT Without common building blocks: Point-to-point connection Data is mapped directly from one application to another Costly, unscalable and difficult to implement and maintain Process, routing, rules logic needs to be coded to specific message types 42 interfaces = n * (n-1 ) OAGi Source: John Mersberg, IBM Corporation Growth adds exponential complexity and expense…

Slide 7 ISO_20022_LV_v132 The ISO value proposition (5/5) SWIFT Canonical Message Model (i.e. ISO 20022) 14 interfaces = n * 2 Proprietary format RosettaNet TWIST IFX EDIFACT OAGi Canonical message model = True process integration Reduced brittleness, faster to respond to change Shared message services – single/shared parser, message independent rules engine, etc. Unified monitoring / audit trail Standardized implementation reduces cost, time to effect change and improves overall performance… ISO aims at long term convergence, while facilitating short term coexistence…

Slide 8 ISO Illustrating business modelling All institutions have their own sets of data objects …and groups them into ‘syntax- neutral’ message models, which... Order Date XML ISO … can be ‘transformed’ in message formats in the desired syntax FIX ASN.1 ISO standardizes common data objects… Account Order Date ISO_20022_LV_v132

Slide 9 The ISO recipe Main ingredients (1/2):  Modelling-based standards development –Syntax-independent business standard –Validated by the industry  Syntax-specific design rules for XML and ASN.1 –Predictable and ‘automatable’ –Protect standard from technology evolution  Reverse engineering approach –Protect industry investment and ease interoperability –Prepare for future migration ISO_20022_LV_v132

Slide 10 The ISO recipe Main ingredients (2/2): ISO_20022_LV_v132  Development / registration process –Clearly identified activities and roles –Business experts and future users involved upfront –Technical experts involved when required  Repository on the ISO website –Business Process Catalogue & Data Dictionary –Outside of official standard (maintained by registration bodies)

Slide 11 The eight parts of ISO Part 1: Metamodel Part 2: UML profile Part 3: Modelling Part 4: XML schema generation Part 5: Reverse engineering Part 6: Message transport characteristics Part 7: Registration Part 8: ASN.1 generation ISO_20022_LV_v132 Copies can be obtained from

Slide 12 ISO 20022: The actors (1/2) ISO_20022_LV_v132 Submitting organisations Could be Communities of users or organisations that want to develop ISO compliant messages to support their financial transactions ANBIMA ASF Berlin Group BIAN CBI Consortium CFETS China UnionPay Clearstream CLS Danish Bankers Association Early Warning Services EPC ESMA Euroclear FFI FISD FPL FpML IFX Forum ISITC nexo A.I.S.B.L. OAGi Omgeo Payments UK RU-CMPG SWIFT TC68/SC7/TG1 TWIST T2S UN/CEFACT ECB Banque de France Banco de España Deutsche Bundesbank etc.

Slide 13 ISO_20022_LV_v132 ISO 20022: The actors (2/2)  Registration Management Group, RMG –Overall governance, court of appeal –Approve business justifications for new message standards –Approve new member entities –Create Standard Evaluation Groups (SEGs) and SubSEGs  Standards Evaluation Groups, SEGs and SubSEGs –Represent future users in specific financial areas –Validate new candidate messages and change requests  Registration Authority, RA –Ensure compliance –Maintain and publish ISO Repository  Technical Support Group, TSG –Assist RMG, SEGs, RA and submitting organisations

Slide 14 ISO_20022_LV_v132 ISO The registration process (1/3) Submitting organisation Financial industry group or standards body Business justification Business justification RMG Project approval & allocation to a SEG SEG Business validation RA Official registration and publication Repository Dictionary Catalogue Optional pilot testing or first implementers RMGmonitorsRMGmonitors Submitting organisation & users Submitting organisation & RA Development & provisional registration

Slide 15 ISO_20022_LV_v132 ISO The registration process (2/3) Submitting organisation Financial industry group or standards body Business justification Business justification RMG Project approval & allocation to a SEG SEG Business validation RA Official registration and publication Repository Dictionary Catalogue Optional pilot testing or first implementers RMGmonitorsRMGmonitors Submitting organisation & users Submitting organisation & RA Development & provisional registration Candidate ISO messages ISO messages

Slide 16 Users CRs Users introduce Change Requests to the RA Submitting organisation Submitting organisation prepares ‘Maintenance Change Request’ with each CR implementation SEG SEG screens Change Requests (CRs) SEG SEG approval/rejection Submitting organisation & RA Development of new versions SEG Validation of new versions RA Registration and publication Repository Dictionary Catalogue By June 1 By July 7 By August 21 By October 1 By December 1 By February 1 April-May Timing ISO registration process (3/3) Yearly maintenance process First implementers ISO_20022_LV_v132 Submitting organisation & users

Slide 17 ISO The Financial Repository  Data Dictionary –Business Concepts –Message Concepts –Data Types  Business Process Catalogue –Financial business process models –Financial business transactions, including messages –XML or ASN.1 message schemas ISO_20022_LV_v132

Slide 18 ISO ISO Registration Platform ISO_20022_LV_v132 Continuing with today’s agenda…

Slide 19 ISO The Deployment  Approval of the international standard  Selection of the Registration Authority and set-up of the  Creation of Registration Management Group  Creation of Standards Evaluation Groups  Registration and publication of first ‘ISO messages’  Approval of a new edition of the international standard ISO_20022_LV_v132 Ongoing: promotion to developers (standardizers, industry bodies) and users (market infrastructures, end-users, vendors)

Slide 20 ISO Registration Management Group (RMG)  Members - 70 senior managers from: –21 countries: AT, AU, BR, CA, CH, CN, DE, DK, FI, FR, GB, IN, IT, JP, KR, NL, NO, SE, SG, US, ZA. –14 organisations: ACTUS, CFTC, Clearstream, DTCC, ECB, EPC, Euroclear, FPL, FpML, IFX, ISITC, MasterCard, SWIFT, VISA  Convener: James Whittle, Payments UK (GB); Vice-convener: Mike Tagai, JPMorgan Chase (JP); Secretary: Andre de Roy, Payments UK (GB)  Meetings: twice a year  Key decisions: – Creation of five SEGs: Payments and Securities in 2005, Trade Services and Forex in 2006, Cards & Related Retail Financial Services in 2008 – Approval of ISO message development projects ISO_20022_LV_v132

Slide 21 ISO – The Payments SEG (1/3)  Members – 61 experts –20 countries: AU, AT, BR, CA, CH, CN, DE, DK, FI, FR, GB, IT, JP, KR, NL, NO, SE, SG, US, ZA –6 organisations: ECB, Euroclear, IFX, ISITC, MasterCard, SWIFT  Convener: Harri Rantanen (FI); Vice-convener: Peter Hoogervorst (SG); Secretary: Aurelie Steeno, SWIFT  Approved: C2B payment initiation (SWIFT/ISTH), Interbank credit transfers and direct debits (SWIFT), Exceptions and investigations (SWIFT), B2C advice & statement (ISTH/ISITC), Mandates (SWIFT), Change/verify account identification (GUF), Bank account management (SWIFT), Creditor payment activation request (CBI Consortium), Cash account reporting request and notification (SWIFT), Bank Services Billing (TWIST/SWIFT), Authorities Financial Investigations (FFI), Stand-alone remittance advice (IFX/OAGi), Cross-border Transactions Currency Control Reporting (RU-CMPG), Financial Institution Direct Debit (SWIFT)  Under evaluation: none  Next: Cash management (SWIFT), Account switching (Payments UK), Mandate Status List (DBA), Payment Pre-Authorization (Early warning Services) ISO_20022_LV_v132

Slide 22 ISO – The Payments SEG (2/3) ISO_20022_LV_v132 Payments Credit transfers Covering instruments such as: Direct debits Cheques Covering actors such as: Private & corporate customers Financial institutions Central banks Clearing houses & RTG systems

Slide 23 ISO_20022_LV_v132 Payments Including business areas such as: Communications between the ordering customer and its bank, etc. Interbank transfers via correspondent banking or ACHs, high value payments, low value bulk payments, RTGS, etc. Account opening, standing orders, transaction and account information, advices & statements from … Payment initiation Clearing & settlement...the account servicing institutions to account owners, including reporting from the financial institution… …to the ordering & beneficiary customers, reconciliation, exceptions & investigations handling. ISO – The Payments SEG (3/3) Cash Management between various actors:

Slide 24 ISO – The Securities SEG (1/3)  Members – 72 experts –16 countries: BR, CA, CH, DE, DK, FI, FR, GB, IE, JP, NL, NO, SE, SG, US, ZA –9 organisations: ACTUS, CFTC, Clearstream, DTCC, ECB, Euroclear, ISITC, FPL, SWIFT  Convener: Axelle Wurmser, BNP Paribas (FR); Vice-convener: Charles- Raymond Boniver, RBC (CA); Secretary: Dominique Forceville, SWIFT  Approved: Investment funds (SWIFT), Transaction regulatory reporting (SWIFT), Proxy voting (SWIFT), Issuer’s agents communication (Euroclear), Corporate actions (SWIFT), Settlement & reconciliation (SWIFT), Post-trade (SWIFT/Omgeo), Total portfolio valuation report (ISITC/SWIFT), CCP Clearing (FPL/SWIFT), Collateral Management (FPL, FpML, ISITC, SWIFT), Money Market Statistical Reporting (ECB, Banque de France, Banco de España, Deutsche Bundesbank), Transparency of Holdings (Clearstream), SSI for Securities, Payments & FX (ISITC, Omgeo, FPL)  Under evaluation: none  Next: Financial instruments and transactions regulatory reporting - MiFID II/MiFIR (ESMA), Target2-Securities (SWIFT/4CB) ISO_20022_LV_v132

Slide 25 ISO – The Securities SEG (2/3) ISO_20022_LV_v132 Securities Equities Covering instruments such as: Funds Fixed income Covering actors such as: Investment managers, distributors, transfer agents, fund administrators Broker / dealers Regulators Stock exchanges, ETC providers Clearing houses, CCPs CSDs, ICSDs Market Data Providers Custodians Service bureaux

Slide 26 ISO – The Securities SEG (3/3) ISO_20022_LV_v132 Including business areas such as: Account opening, standing orders, transaction and account information, advices & statements, queries & investigations Income, corporate actions, market data, proxy voting Collateral, repos, securities lending & borrowing Custody Collateral management Trade Initiation, pre- trade Trade, post- trade Clearing & settlement Securities Securities Issuance

Slide 27 Looking at the advantages ISO brings over ISO ISO 20022:  Builds on the ISO data dictionary concept and registration infrastructure, but strengthens the monitoring by the industry  Uses a more robust, syntax independent development methodology based on modelling of business processes and transactions  Uses XML or ASN.1 as the syntax for the actual physical messages  Has a wider scope than ISO 15022, which is only for securities messages ISO_20022_LV_v132 Syntax independent business modelling is key to the ISO standard !

Slide 28 ISO – Derivatives SubSEG (1/3)  Members – 45 experts –7 countries: BR, CA, DK, FR, GB, JP, US –9 organisations: ACTUS, CFTC, DTCC, ECB, Euroclear, FPL, ISDA/FpML, ISITC, SWIFT  Convener: Karel Engelen, ISDA/FpML; Vice-convener: Joe Halberstadt, SWIFT; Secretary: Courtney McGuinn, FPL  Approved: none  Under evaluation: Financial instruments and transactions regulatory reporting - EMIR (ESMA) ISO_20022_LV_v132

Slide 29 ISO – Derivatives SubSEG (2/3) ISO_20022_LV_v132 Derivatives Covering instruments such as: Listed Derivatives Covering actors such as: Investment managers, distributors, transfer agents, fund administrators Broker / dealers Regulators Confirmation, Execution platforms OTC Derivatives Clearing houses, CCPs CSDs, ICSDs Market Data Providers Custodians Market Infrastructures

Slide 30 ISO – Derivatives SubSEG (3/3) ISO_20022_LV_v132 Including business areas such as: Trade, post-trade, including post-trade events such as novation, termination, increase, amendment, option events, and external events such as index and basket changes. Regulatory reporting including real-time and snapshot reporting Collateral management Initiation, pre-trade including RFQ and credit limit check, clearing eligibility, margin quote Clearing & settlement Derivatives

Slide 31  Members – 22 experts –9 countries: CA, CH, CN, FR, GB, NO, SE, US, ZA –3 organisations: FPL, ISITC, SWIFT  Convener: Ram Komarraju, CLS (US); Vice-convener: Zaiyue Xu, CFETS (CN); Secretary: Joe Halberstadt (SWIFT)  Kick-off meeting: in September 2006  Approved: Forex notifications (CLS), Post Trade Foreign Exchange Messages (CLS), FX Post-Trade Trade Capture and FX Post-Trade Confirmation (CFETS)  Under evaluation: none  Next: none ISO_20022_LV_v132 ISO – The FX SEG (1/3)

Slide 32 ISO – The FX SEG (2/3) ISO_20022_LV_v132 Foreign eXchange Spot Covering instruments such as: Forward Swaps Covering actors such as: Investment managers Hedge funds Dealers Custodians CLS and CLS settlement members Currency Options Industry associations (ISDA) Application providers Money brokers Trading portals, matching services providers

Slide 33 ISO_20022_LV_v132 ISO – The FX SEG (3/3) Including business areas such as: Clearing and Settlement, including netting and related reporting Post-trade: confirmation, matching, assignment, novation, etc. Notification of trades to third parties Pre- trade: IOI, quotes, etc. Trigger events, option exercises Trade: order, execution, allocation, affirmation, etc. Foreign eXchange

Slide 34  Members – 29 experts –12 countries: CA, CH, DE, DK, FI, FR, GB, IS, IT, JP, NL, US –1 organisation: SWIFT  Convener: Tapani Turunen, Tieto (FI) Vice-convener: Peter Potgieser (NL); Secretary: vacant  Kick-off meeting: in September 2006  Approved: Invoice Financing Request (CBI Consortium), Trade Services Management (SWIFT), Financial Invoice (UN/CEFACT TBG5), Demand Guarantees and Standby Letters of Credit (SWIFT), Factoring Services (ASF)  Under evaluation: Invoice Tax Report (FFI & Tieto)  Next: none ISO_20022_LV_v132 ISO The Trade Services SEG (1/3)

Slide 35 ISO The Trade Services SEG (2/3) ISO_20022_LV_v132 Trade Services Documentary credit …and services such as: Open Account Trading Reconciliation (A/R, A/P), remittance data Purchase order, transport documents Guarantee Invoice financing e-Invoicing EBPP Covering products… Collection Letter of credit

Slide 36 ISO The Trade Services SEG (3/3) ISO_20022_LV_v132 Including actors such as: Trade facilitators: chambers of commerce, insurance co, freight forwarders, carriers, customs, factoring co Associations providing rules and master agreements (eg IFSA, ICC) Private and corporate customers (treasurers) Application providers Financial Institutions Trade Services Risk management entities

Slide 37 ISO – The Cards & Related Retail Financial Services SEG (1/3)  Members – 31 experts –15 countries: AT, CA, CH, CN, DE, DK, FI, FR, GB, JP, KR, NL, SE, US, ZA –5 organisations: IFX, Mastercard, nexo A.I.S.B.L., SWIFT, VISA  Convener: William Vanobberghen, Groupement des Cartes Bancaires (FR); Vice-convener: Richard DuVall (IFX); Secretary: Reinhard Herwig (DE)  Kick-off meeting: on October 2008  Approved: CAPE – Acceptor to Acquirer and Terminal Management (nexo A.I.S.B.L.), ATM interface for transaction processing and ATM management (IFX Forum/nexo A.I.S.B.L), Acquirer to Issuer Card Messages – version 1(TC68/SC7/TG1)  Under evaluation: none  Next: Dispute Resolution in Cards Fee Collection (CUP), Payment Tokens Management Exchanges (nexo A.I.S.B.L & ISO TC68/SC7/TG1), Acquirer to Issuer Card Messages – version 2 (TC68/SC7/TG1) ISO_20022_LV_v132

Slide 38 ISO – The Cards & Related Retail Financial Services SEG (2/3) ISO_20022_LV_v132 Card issuer Cards and Retail Covering instruments… …and actors such as: Card holder Acceptor (merchant, retailer) Acquirer Intermediary agent Card scheme Hard- and Software providers Debit card Prepaid card Charge and credit card

Slide 39 ISO – The Cards & Related Retail Financial Services SEG (3/3) ISO_20022_LV_v132 Including business areas such as: POI messages for payments, administrative and device related services Similar messages transacted on internet or from mobiles or other personal devices Transactions between acquirers and card issuers ATM processes such as authorization, processing, ATM management and inventory Transactions between merchants and acquirers, and cardholders and issuers that support authorization, clearing, reversal, chargeback, dispute processing, etc.

Slide 40 ISO – Technical Support Group  Members – 29 experts –9 countries: BR, CN, CH, DE, DK, FR, GB, JP, KR –7 organisations: ACTUS, CFTC, DTCC, Euroclear, FPL, ISITC, SWIFT  Convener: Frank Dreisch, Gefeg (DE); Vice-convener: Anthony Coates (GB); Secretary: Kris Ketels, SWIFT  Kick-off meeting: on October 2008  Mission: help RMG, RA, SEGs and Submitting Organisations with technical matters ISO_20022_LV_v132

Slide 41 Continuing with today’s agenda… ISO_20022_LV_v132 ISO Cross-industry harmonisation

Slide 42 ISO_20022_LV_v132 Harmonising across all industries with UN/CEFACT  Created in 1997 to improve world-wide co-ordination of trade facilitation across all industries  Focusing on international standards for electronic transactions (e.g., ebXML venture with OASIS)  Promoting technology neutral business modelling and a central library of core components Goal is to establish interoperability between ISO and UN/CEFACT repositories United Nations/CEFACT – Centre for trade facilitation and e-business

Slide 43  2004: TC68, TBG5 and SWIFT sign a MoU to investigate harmonisation  2005: Trial submission from ISO to UN/CEFACT  2006: ISO TC68/WG4 takes over technological alignment  2007: Official submission from ISO to UN/CEFACT  2008: Customer-to-bank payment components harmonised and accepted in UN/CEFACT core component library  2009: The cooperation is placed under the umbrella of the ‘MoU on e- Business’  2010: Official submission of a financial e-invoice message from UN/CEFACT to ISO ISO_20022_LV_v132 Harmonisation between ISO and UN/CEFACT

Slide 44 ISO_20022_LV_v132 Continuing with today’s agenda Interoperability within the financial industry ISO 20022

Slide 45 All institutions have their own sets of data objects …and groups them into ‘syntax- neutral’ message models, which... Order Date ASN.1 FpML … can be ‘transformed’ in message formats in the desired syntax FIX XML ISO standardizes common data objects… Account Order Date ISO_20022_LV_v132 Using ISO modelling to reach interoperability

Slide 46 ISO_20022_LV_v132 Card payments ISO compliance at model level Repository Dictionary Catalogue Payments clearing & settlement ISO message models ISO Dictionary ISO ASN.1 syntax ISO XML syntax physical message representation

Slide 47 ISO_20022_LV_v132 Card payments Repository Dictionary Catalogue Payments clearing & settlement ISO message models ISO Dictionary other syntax ISO syntax ISO compliant ‘using a domain specific syntax’ physical message representation ISO compliant ISO compliance at model level

Slide 48 “Investment Roadmap” for ISO, FIX, XBRL and FpML syntaxes ISO_20022_LV_v132 Download the Investment Roadmap and related FAQInvestment RoadmapFAQ The Investment Roadmap is maintained by the Standards Coordination Group including the following organisations:

Slide 49 Interoperability in the customer-to-bank payment domain ISO_20022_LV_v132 Let us look at a concrete example from payments area: a customer may need to adapt to the format of the banks… Customer A Bank A Bank B Bank C Proprietary format SWIFT MT 101 IFX format

Slide 50 ISO_20022_LV_v132 …or banks may need to accept many formats… Bank A Proprietary format IFX format Customer ACustomer CCustomer B SWIFT MT 101 Interoperability in the customer-to-bank payment domain

Slide 51 ISO_20022_LV_v132 SWIFT MT The reverse engineering produces a canonical ISO message model Proprietary TWIST OAGi IFX Interoperability in the customer-to-bank payment domain ISO Core Payment Kernel model

Slide 52 ISO_20022_LV_v132 Adopting ISO facilitates convergence and co-existence IFX MT 101 Interoperability in the customer-to-bank payment domain ISO Core Payment Kernel Core Payment Kernel IFX MT 101

Slide 53 ISO_20022_LV_v132 & & uestions A nswers