1. Edward de Courcy-Ireland Regional Manager - Securities
Central Securities Depositories, ISO Standards and SWIFT Automation today and for the future
Edward de Courcy-Ireland
Regional Manager - Securities
4th November 2006
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2. Agenda SWIFT update Securities Market Infrastructures using SWIFT
ISO Standards
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3. SWIFT - September 2006 2.5 billion messages per year 7,940 customers
208 countries
Average daily traffic 11.2 million messages
Peak day of 13.1 million messages, 29 Sep 2006
Availability of SWIFTNet %
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4. FIN Messaging Traffic Growth
FIN Growth by Market – August 2006 YTD
(Millions of messages)
FIN Category
2005 YTD Actual
2006 YTD Actual
Growth from 2005
Payments
641
692
7.2%
Securities
555
689
23.2%
Treasury
106
120
12.7%
Trade Finance 31
1.8%
System 8
-3.4%
Category 9
301
337
11.3%
TOTAL
1,641
1,877
13.6%
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5. Pricing and traffic Harnessing economies of scale
Price
(EURcent/msg)
Traffic
(Millions of messages) 50
2500 45
Traffic
2000 40 35
1500 30 25
1000 20
Price 15
500 10 5
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
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6. Agenda SWIFT update Securities Market Infrastructures using SWIFT
ISO Standards
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7. Securities strategic priorities (set by the industry)
Market space
Strategic priorities
Equity and fixed income
Pre-trade / Trade
Succeed in Pre trade /Trade messaging
Be the messaging platform of choice for market
infrastructures
Drive Industry towards Standards convergence
Post Trade / Pre-settlement
Platform of choice for Post-trade / Pre-set.
Clearing and Settlement
Grow traffic in Clearing and Settlement and Custody services
Custody Services
Investment funds
Become messaging platform of choice
for the Funds industry
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8. A world without SWIFT Different Standards, Messaging & Connectivity
User
Market
Infrastructures
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9. Single Window from SWIFT Reusing Standards, Messaging and Connectivity
User
Market
Infrastructures
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10. Securities Market Infrastructures Outsource Messaging & Network
has full
vertical
implementation
Messaging
Mechanisms
Network
Vendor
Infrastructure
outsources
Physical
network
Messaging
Mechanisms
Network
Messaging&
Vendor
Infrastructure
outsources
& network
Focusing on
core values
Outsourcing
connectivity to
specialist
Messaging
Mechanisms
Physical
Network
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11. SWIFT’s messaging services
Financial institutions
Infrastructures and service providers
SWIFTNet FIN
SWIFTNet InterAct
SWIFTNet FileAct
1. SWIFT has provided the financial industry with a value-added financial messaging service (FIN) since The initial focus of FIN was to enable banks to automate the exchange payment instructions in a highly secure, reliable and standard way.
2. Over the years, SWIFT made FIN evolve to answer requirements from Market infrastructures such as real-time gross settlement systems (RGGS). FIN evolved with FIN Copy enabling to link banks and central payment systems. Later in the 90’s, RTGS systems requested SWIFT to provide real-time messaging in order for them to provide their participants with an interactive access to their central systems. SWIFTNet was initially developed for that purpose.
3. SWIFTNet complements FIN with additional messaging services. Thanks to SWIFTNet, SWIFT is now capable of supporting content-transparent interactive messaging and file transfer between financial institutions. RTGS systems are implementing SWIFTNet to enable real-time account enquiries and transaction input through InterAct (eg, managing payment queues), reporting through FileAct and browser-based monitoring through Browse.
SWIFTNet Browse
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12. Securities Market Infrastructures – SWIFTNet FIN
Argentina
Caja de Valores
Australia
Australian Stock Exchange SFE – Austraclear
Austria
OeKB
Belgium
CIK Euroclear Bank MTS National Bank of Belgium
Brazil
CBLC
Canada
CDS
Croatia
Sredisnja Depositarrna Agencija
Denmark
OMX VP
Dubai
DIFX
Estonia
Estonian Securities Depository OMX
Finland
NCSD Finland – APK OMX
France
Euroclear France Euronext Paris – MATIF MTS
Germany
Eurex Clearing Clearstream Banking AG MTS
Greece
Central Securities Depository Bank of Greece
Hong Kong
HK Futures Exchange Hong Kong Monetary Authority SEHK Options Clearing House
Hungary
Keler
Israel
Tel Aviv Stock Exchange
Italy
CCG Monte Titoli
Japan
JSCC Tokyo Stock Exchange
Kazakhstan
Kazakhstan Stock Exchange
Korea
Securities Depository
Latvia
Bank of Latvia Central Depository OMX
Lebanon
Midclear
Lithuania
OMX
Luxemburg
Clearstream Banking SA
Mexico
S.D. Indeval
Netherlands
Euroclear Nederland MTS
Norway
VPS
Poland
National Depository for Securities – KDPW
Portugal
Banco de Portugal – SITEME MTS
Russian Federation
Depository Clearing Company The National Depository Center
Singapore
Central Depository Singapore Exchange
Slovakia
Bank of Slovakia
Slovenia
Central Securities Clearing Corporation – KDD
South Africa
STRATE JSE Securities Exchange
Spain
Iberclear MEFF MTS
Sweden
NCSD Sweden – VPC OMX
Switzerland
SIS SIS x-clear
Taiwan
Securities Central Depository
Thailand
Thailand Securities Depository
UK (& Ireland)
CREST LCH.Clearnet London Stock Exchange
USA
Chicago Mercantile Exchange Clearing Corporation DTCC Omgeo Options Clearing Corporation
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13. Banking Market Infrastructures
Albania
Algeria
Angola
Australia
Austria
Azerbaijan
Bahamas
Bahrain
Barbados
Belgium
Bosnia and Herzegovina
Botswana
Brazil
Bulgaria
Canada
Chile
CLS
Croatia
Denmark
East Caribbean
Egypt
EBA (EURO1/STEP1)
ECB (TARGET)
Eurosystem (TARGET2)
Fiji
Finland
France
Georgia
Germany
Ghana
Greece
Guatemala
Hong Kong
Hungary
Ireland
Italy
Jordan
Kenya
Kuwait
Latvia
Lebanon
Lesotho
Luxemburg
Malta
Mauritius
Namibia
Netherlands
New Zealand
Norway
Oman
Pakistan
Palestine
Philippines
Romania
Russian Federation
Singapore
Slovenia
South Africa
Spain
Sri Lanka
Sweden
Switzerland
Tanzania
Thailand
Trinidad and Tobago
Tunisia
Uganda
United Kingdom
United States
Venezuela
Zambia
Zimbabwe
Central African States
West African States
High-Value Payments
Countries
Live 67
Implementation 8
Planning 8
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14. Agenda SWIFT update Securities Market Infrastructures using SWIFT
ISO Standards
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15. SWIFTNet FIN: Settlement & Reconciliation Process
CSD
Trade
Date
Settlement
Date
MT 540-3
Settlement
Instruction
MT 548
Status of
Instruction
MT 537
Pending
Transactions
MT 544-7
Confirmation
of Settlement
MT 535
Statement of Holdings
MT 536
Statement of Transactions
CSD participant
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16. SWIFTNet FIN: CA Message flow - non elective event
Stock Exchange/CSD Ex
Date
Record Date
Payment Date
Announcement
MT 564
Notification
of Announcement
MT 564
Notification of
Entitled Position
MT 566
Confirmation
of account activity
CSD participant
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17. SWIFTNet FIN: CA Message flow - elective event
Stock Exchange/CSD
Ex/
Record
Date
Announcement
of offer
Deadline Date
Receipt of
new shares
Response period
MT 565
Instruction
MT 567
Status of
Instruction
MT 564
Notification
of Offer
MT 564
Notification
of Ex date
Entitlement
MT 566
Confirm of account
activity
MT 564
Notification
Entitlement Calculation
CSD participant
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18. SWIFTNet FIN: Post-trade pre-settlement matching (model I)
CSD
MT 540-3
Settlement
Instruction
MT 540-3
Settlement
Instruction
Matching utility
MT 515
Trade
confirmation
MT 515
Trade
confirmation
MT 509
Trade status
Receiver
Deliverer
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19. SWIFTNet FIN: Post-trade pre-settlement matching (model II)
CSD
Matching engine
MT 540-3
Settlement
Instruction
MT 540-3
Settlement
Instruction
MT 548
Status of
instruction
Receiver
Deliverer
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20. Typical usage by Securities Market Infrastructures of all SWIFTNet Messaging services
FIN
FileAct
InterAct
Browse
Putting legacy
(domestic standards) on file transfer on
SWIFTNet
(proprietary formats or
ISO or
ISO 20022)
Putting legacy screen-based access on SWIFTNet
Putting legacy
messaging on
SWIFTNet
(proprietary formats or
ISO or
ISO 20022)
Proxy Voting
Instructions
Confirmations
Status
Statements
CA reporting
CA confirms
Coll Mgmt
ISO 15022
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21. Securities market infrastructures – SWIFTNet InterAct, FileAct and Browse
Belgium
Euroclear Bank
EUCLID File Transfer EUCLID PC / Server
France
Euroclear France
E2A
Italy
Monte Titoli
Express II
Luxemburg
Clearstream International
Creation Direct
Netherlands
Euroclear Nederland
Direkte Verbinding
Spain
Iberclear
Ventana Unificada de Communicaciones (VUC)
United Kingdom
CRESTCo
SWIFTNet CREST
USA
DTCC
Deriv/SERV
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22. Who is listening? ECSDA (EU) ACSDA (Americas) ACG (APAC) AECSD (CIS)
and you, the AMEDA
and a date for your diaries
Boston October 1-5, 2007
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23. Accessing CSDs through SWIFT: Market needs
UNDER DISCUSSION
One standardised solution
Interfaces
Messaging
Security
Giovannini compliant and EU integration future proof
Complete range of communication channels
ISO compliant standards (15022 and 20022)
Uniform service (support, liability,…)
Value-added services
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24. Thank you for your attention
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25. Central Securities Depositories, ISO Standards and SWIFT Automation today and for the future
John Falk
19 October 2006
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26. Back-up
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27. New SWIFTSolution: SWIFTNet CSDAccess
UNDER DISCUSSION
CSD participants
CSDs
1-by-1 messaging channel
File transfer channel
Operator-based access
ISO 15022
ISO 20022
Potential added value:
Notary function Copy function to regulators MT/MX translation …
...
Global solution – Giovannini compliant
and EU Harmonisation aligned
...
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28. Agenda SWIFT update Securities MIs using SWIFT EU C&S harmonisation
New SWIFTSolution: SWIFTNet CSDAccess
SN Kits: Connectivity for small users
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29. SWIFT usage for local intermediaries
Local CSD, Central Bank & settlement agents
International Cash Correspondents
Global Custodians
International B/Ds
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30. Making SWIFT cost-effective
Services
Security
Messaging soft
Special
SN Kits
for specific solutions
Complete set-up
Connectivity soft
Network
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31. Market Infrastructure CUGs: A closed community of users on SWIFT
Service participant
SWIFT user
SWIFT user
“Service Participants within a Closed User Group”
Service participant
Market infrastructure
SWIFT member
SWIFT user
If we combine the 2 previous models (hub-and-spoke, and many-to-many), we get to the above model.
In effect, a Closed User Group extends the scope of SWIFT services for SWIFT Members that they can offer to their clients, which may or not be financial institutions.
The benefits of this include
re-using investments
extending the SWIFT service levels & ‘outsourcing’ service management of the messaging platform
extending the security right out to the Service Participant.
etc
Service participant
SWIFT user
SWIFT user
Through Closed User Groups, the administrator takes full control: which messaging options, which billing option, who has access, …
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32. The SWIFT community banks found SWIFT - broker/dealers
- central depositories & clearing institutions
- exchanges
securities market data providers
1973
1987
2004
travellers cheque issuers
fund administrators
2002
1988
money brokers
MA-CUGs
1989
2001
- registrars & transfer agents
- custody providers
- trust or fiduciary services companies
2000
1990
securities MIs
1999
1992
- treasury counterparties
- treasury ETC service providers
investment managers
1998
1995
1996
- payments MIs
proxy voting agencies
non-shareholding financial institutions
trading institutions
treasury securities ETC service providers
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33. Using SWIFT to communicate with securities market infrastructuresIM
B/D SC SA
Order GC
MU / ETCP
Exchange
CH / CCP
(I)CSD CM
Trade
Benefits for system owner
Mission critical levels of
> reliability, security and support
Time to market is
> short
Low entrance barriers for
> remote members
Access to all types of domestic and international players
> increased internationalisation of client activities
Global standards ISO 15022, XML, FIX for
> trading > clearing > settlement > custody
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34. Using SWIFT to communicate with securities market infrastructuresIM
B/D SC SA
Order GC
MU / ETCP
Exchange
CH / CCP
(I)CSD CM
Trade
Benefits for system member
Technical standardisation: single window access to domestic and international systems through one interface
> cost efficiency
Mission critical levels of
> reliability, security and support
Business standardisation: ISO 15022, XML, FIX
> Market Practice standardisation > straight-through processing
> Real-time DVP > shorter settlement cycles > risk reduction
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