ISO 20022 and Regulatory Reporting Alexandre Kech, Head of Securities markets & Standards, APAC May 2016

The global utility for secure financial messaging services User-owned cooperative Headquarter Brussels Overseen by central banks Servicing 150+ settlement infrastructures globally ISO 20022 enabler

Belgium Canada Australia France China Germany Hong Kong Italy India Oversight Group Co-operating Central Banks from 22 countries Led by Central Bank of Belgium SWIFT is domiciled and headquartered in Belgium Belgium Canada France Germany Italy Japan The Netherlands United Kingdom United States Switzerland Sweden ECB Extended oversight Australia China Hong Kong India Korea Russia Saudi Arabia Singapore South Africa Turkey

Increase transparency, reduce systemic risk G20 summit and new regulations G20 commitments September 2009 2008 financial crisis: OTC derivatives pose risks to financial stability Among others – to subject standardised OTC derivatives contracts to on- exchange trade, cleared through CCP and reported to TRs US APAC EU Dodd-Frank Country specific EMIR TR’s: DTCC  TR’s: DTCC  Domestic MIs Others TR’s: DTCC  (for GTR) REGIS-TR  UnaVista, KDPW, CME, ICE  = connectivity can be done via SWIFT

Intensified Regulatory Development Regulations are global and national Source: KPMG, Evolving Banking Regulation, March 2015

Resiliency & reliability Regulation & compliance Key trends are highly relevant for SWIFT APAC core businesses Payments Trends Securities Renewal New systems: ISO 20022 messaging – rapidly growing interest in XML messaging capabilities Multi-currency clearing, PvP Extended operating hours (e.g. HK RMB 20.5 hrs) Aging technology Fin tech (distributed ledger) Regional ambition-collaboration ISO 20022 Real-time 24-7 Convergence btw high & low value Real-time (New services) Issuer to investor CA announcement Funds Collateral management OTC clearing ASEAN Economic Community (AEC), CIPS, Pacific payment system Increasing international connectivity of infrastructures ISO 20022 adoption Regionalization ASEAN Economic Community (AEC) Regional harmonization: ABMF, ASEAN Link, HK-CN, TW-SG, CSIF cross-border DVP ISO 20022 adoption Demand for safer and more reliable infrastructure Cyber threats increasing CPMI-IOSCO PFMI & Annex F for CSPs Resiliency & reliability Demand for safer and more reliable infrastructure Cyber threats increasing CPMI-IOSCO PFMI & Annex F for CSPs Fighting financial crime, monitoring & control, compliance recommendations. FATF, Basel III, FATCA, FCPA, AML, Sanctions Regulation & compliance CPMI-IOSCO Principles Mandatory OTC clearing (collateral management challenge) Securities regulatory reporting T+2 APAC Securities 2020 strategy - 2016 plan

Scope of Regulations in Europe Derivatives EMIR 2014 Money Market MMSR/ SMMD Mid 2016 Equity MiFID II/ MIFIR Jan 2018

EU Regulations Adopting ISO 20022 for Regulatory Reporting EMIR Money Market (MMSR) Money Market (SMMD) MiFID II / MiFIR Scope Financial and non-financial counterparties OTC and listed derivatives 53 Euro banks (wave 1) Euro Money Market transactions 12 GBP Banks GBP Money Market transactions Investment firms All (but SFTs, primary markets, give-ups) Information to be reported Transactions Positions valuation Collateral amounts Transactions Transactions Transactions Reference data Addressee Trade Repository ECB NCBs (DE/FR/IT/ES) BOE Approved Reporting Mechanism (ARM) National Competent Authority Format Proprietary format Consultation feedback: ISO 20022 ISO 20022 ISO 20022 ISO 20022 Frequency & Deadline Daily D+1 at the latest Daily D+1 07:00 at the latest Daily D+1 07:00 at the latest Daily D+1 at the latest

Data Exchange between TRs and authorities Proposal maintained: An XML template based on ISO 20022 methodology Harmonised Ensures correct and harmonised handling of communications Compliance High level of compliance with envisaged legal requirements Standardised output, data exchange, performance and extensibility Basis of Assessment Operation Positive improvements to STP, transparency, regulatory compliance and interoperability Expected to reduce long-term costs to bot TR and authorities Facilitative Facilitate daily data collection and timely processing APAC Securities 2016 detailed Source: Draft technical standards on access to data and aggregation and comparison of data across TR under Article 81 of EMIR, ESMA, April 2016

Regionalisation Initiatives Progressing using ISO 20022 IM B SMI C C B

Trade Reporting - APAC Progress at a Glance Staggered and at different stages of development CN CFETS (PBOC) – IRS, RMB FX, credit CSIS -SCM and FMCs to report OTC derivatives trades JP JFSA (direct) or DTCC OTC forwards, options, swaps, CDS North Korea Japan South Korea KR BOK-FSC CR, IRD, FX and EQD FSC designate KRX as TR (2015) IN RBI – CCIL FXD, IRS and CR China Nepal Taiwan Bhutan Bangladesh Philippines India Laos Hong Kong Myanmar Thailand MY Consultation issued in 2014 by BNM, SC and PIDM CR, IRD, FX, EQD, Comm and Islamic Derivs Vietnam TW FSC – Gretai CR, IRD, FXD, EQD and ComnD Maldives Cambodia Brunei Sri Lanka Malaysia Singapore SG MAS – DTCC (LFTR) CR, IRD, FX Indonesia HK HKMA&SFC – HKTR (DTCC as agent) FXD and IRS East Timor Australia Australia AU TR rules phased in since 2013 DTCC, CME IRS, FXD, EQD, CommD In progress Live As at Jan 2016. Various sources.

“Recipe” for Standards Why ISO 20022 for Reporting? Preferred Data Model “Recipe” for Standards Universal Language Adopted Globally Ideal for harvest, aggregate and interpret data Unambiguous, clear and equivalent irrespective of its source Encourage consistent data submission Is syntax agnostic but recommend XML Has a development methodology, a registration process, and a centralised, machine processable “e-repository” Open methodology for developing new financial messaging standards Open methodology for harmonising existing financial messaging standards Can be shared by business, legal and technical experts Simplifies interpretation and implementation Open and transparently governed standard Platform neutral, free to download, implement and extend Allows for characters such as Chinese, Thai and etc Widely adopted in the financial industry – central bank and market infrastructures US – US payments, DTCC, Etc, EU – T2S, SEPA, ESMA, Etc. APAC – CNAPS, JASDEC, SGX, ASX, Etc. APAC Securities 2016 detailed

Towards a harmonised use of ISO 20022 ISO 20022 Harmonisation Charter Publish your standards information in a consistent format on MyStandards [messages/versions used, release timeline, market practice] Publication Adhere to/promote Global market practice Align with best practices for version management Adherence Market Practice Information sharing Share information on ISO 20022 messages, versions and market practice

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