Slide 1 ISO_20022_LV_v39 ISO (UNIFI) ISO Introduction to ISO – Universal financial industry message scheme

Slide 2 ISO_20022_LV_v39 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

Slide 3 ISO_20022_LV_v39 The ISO value proposition (1/5) Objective To enable communication interoperability between financial institutions, their market infrastructures and their end-user communities Major obstacle Numerous overlapping standardisation initiatives looking at XML financial messages: MDDL, FIX, FinXML, VRXML, RIXML, XBRL, FpML, IFX, TWIST, SWIFT, RosettaNet, OAGi, ACORD, CIDX, etc.

Slide 4 ISO_20022_LV_v39 Proposed solution A single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives The ISO value proposition (2/5) ISO 20022

Slide 5 ISO_20022_LV_v39 Convergence into ONE standard is the long term objective…. The ISO value proposition (3/5) …but in the interim several standards need to coexist to enable quick response to competitive pressures and regulatory demands Source: John Mersberg, IBM Corporation

Slide 6 ISO_20022_LV_v39 Growth adds exponential complexity and expense… The ISO value proposition (4/5) RosettaNet OAGi 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) Source: John Mersberg, IBM Corporation

Slide 7 ISO_20022_LV_v39 Standardised implementation reduces cost, time to effect change and improves overall performance… Canonical message model = T rue process integration Reduced brittleness, faster to respond to change Shared message services – single/shared parser, message independent rules engine, etc. Unified monitoring / audit trail RosettaNet TWIST SWIFTIFX EDIFACT Canonical Message Model (i.e. ISO 20022) ISO aims at long term convergence, while facilitating short term coexistence… 14 interfaces = n * 2 Source: John Mersberg, IBM Corporation The ISO value proposition (5/5) OAGi Proprietary format

Slide 8 ISO_20022_LV_v39 ISO Illustrating business modelling All institutions have their own sets of data objects ISO standardises common data objects… Account Order Date …and groups them into ‘syntax- neutral’ message models, which... Order Date XML ISO … can be ‘transformed’ in message formats in the desired syntax FIX EDIFACT

Slide 9 ISO_20022_LV_v39 The ISO recipe Major ingredients (1/2):  Modelling-based standards development  Syntax-specific design rules for XML  Reverse engineering approach - Syntax-independent business standard - Validated by the industry - Predictable and ‘automatable’ - Protect standard from technology evolution - Protect industry investment and ease interoperability - Prepare for future migration

Slide 10 ISO_20022_LV_v39 The ISO recipe Major ingredients (2/2):  Development / registration process  Repository on the ISO website - Clearly identified activities and roles - Business experts and future users involved upfront - Technical experts involved when required - Business Process Catalogue & Data Dictionary -Outside of official standard (maintained by registration bodies)

Slide 11 ISO_20022_LV_v39 The five parts of ISO International Standard: Overall methodology and format specifications for inputs to and outputs from the ISO Repository International Standard: Roles and responsibilities of the registration bodies Technical Specification: ISO modelling guidelines Technical Specification : ISO XML design rules Technical Specification: ISO reverse engineering Copies can be obtained from Part 1: Part 2: Part 3: Part 4: Part 5:

Slide 12 ISO_20022_LV_v39 Communities of users or organisations that want to develop ISO compliant messages to support their financial transactions Submitting organisations Could be ACBI Clearstream CLS EPAS Euroclear FIX FpML IFX ISITC ISTH MDDL OAGI Omgeo SWIFT TWIST TBG5 Creation of a new set of ISO messages to support a specific transaction Update of existing ISO message sets to accommodate the evolution of the business Reasons ISO – The actors (1/2) Etc.

Slide 13 ISO_20022_LV_v39 ISO – The actors (2/2)  Registration Management Group, RMG –Overall governance / court of appeal –Approve business justifications for new standards –Create Standards Evaluation Groups (SEGs)  Standards Evaluation Groups, SEGs –Represent future users of specific financial areas –Validate message standards  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_v39 ISO The registration process (1/3) Submitter Financial industry group or standards body Business justification Business justification RMG Project approval & allocation to a SEG SEG Endorsement of scope and developers Submitter & RA Development & provisional registration SEG Business validation RA Official registration and publication Repository Dictionary Catalogue Optional pilot testing or first implementers RMGmonitorsRMGmonitors Submitter & users

Slide 15 ISO_20022_LV_v39 ISO The registration process (2/3) Submitter Financial industry group or standards body Business justification Business justification RMG Project approval & allocation to a SEG SEG Endorsement of scope and developers Submitter & RA Development & provisional registration SEG Business validation RA Official registration and publication Repository Dictionary Catalogue Optional pilot testing or first implementers RMGmonitorsRMGmonitors Submitter & users Candidate ISO messages ISO messages

Slide 16 ISO_20022_LV_v39 ISO Standards Evaluation Groups ISTH Omgeo CLS SWIFT Euroclear ISITC ACBI Data Dictionary Business Process Catalogue ISO Financial Repository ISO Registration Management Group ISO Registration Authority ISO Users  Business models  Candidate ISO messages  Business justification  ISO messages ISO The registration process (3/3) Securities Payments Trade Services Forex Cards

Slide 17 ISO_20022_LV_v39 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 message schemas

Slide 18 ISO_20022_LV_v39 Continuing with today’s agenda ISO registration platform ISO 20022

Slide 19 ISO_20022_LV_v39  Approval of the international standard  Selection of the Registration Authority  Set-up of  Creation of Registration Management Group  Creation of the first Standards Evaluation Groups  Registration and publication of first ‘ISO messages’ ISO The deployment Ongoing: promotion to developers (standardisers, industry bodies) and users (vendors, end-users)

Slide 20 ISO_20022_LV_v39 ISO – How does it fit into the ISO structure? ISO Technical Committee TC68 Financial Services ISO RMG SEG Payments SEG Securities RA SEG FX RMG members nominated by P-member countries and A- liaison organisations TSG & SEG members nominated by all member countries and liaison organisations SC7 Banking SC4 Securities SC2 Security WG4 ISO Review SEG Trade Services TSG SEG Cards

Slide 21 ISO_20022_LV_v39  Members - 52 senior managers from: –19 countries: AT, AU, BR, CA, CH, DE, DK, FI, FR, GB, IT, JP, KR, LU, NL, NO, SE, US, ZA. –9 liaison organisations: Clearstream, Euroclear, FPL, FpML, ISITC, SWIFT, TWIST, UN/CEFACT/TBG5, VISA.  Convener: Gerard Hartsink, ABN Amro (NL); Vice-convener: Bob Blair, JPMorgan Chase (US); Secretary: Cynthia Fuller, X9 (US)  Meetings: twice a year  Key decisions: –Creation of five SEGs: Payments and Securities in 2005, Trade Services and Forex SEGs in 2006, Cards & Related Retail Financial Services in 2008 –Approval of 35 development projects ISO Registration Management Group

Slide 22 ISO_20022_LV_v39  Members – 42 experts –14 countries: AT, AU, CH, DE, DK, FI, FR, GB, IT, NL, NO, SE, US, ZA –5 liaison organisations: Euroclear, IFX, SWIFT, TWIST, UN/CEFACT/TBG5  Convener: Len Schwartz, ABN Amro (NL); Vice-convener: Bob Blair, JP Morgan Chase (US); Secretary: Deb Hjortland, FRB (US)  Approved: C2B payment initiation (SWIFT/ISTH), Interbank credit transfers and direct debits (SWIFT), Exceptions and investigations (SWIFT), B2C advice & statement (ISTH/ISITC)  Under evaluation: Payments maintenance 2009 (SWIFT, ISTH, ISITC)  Next: Change/verify account identification (GUF), E-mandates (SWIFT), Cash management (SWIFT), Creditor payment activation request (ACBI), Bank account management (SWIFT) ISO – The Payments SEG (1/3)

Slide 23 ISO_20022_LV_v39 ISO – The Payments SEG (2/3) Payments Credit transfer s covering instruments such as: Direct debits Cheque s covering actors such as: Private & corporate customers Financial institution s Central banks Clearing houses & RTG systems Payment ‘factories’

Slide 24 ISO_20022_LV_v39 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 Cash management between various actors:...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)

Slide 25 ISO_20022_LV_v39  Members – 59 experts –16 countries: AU, CA, CH, DE, DK, FI, FR, GB, JP, LU, NL, NO, SE, TR, US, ZA –7 liaison organisations: Clearstream, Euroclear, ISDA/FpML, ISITC, FISD/MDDL, FPL, SWIFT  Convener: Karla McKenna, Citigroup (US); Vice-convener: Didier Hermans, Euroclear; Secretary: Chad Spitler, BGI  Approved: Investment funds (SWIFT), Transaction regulatory reporting (SWIFT), Proxy voting (SWIFT), Issuer’s agents communication for CA (Euroclear)  Under evaluation: Pre-trade/trade (SWIFT/FPL), Fund processing passport report (SWIFT), Proxy voting maintenance 2009 (SWIFT)  Next: Total portfolio valuation statement (ISITC), Post-trade (Omgeo), Registration & holder identification (Euroclear), Market claims & automatic transformations (Euroclear), Corporate actions (SWIFT), Settlement & reconciliation (SWIFT), Securities issuance (Euroclear), Triparty collateral management (SWIFT), Alternate funds (SWIFT) ISO – The Securities SEG (1/3)

Slide 26 ISO_20022_LV_v39 Securities Equities covering instruments such as: Funds Fixed income covering actors such as: Investment managers, distributors, transfer agents, fund administrator s Broker / dealers Regulators Custodians Stock exchanges, ETC providers Deriva- tives Clearing houses, CCPs CSDs, ICSDs Market Data Providers Service bureaux ISO – The Securities SEG (2/3)

Slide 27 ISO_20022_LV_v39 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 Securities management Custody Collateral management Trade Initiation, pre- trade Trade, post- trade Clearing & settlemen t Securities Securities Issuance ISO – The Securities SEG (3/3)

Slide 28 ISO_20022_LV_v39 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 UML modelling of business processes and transactions  Uses XML as the syntax for the actual physical messages  Has a wider scope than ISO 15022, which is only for securities messages  Is in line with directions taken by other industries (UN/CEFACT) Looking at the advantages ISO brings over ISO Syntax independent business modelling is key to the ISO standard !

Slide 29 ISO_20022_LV_v39  Members – 26 experts –11 countries: AU, CA, CH, FR, GB, NL, NO, SE, TR, US, ZA –3 liaison organisations: FPL, ISITC, SWIFT  Convener: Ludy Limburg, ABN Amro (NL); Vice-convener: Tony Smith, JP Morgan Chase (UK); Secretary: Joshua Derrick, SWIFT  Kick-off meeting: in September 2006  Approved: Forex notifications (CLS) ISO – The FX SEG (1/3)

Slide 30 ISO_20022_LV_v39 Foreign eXchange Spot covering instruments such as: Forward Swaps covering actors such as: Investment managers Hedge funds Dealers Custodians CLS and CLS settlement members Currenc y Options Industry association s (ISDA) Applicatio n providers Money brokers Trading portals, matching services providers ISO – The FX SEG (2/3)

Slide 31 ISO_20022_LV_v39 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 ISO – The FX SEG (3/3)

Slide 32 ISO_20022_LV_v39  Members – 26 experts –13 countries: AU, CA, CH, DE, DK, FI, FR, GB, IS, IT, NL, US, ZA –2 liaison organisations: ISITC, SWIFT  Convener: Katja Lehr, IFSA (US); Vice-convener: Dominique Pierre Barthares, BNP Paribas (FR); Secretary: Jim Wills, SWIFT  Kick-off meeting: in September 2006  Approved: Invoice Financing Request (ACBI), Trade Services Management (SWIFT)  Next: e-Invoice (UN/CEFACT/TBG5) ISO The Trade Services SEG (1/3)

Slide 33 ISO_20022_LV_v39 Trade Services Collection covering products… Letter of credit Documentar y credit …and services such as: Open Account Trading Reconciliation (A/R, A/P), remittance data Purchase order, transport documents Guarante e Invoice financing Pre/post- shipment financing & factoring e-Invoicing EBPP ISO The Trade Services SEG (2/3)

Slide 34 ISO_20022_LV_v39 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) Risk managemen t entities Private and corporate customers (treasurers ) Application providers Financial Institutions Trade Services ISO The Trade Services SEG (3/3)

Slide 35 ISO_20022_LV_v39  Members – 22 experts –9 countries: AT, AU, CH, DE, FI, FR, GB, NL, SE –3 liaison organisations: IFX, Mastercard, VISA  Convener: Chris Starr, APACS (GB); Vice-convener: Sheri Brandon, RBS (NL); Secretary: Reinhard Herwig, SRC (DE)  Kick-off meeting: on October 2008  Next: ATM interface for transaction processing and ATM management (IFX Forum), Card Payments Exchanges (EPAS Consortium) ISO – The Cards & Related Retail Financial Services SEG (1/3)

Slide 36 ISO_20022_LV_v39 Card issuer Cards and Retail Debit card covering instruments… Prepaid card Charge and credit card …and actors as: Card holder Acceptor (merchant, retailer) Acquirer Intermediar y agent Card scheme Hard- and Software providers ISO – The Cards & Related Retail Financial Services SEG (2/3)

Slide 37 ISO_20022_LV_v39 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. ISO – The Cards & Related Retail Financial Services SEG (3/3)

Slide 38 ISO_20022_LV_v39  Members – 22 experts –8 countries: BR, CN, FI, FR, GB, NL, US, ZA –4 liaison organisations: FPL, Mastercard, SWIFT, VISA  Convener: Derek Lasalle, JP Morgan Chase (US); Vice- convener: Paul Hojka, APACS (GB); Secretary: Kris Ketels, SWIFT  Kick-off meeting: on October 2008  Mission: help RMG, RA, SEGs and Submitting Organisations with technical matters ISO – Technical Support Group

Slide 39 ISO_20022_LV_v39 Continuing with today’s agenda Cross-industry harmonisation ISO 20022

Slide 40 ISO_20022_LV_v39  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 repository of core components Harmonising across all industries with UN/CEFACT Goal is to establish interoperability between ISO and UN/CEFACT repositories United Nations/CEFACT – Centre for trade facilitation and e-business

Slide 41 ISO_20022_LV_v39  2004: –TC68, TBG5 and SWIFT sign a cooperation agreement to investigate alignment in line with the objectives of the ‘MoU on e-Business’ –A workplan is agreed between the signatories  2005: –Recommendation for alignment of methodologies –Trial submission from ISO to UN/CEFACT  2006: –WG4 takes over technological alignment  2007: –First official submission from ISO to UN/CEFACT –Project of submission from UN/CEFACT to ISO  2008: –Customer-to-bank payment components harmonised and accepted in UN/CEFACT core component library Harmonisation between ISO and UN/CEFACT

Slide 42 ISO_20022_LV_v39 ISTH Omgeo CLS SWIFT Euroclear ISITC ACBI Core Components Common Business Processes Data Dictionary Business Process Catalogue UN/CEFACT Registry/ Repository ISO Financial Repository ISO Registration Management Group UN / CEFACT (All Industries) ISO Registration Authority ISO Users Business Requests Message Models TBG5 Finance and TBG17 Harmo- nisation A single ISO-UN/CEFACT approach ISO Standards Evaluation Groups Securities Payments Trade Services Forex Cards

Slide 43 ISO_20022_LV_v39 Continuing with today’s agenda Interoperability within the financial industry - securities ISO 20022

Slide 44 ISO_20022_LV_v39 Messages Indication Quotation Order Execution (Pre-)Allocation Confirmation Settlement Reconciliation ISO Trade ISO FIX Two overlapping standards to support the end-to-end transaction FIX

Slide 45 ISO_20022_LV_v39 Executing Party Trade Counterparty Ordering Party Trade Counterparty Ordering Party Execution (FIX) Order (FIX) Execution (FIX) Order (ISO 15022) Execution (ISO 15022) Order (FIX) Order (ISO 15022) Execution (ISO 15022) Working towards co-existence and convergence

Slide 46 ISO_20022_LV_v39 Single Order Single Execution ISO New Order - single Execution Report MT 502 MT 513 FIXISO Order Execution Working towards co-existence and convergence

Slide 47 ISO_20022_LV_v39 FIX Order to buy/sell Security Quantity Limit price Expiry date Account USD Executed quantity Executed price Execution date Settlement date ORDER EXECUTION 32 = = 110; 15 = USD 75 = YYYYMMDD 64 = YYYYMMDD 54=1 22 = 4; 48 = 38 = = 112; 40 = = YYYYMMDD 1 = myAccount ISO :22F::BUSE//BUYI :35B:: :36B::ORDR//UNIT/1000 :90B::LIMI//ACTU/USD112 :98A::EXPI//YYYYMMDD :97A::CASH//myAccount :36B::CONF//UNIT/750 :90B::DEAL//ACTU/USD110 :98A::TRAD//YYYYMMDD :98A::SETT//YYYYMMDD Working towards co-existence and convergence ISO Side/BUYI ISIN/ OrderQuantity3/Quantity Order3/OrderPrice/Price1 OrderExpiryDate AccountIdentification ExecutedTradeQuantity ExecutedTradePrice TradeDate SecuritiesSettlement1/Date

Slide 48 ISO_20022_LV_v39 Executing Party Trade Counterparty Ordering Party Trade Counterparty Ordering Party Execution (FIX) Order (FIX) Execution (FIX) Order (ISO 15022) Execution (ISO 15022) Order (FIX) Order (ISO 15022) Execution (ISO 15022) Execution (FIX) Order (FIX) Execution (FIX) Order (ISO 20022) Execution (ISO 20022) Order (FIX) Order (ISO 20022) Execution (ISO 20022) Working towards co-existence and convergence

Slide 49 ISO_20022_LV_v39 Continuing with today’s agenda Interoperability within the financial industry - payments ISO 20022

Slide 50 ISO_20022_LV_v39 Working towards interoperability and convergence Let us look at one 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 51 ISO_20022_LV_v39 …or banks may need to accept many formats… Bank A Proprietary format IFX format Customer ACustomer CCustomer B SWIFT MT 101 Working towards interoperability and convergence

Slide 52 ISO_20022_LV_v39 SWIFT MT ISO Core Payment Kernel model The reverse engineering produces a canonical ISO message model and ‘convergence tables’ Proprietary TWIST OAGi IFX Working towards interoperability and convergence

Slide 53 ISO_20022_LV_v39 Adopting ISO facilitates convergence and co-existence IFX MT 101 Working towards interoperability and convergence ISO Core Payment Kernel Core Payment Kernel IFX MT 101

Slide 54 ISO_20022_LV_v39 & & uestions A nswers