1. Slide 1 Introduction to ISO 20022 – Universal financial industry message scheme ISO_20022_SV_v47 ISO 20022

2. Slide 2 Agenda  ISO 20022: –Value proposition –The standard –The actors –The registration process –The Repository  ISO 20022 registration platform  Cross industry harmonisation  Interoperability within the financial industry  Q&A ISO_20022_SV_v47

3. Slide 3 The ISO 20022 value proposition (1/5) Objective To enable communication interoperability between financial institutions, their market infrastructures and their end-user communities ISO_20022_SV_v47 Major obstacle Numerous overlapping standardization initiatives looking at XML financial messages: MDDL, FIX, FinXML, VRXML, RIXML, XBRL, FpML, IFX, TWIST, SWIFT, RosettaNet, OAGi, ACORD, CIDX, etc.

4. Slide 4 ISO_20022_SV_v47 The ISO 20022 value proposition (2/5) Proposed solution A single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives ISO 20022

5. Slide 5 ISO_20022_SV_v47 The ISO 20022 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

6. Slide 6 ISO_20022_SV_v47 The ISO 20022 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…

7. Slide 7 ISO_20022_SV_v47 The ISO 20022 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…

8. Slide 8 ISO 20022 Illustrating business modelling ISO_20022_LV_v46 All institutions have their own sets of data objects …and groups them into ‘syntax- neutral’ message models, which... Order Date XML ISO 15022 … can be ‘transformed’ in message formats in the desired syntax FIX ASN.1 ISO standardizes common data objects… Account Order Date ISO_20022_SV_v47

9. Slide 9 The ISO 20022 recipe Main ingredients (1/2):  Modelling-based standards development –Syntax-independent business standard –Validated by the industry  Syntax-specific design rules for XML –Predictable and ‘automatable’ –Protect standard from technology evolution  Reverse engineering approach –Protect industry investment and ease interoperability –Prepare for future migration ISO_20022_SV_v47

10. Slide 10 The ISO 20022 recipe Main ingredients (2/2): ISO_20022_SV_v47  Development / registration process –Clearly identified activities and roles –Business experts and future users involved upfront –Technical experts involved when required  Repository on the ISO 20022 website –Business Process Catalogue & Data Dictionary –Outside of official standard (maintained by registration bodies) www.iso20022.org

11. Slide 11 The five parts of ISO 20022 Part 1: Part 2: Part 3: Part 4: Part 5: International Standard: Overall methodology and format specifications for inputs to and outputs for the ISO 20022 Repository International Standard: Roles and responsibilities of the registration bodies Technical specification: ISO 20022 modelling guidelines Technical specification: ISO 20022 XML design rules Technical specification: ISO 20022 reverse engineering ISO_20022_SV_v47 Copies can be obtained from www.iso.orgwww.iso.org

12. Slide 12 ISO 20022: The actors (1/2) ISO_20022_SV_v47 Submitting organisations Reasons Could be Communities of users or organisations that want to develop ISO 20022 compliant messages to support their financial transactions Creation of a new set of ISO 20022 messages to support a specific transaction Update of existing ISO 20022 message sets to accommodate the evolution of the business CBI Consortium Clearstream CLS EPAS Euroclear FIX FpML IFX ISITC ISTH MDDL OAGI Omgeo SWIFT TWIST TBG5 4CB Etc.

13. Slide 13 ISO_20022_SV_v47 ISO 20022: The actors (2/2)  Registration Management Group, RMG –Overall governance, court of appeal –Approve business justifications for new standards –Create Standard Evaluation Groups (SEGs)  Standards Evaluation Groups, SEGs –Represent future users in specific financial areas –Validate candidate message standards  Registration Authority, RA –Ensure compliance –Maintain and publish ISO 20022 Repository  Technical Support Group, TSG –Assist RMG, SEGs, RA and submitting organisations

14. Slide 14 ISO_20022_SV_v47 ISO 20022 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 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 www.iso20022.org RMGmonitorsRMGmonitors Submitter & users

15. Slide 15 ISO_20022_SV_v47 ISO 20022 The registration process (2/3) www.iso20022.org RMGmonitorsRMGmonitors Submitting organisation 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 Submitter & users Candidate ISO 20022 messages ISO 20022 messages

16. Slide 16 ISO_20022_SV_v47 Registration Management Group Registration Authority Standards Evaluation Groups Securities Payments Trade services Forex Cards Business justification Business models Candidate ISO 20022 messages ISO 20022 messages ISTH Omgeo CLS SWIFT Euroclear CBI ISO 20022 users ISO 20022 Financial Repository Data Dictionary Business Process Catalogue www.iso20022.org 4 2 3 1 ISO 20022 The registration process (3/3)

17. Slide 17 ISO 20022 - 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 ISO_20022_SV_v47 www.iso20022.org

18. Slide 18 ISO 20022 ISO 20022 Registration Platform ISO_20022_SV_v47 Continuing with today’s agenda…

19. Slide 19 ISO 20022 - The Deployment  Approval of the international standard  Selection of the Registration Authority  Set-up of the www.iso20022.org  Creation of Registration Management Group  Creation of the first Standards Evaluation Groups  Registration and publication of first ‘ISO 20022 messages’ ISO_20022_SV_v47 Ongoing: promotion to developers (standardizers, industry bodies) and users (vendors, end-users)

20. Slide 20 ISO 20022 How does it fit into the ISO structure? ISO_20022_SV_v47 ISO Technical Committee TC68 Financial Services ISO 20022 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 20022 Review SEG Trade Services TSG SEG Cards

21. Slide 21 ISO 20022 Registration Management Group (RMG)  Members - 64 senior managers from: –19 countries: AT, AU, BR, CA, CH, DE, DK, FI, FR, GB, IT, JP, KR, LU, NL, NO, SE, US, ZA. –12 liaison organisations: Clearstream, ECB, Euroclear, FISD, FPL, FpML, IFX, 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 in 2006, Cards & Related Retail Financial Services in 2008 – Approval of 36 development projects ISO_20022_SV_v47

22. Slide 22 ISO 20022 – The Payments SEG (1/3)  Members – 52 experts –15 countries: AT, AU, CH, DE, DK, FI, FR, GB, IT, JP, 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: E-mandates (SWIFT)  Next: Change/verify account identification (GUF), Cash management (SWIFT), Creditor payment activation request (CBI Consortium), Bank account management (SWIFT) ISO_20022_SV_v47

23. Slide 23 ISO 20022 – The Payments SEG (2/3) ISO_20022_SV_v47 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 Payment ‘factories’

24. Slide 24 ISO_20022_SV_v47 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 20022 – The Payments SEG (3/3) Cash Management between various actors:

25. Slide 25 ISO 20022 – The Securities SEG (1/3)  Members – 69 experts –18 countries: AU, BR, CA, CH, DE, DK, FI, FR, GB, IE, JP, LU, NL, NO, SE, TR, US, ZA –8 liaison organisations: Clearstream, ECB, Euroclear, ISDA/FpML, ISITC, FISD, FPL, SWIFT  Convener: Kevin Wooldridge, Standard Logic (UK); 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), Corporate actions (SWIFT), Settlement & reconciliation (SWIFT)  Next: Total portfolio valuation statement (ISITC), Post-trade (SWIFT/Omgeo), Registration & holder identification (Euroclear), Market claims & automatic transformations (Euroclear), Securities issuance (Euroclear), Triparty collateral management (SWIFT), Alternative funds (SWIFT), Modification/replace & allegement response (SWIFT), Target2-Securities (SWIFT/Bundesbank on behalf of 4CB) ISO_20022_SV_v47

26. Slide 26 ISO 20022 – The Securities SEG (2/3) ISO_20022_SV_v47 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 Deriva- tives Clearing houses, CCPs CSDs, ICSDs Market Data Providers Custodians Service bureaux

27. Slide 27 ISO 20022 – The Securities SEG (3/3) ISO_20022_SV_v47 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

28. Slide 28 Looking at the advantages ISO 20022 brings over ISO 15022 ISO 20022:  Builds on the ISO 15022 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) ISO_20022_SV_v47 Syntax independent business modelling is key to the ISO 20022 standard !

29. Slide 29  Members – 27 experts –12 countries: AU, CA, CH, FI, FR, GB, NL, NO, SE, TR, US, ZA –4 liaison organisations: FISD, 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_20022_SV_v47 ISO 20022 – The FX SEG (1/3)

30. Slide 30 ISO 20022 – The FX SEG (2/3) ISO_20022_SV_v47 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

31. Slide 31 ISO_20022_SV_v47 ISO 20022 – 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

32. Slide 32  Members – 27 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: Peter Potgieser, ABN Amro (NL); Secretary: Jim Wills, SWIFT  Kick-off meeting: in September 2006  Approved: Invoice Financing Request (CBI Consortium), Trade Services Management (SWIFT)  Next: e-Invoice (UN/CEFACT/TBG5) ISO_20022_SV_v47 ISO 20022 The Trade Services SEG (1/3)

33. Slide 33 ISO 20022 The Trade Services SEG (2/3) ISO_20022_SV_v47 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

34. Slide 34 ISO 20022 The Trade Services SEG (3/3) ISO_20022_SV_v47 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

35. Slide 35 ISO 20022 – The Cards & Related Retail Financial Services SEG (1/3)  Members – 22 experts –9 countries: AT, AU, CH, DE, FI, FR, GB, SE, US –3 liaison organisations: IFX, Mastercard, VISA  Convener: Chris Starr, APACS (GB); Vice-convener: vacant; Secretary: Reinhard Herwig, SRC (DE)  Kick-off meeting: on 23-24 October 2008  Next: ATM interface for transaction processing and ATM management (IFX Forum), Card Payments Exchanges (EPAS Consortium) ISO_20022_SV_v47

36. Slide 36 ISO 20022 – The Cards & Related Retail Financial Services SEG (2/3) ISO_20022_SV_v47 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

37. Slide 37 ISO 20022 – The Cards & Related Retail Financial Services SEG (3/3) ISO_20022_SV_v47 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.

38. Slide 38 ISO 20022 – Technical Support Group  Members – 25 experts –10 countries: BR, CH, CN, FI, FR, GB, JP, 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 23-24 October 2008  Mission: help RMG, RA, SEGs and Submitting Organisations with technical matters ISO_20022_SV_v47

39. Slide 39 Continuing with today’s agenda… ISO_20022_SV_v47 ISO 20022 Cross-industry harmonisation

40. Slide 40 ISO_20022_SV_v47 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 20022 and UN/CEFACT repositories United Nations/CEFACT – Centre for trade facilitation and e-business

41. Slide 41  2004: TC68, TBG5 and SWIFT sign a MoU to investigate harmonisation  2005: Trial submission from ISO 20022 to UN/CEFACT  2006: ISO TC68/WG4 takes over technological alignment  2007: –First official submission from ISO 20022 to UN/CEFACT –Project of submission from UN/CEFACT to ISO 20022  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’ ISO_20022_SV_v47 Harmonisation between ISO and UN/CEFACT

42. Slide 42 ISO_20022_SV_v47 ISO 20022 Registration Management Group ISO 20022 Registration Authority ISO 20022 Standards Evaluation Groups Securities Payments Trade services Forex Cards TBG5 Finance and TBG17 Harmo- nisation ISTH Omgeo CLS SWIFT Euroclear CBI ISO 20022 users ISO 20022 Financial Repository Data Dictionary Business Process Catalogue www.iso20022.org A single ISO-UN/CEFACT approach UN/CEFACT Registry/Repository Core Component Library Common Business Processes UN / CEFACT (all industries) Business models Candidate ISO 20022 messages

43. Slide 43 ISO_20022_SV_v47 Continuing with today’s agenda Interoperability within the financial industry ISO 20022

44. Slide 44 Working towards interoperability and convergence ISO_20022_SV_v47 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

45. Slide 45 ISO_20022_SV_v47 …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

46. Slide 46 ISO_20022_SV_v47 SWIFT MT The reverse engineering produces a canonical ISO 20022 message model and ‘convergence tables’ Proprietary TWIST OAGi IFX Working towards interoperability and convergence ISO 20022 Core Payment Kernel model

47. Slide 47 ISO_20022_SV_v47 Adopting ISO 20022 facilitates convergence and co-existence IFX MT 101 Working towards interoperability and convergence ISO 20022 Core Payment Kernel Core Payment Kernel IFX MT 101

48. Slide 48 ISO_20022_SV_v47 & & uestions A nswers iso20022ra@iso20022.org www.iso20022.org