1. Introduction to SWIFT FIRMA Conference
Dennis Goodenough Senior Business Manager, SWIFT
18 April 2011

2. Agenda Overview Securities Payments and cash management Q & A History
Governance
Membership
Organization
Oversight
Products
Figures
Standards
Securities
Payments and cash management
Q & A
Introduction to SWIFT - FIRMA - 18 April 2011

3. SWIFT history
First Sibos
1978
First Operating Centre opens
1976
First corporates join SWIFT
1996
Asia
1980
Securities
1987
SWIFTNet live
2001
1970s
1980s
1990s
2000+
1973 SWIFT founded
1977
SWIFT goes Live
1986 Value-Added services
1996
Volumes exceed 3M messages/day
2004 SWIFTNet migration complete
1979 North America
Introduction to SWIFT - FIRMA - 18 April 2011

4. SWIFT - Governance National Bank of Belgium and G-10 Central Banks
Oversight
Governance
Board
Board committees
National member groups
National user groups
SWIFT members
SWIFT community
Introduction to SWIFT - FIRMA - 18 April 2011

5. Oversight: Co-operating central banks from the G-10 countries
Lead overseer: National Bank of Belgium
Bank of Canada
Deutsche Bundesbank
European Central Bank
Banque de France
Banca d' Italia
Bank of Japan
De Nederlandsche Bank
Sveriges Riksbank
Swiss National Bank
Bank of England
The Federal Reserve System (USA), represented by the Federal Reserve Bank of New York and the Board of Governors of the Federal Reserve System
Introduction to SWIFT - FIRMA - 18 April 2011

6. SWIFT - User categories
Supervised
Financial
Institutions
Closed
User
Groups/
Corporates
Introduction to SWIFT - FIRMA - 18 April 2011

7. SWIFT – A customer-centric user community
Banks
Corporates
Payment Systems
Clearing & Settlement Systems
Insurance Companies
Government Institutions
Broker-Dealers
Customer
Stock Exchanges
Securities MI’s
Depositories
Payments MI's
IMI's
Trustees
Introduction to SWIFT - FIRMA - 18 April 2011

8. SWIFT – Members (shareholders)
Eligible shareholders:
Banks
Broker/dealers
Investment Management Institutions
Non-shareholding member – threshold of five shares
Upon joining, the organisation can buy one share or opt out until the next re-allocation of shares
Introduction to SWIFT - FIRMA - 18 April 2011

9. Countries’ organisation
National Member Groups
All SWIFT shareholders within same country
Advisory role for membership matters: local admission criteria and new users
Nominate Directors who are then appointed by the shareholders
National User Groups
All SWIFT users within same nation
Advisory role for operational and technical matters
Introduction to SWIFT - FIRMA - 18 April 2011

10. SWIFT – Board of Directors
Banking & Payments Committee
Securities Steering Committee
Technology and production Committee
Standards
Committee
Community input
Audit
& Finance
Committee
Human Resources Committee
Introduction to SWIFT - FIRMA - 18 April 2011

11. Oversight
SAS 70 report
Self assessment of performance against the overseers’ High Level Expectations for SWIFT
Introduction to SWIFT - FIRMA - 18 April 2011

12. Data Protection Data Privacy Working Group Contractual Policies
SWIFT group
12 experts in data privacy from EU, US, Australia, Canada
Review policies
Contractual Policies
Commitment to the confidentiality and protection of users data
Data retrieval policy, Personal Data Protection Policy
Available on swift.com
Audited
SAS70
Introduction to SWIFT - FIRMA - 18 April 2011

13. Data Retrieval Policy Principles
Traffic data: limited usage permitted, for billing, pricing, market and service analysis
Message data: strictly confidential, usage and disclosure must be permitted by customers or required for problem investigation
Exceptions
Collective request: request of message data by, for example, a market infrastructure, for statistical purpose
Mandatory request: legally enforceable request by a judicial, administrative, governmental or other competent authority
Introduction to SWIFT - FIRMA - 18 April 2011

14. Platform – the SWIFT product stack
SWIFT Solutions
Payments
Treasury
Securities
Trade
Standards
Rules
Directories
&
Information
services
Messaging services
Testing
Services
&
Prof
Svcs
Interfaces
Solutions: SWIFT looks at each of the different sectors and business areas that our customers operate in - weather it be payments, treasury, trade, securities pre-trade, post-trade, settlement, custody services – and examines how best to improve automation in each of those areas. In response we come up with what we call SWIFTSolutions, solutions tailored to the needs of a sub-set of our community.
Standards: These solutions are first and foremost based on standards and rules. This is where our trusted community 3rd party role comes in. We sit down with key players and establish the best way forward for their solution. We then express it in terms of standards (how each transaction messages should be structured, what data it needs to contain, how it should be formatted) and rules (how and when each messages should be used).
Messaging services: These solutions – with their standards and rules – are based around messaging. And those messages need to be transmitted somehow between participants. That’s what we need messaging services for. Think of them as the envelope that carries the message. We have a range of messaging services, each with its own set of functionality to meet the needs of our diverse community.
Secure network: The messaging services need a platform on which to run. In crude terms, the pipe in which the message flow. That’s our network. After our standards, our huge differentiator compared to other networks and the Internet is our unrivalled levels of security and reliablity. The network is where a lot of that happens.
Interfaces: In order for customers to be able to gain access to these solutions, they need software that will allow them to plug in their existing in-house applications (e.g. payments systems, trade order management systems etc) generating SWIFT messages. That’s what are interfaces are for. They are the link between our customers systems and the SWIFT network
Tools & services: Supporting the platform are a range of tools & services, information services like directories, analysis tools and, last but definitely not least, a world-class, award winning, customer service offering.
Secure IP Network (SIPN)
Secure, reliable and resilient platform
Introduction to SWIFT - FIRMA - 18 April 2011

15. SWIFT in figures
Introduction to SWIFT - FIRMA - 18 April 2011

16. SWIFT in figures (January 2011 YTD)
> 4.0 billion messages per year
9,693 customers
210 countries and territories
~ 2,000 employees
Average daily traffic 17.2 million messages
Peak day of 18.9 million messages – 1 March 2011
Note: SWIFT does not ‘own’ the data contained in messages it transports
Introduction to SWIFT - FIRMA - 18 April 2011

17. SWIFT standards
SWIFT sets standards because a common language for international financial transactions:
Improves automation
Ensures human understanding of the data
Reduces errors
Helps save costs
SWIFT message standards are recognised by the International Organisation for Standardisation (ISO)
SWIFT works with the financial community to coordinate standards convergence worldwide and avoid unnecessary duplication
Introduction to SWIFT - FIRMA - 18 April 2011

18. FIN message categories
Category 1 – Customer Payments & Cheques (16 messages)
Category 2 – Financial Institution Transfers (16 messages)
Category 3 – Treasury Markets – Foreign Exchange, Money Markets & Derivatives (26 messages)
Category 4 – Collections & Cash Letters (18 messages)
Category 5 – Securities (67 messages)
Category 6 – Treasury Markets – Metals & Syndications (19 messages)
Category 7 – Documentary Credits & Guarantees (29 messages)
Category 8 – Travellers Cheques (11 messages)
Category 9 – Cash Management & Customer Status (21 messages)
Category 0 – Service and System Messages (66 messages)
4 ISO 15022
53 ISO 15022
Name of Presentation – Confidentiality: External

19. Standards The current and future message landscape
Payments, Cash and Trade (127 messages)
Securities, FX and Derivatives (160 messages)
Current ISO 20022
Future ISO 20022
FIN
& ISO (MTs)
Payments, Cash and Trade (111 messages)
Securities, FX and Derivatives (112 messages)
- including 57 ISO messages
Service & System Messages (66)
287 completed messages
346 live messages
See back-up slides for additional details.
Payments, Cash, Trade and Cards
Payments, Cash and Trade (132 messages)
Securities, FX and Derivatives (173 messages)
Securities, FX and Derivatives
> 300 messages in progress
Name of Presentation – Confidentiality: External

20. ISO 20022 messages Payments, Cash, Trade and Cards
287 completed messages
Payments, Cash, Trade and Cards
Payments and Cash Management
Account Management
Change/Verify Account Identification (3)
Bank Account Management (15)
Payments Initiation
Initiation (4)
Mandate (4)
Creditor Payment Activation Request (2)
Payment Clearing and Settlement (6)
Cash Management
Bank-to-Customer Cash Management (3)
Notification to Receive and Account Reporting Request (4)
Exceptions and Investigations (17)
Trade
Trade Services Initiation
Invoice Financing Request (3)
Financial Invoice (1)
Trade Services Management (50)
Cards and Related Retail Financial Transactions
Acceptor to Acquirer Card Transactions (15)
Securities, FX and Derivatives
Settlement & Reconciliation (29)
Corporate Actions (13)
Investment Funds
Securities Trade (30) and Settlement (16)
Reference Data (3) and Acct Mgmt (5)
Securities Management (7)
Cash Management (6)
Funds Processing Passport (2)
Other Securities
Securities Transaction Regulatory Reporting (4)
Proxy Voting (8)
Issuers’ Agents Communication (22)
Foreign exchange and OTC Derivatives
Non-Deliverable Forwards (7)
Currency Options (4)
Generic (4)
127 messages
160 messages
Name of Presentation – Confidentiality: External

21. ISO 20022: The standards community
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 with the standard
Maintain and publish ISO Repository
Technical Support Group, TSG
Assist RMG, SEGs, RA and submitting organizations
68 financial professionals from 21 countries and 12 liaison organizations
The registration process is described in part 2 of the standard. It involves four registration bodies, which interact with the ‘submitting organisations’ that use the ISO recipe to develop financial messages:
The Registration Management Group (RMG) is the highest registration body. It is made up of senior industry experts nominated by ISO who, all together, represent all sectors of the financial industry. The RMG monitors the overall registration process including the performance of the other registration bodies. It acts as a ‘court of appeal’ if no consensus can be found, or if there are conflicts between the various parties involved in the process.
The RMG evaluates and prioritises the business justifications introduced by submitting organisations that want to develop new (or update existing) ISO messages.
The RMG also initiates the creation of the Standards Evaluation Groups (SEGs).
The Standards Evaluation Groups (SEGs) are groups of industry experts nominated by ISO, which each represents the future users of ISO messages in a particular financial domain. Their role is to ensure that the candidate ISO messages actually address the needs of the future users. All candidate ISO messages are validated by one or more SEG(s) depending on the scope of the messages.
The Registration Authority (RA) is the guardian of the ISO financial repository. SWIFT has been nominated by ISO to provide the RA services. The role of the RA is to guide submitting organisations, ensure compliance of the developed models with the ISO technical specifications and perform the transformation of message models into compliant XML schemas. SWIFT has developed a ‘standards workstation’ that generates the XML schemas from the models automatically according to the UML-to-XML design rules described in part 4 of the standard. The RA is also responsible for the maintenance of the ISO website ( and publishes updated extracts of the ISO Repository on a regular basis.
Finally, the Technical Support Group (TSG) is a group of technical experts nominated by ISO to help any of the other registration bodies and the submitting organisations with technical problems related to the use of the ISO recipe.
Let us now look at the registration process itself.
Introduction to SWIFT - FIRMA - 18 April 2011

22. ISO 20022 messages Payments, Cash, Trade and Cards
287 completed messages
Payments, Cash, Trade and Cards
Payments and Cash Management
Account Management
Change/Verify Account Identification (3)
Bank Account Management (15)
Payments Initiation
Initiation (4)
Mandate (4)
Creditor Payment Activation Request (2)
Payment Clearing and Settlement (6)
Cash Management
Bank-to-Customer Cash Management (3)
Notification to Receive and Account Reporting Request (4)
Exceptions and Investigations (17)
Trade
Trade Services Initiation
Invoice Financing Request (3)
Financial Invoice (1)
Trade Services Management (50)
Cards and Related Retail Financial Transactions
Acceptor to Acquirer Card Transactions (15)
Securities, FX and Derivatives
Settlement & Reconciliation (29)
Corporate Actions (13)
Investment Funds
Securities Trade (30) and Settlement (16)
Reference Data (3) and Acct Mgmt (5)
Securities Management (7)
Cash Management (6)
Funds Processing Passport (2)
Other Securities
Securities Transaction Regulatory Reporting (4)
Proxy Voting (8)
Issuers’ Agents Communication (22)
Foreign exchange and OTC Derivatives
Non-Deliverable Forwards (7)
Currency Options (4)
Generic (4)
127 messages
160 messages
Name of Presentation – Confidentiality: External

23. SWIFT in Securities
Introduction to SWIFT - FIRMA - 18 April 2011

24. Securities standards on FIN (MTs)
There are 67 category 5 securities messages, covering the following business areas:
Pre-Trade / Trade (trade initiation and confirmation)
Settlement & Reconciliation (settlement instructions, confirmations and statements)
Corporate actions (asset servicing)
Securities lending and borrowing
Collateral
Securities industry players also widely use payments, cash management (categories 1 and 2) and foreign exchange messages (category 3)
Introduction to SWIFT - FIRMA - 18 April 2011

25. Securities Standards on FIN (MTs) Pre-Trade / Trade (trade initiation and confirmation messages)
MT 502 Order to buy or sell
MT 509 Trade status message
MT 513 Client advice of execution
MT 514 Trade allocation instruction
MT 515 Client confirmation of purchase or sale *
MT 517 Trade confirmation affirmation
MT 518 Market-side securities trade confirmation
MT 549 Request for statement/status advice
* Received US SEC ‘no action’ relief 27 May 2010
Introduction to SWIFT - FIRMA - 18 April 2011

26. Securities Standards on FIN (MTs) Settlement & Reconciliation (pre-settlement instructions and settlement confirmation messages)
MT 540 Receive free
MT 541 Receive against payment
MT 542 Deliver free
MT 543 Deliver against payment
MT 544 Receive free confirmation
MT 545 Receive against payment confirmation
MT 546 Deliver free confirmation
MT 547 Deliver against payment confirmatio
Statement messages – MT 940 and MT 950 and MT 535
Introduction to SWIFT - FIRMA - 18 April 2011

27. Securities settlement – a typical scenario
MT 514 Allocation (1) 300
MT 515 Confirmation (1) 300
MT 502 block Order
MT 513 Advice of Execution
Client 1
= 300
shares
Investment manager
Broker
dealer
PEFIGB22
BDAPGBPP
MT 541 Receive Against Payment
MT 543 Deliver Against Payment
MT 509 Status (optional, to DK)
MATCH
MT 541 Receive Against Payment
Custodian
CSD
GLOBGB22
CRSTGB22
Introduction to SWIFT - FIRMA - 18 April 2011

28. Securities settlement – a typical scenario
MT 514 Allocation (1) 300
MT 515 Confirmation (1) 300
MT 502 block Order
MT 513 Advice of Execution
Client 1
= 300
shares
Investment manager
Broker
dealer
PEFIGB22
BDAPGBPP
MT 541 Receive Against Payment
MT 543 Deliver Against Payment
MT 544 Confirmation Delivery
MT 509 Status (optional, to DK)
MATCH
MT 541 Receive Against Payment
Custodian
MT 545 Confirmation Receipt
CSD
GLOBGB22
CRSTGB22
Custodian a/c
Broker a/c
Shares
Introduction to SWIFT - FIRMA - 18 April 2011
$$$$

29. Securities settlement – a typical scenario1
MT 502 block Order
Client 1
= 300
shares 2
MT 513 Advice of Execution
Investment manager
Broker
dealer 3
MT 514 Allocation (1) 300
PEFIGB22 4
BDAPGBPP
MT 515 Confirmation (1) 300 9
MT 541 Receive Against Payment
MT 545 Confirmation Receipt
MT 543 Deliver Against Payment
MT 544 Confirmation Delivery 8a 5b 5a 6
MATCH
MT 541 Receive Against Payment 7
Custodian
MT 545 Confirmation Receipt
CSD
GLOBGB22
CRSTGB22 8a
Client 1 a/c
Shares
$$$$
Custodian a/c
Broker a/c +
Shares -
Introduction to SWIFT - FIRMA - 18 April 2011
$$$$

30. Trade matching on Accord
NEW
Trade matching on Accord
MT 3xx messages
OTC Equity & Fixed Income Transactions
FX & currency options
For Prime & Executing Brokers and Custodians
Loans and deposits
Accord for Treasury
Accord for Securities
OTC derivatives
Community driven
+ 450 customers
Live since May 2009
Independent of counterparty

31. Accord for Securities – Prime/Executing Broker Solution for hedge fund transactions
2. Real time status updates + exception handling on GUI + full reporting in MT 998
Accord
MT515
Daily Trade report
MT 998
MT515
MT 998
Prime Broker
1. Automated pre-matching,
4. Settlement OK
3 . PSET agents’ local code is x-ref to a BIC in Accord
Custodian
Custodian
FAIL!
Agent
Agent
CSD (PSET)
Introduction to SWIFT - FIRMA - 18 April 2011

32. Accord for Treasury Single-slide overview
FX, FX Options, Money markets,
OTC Derivatives, Commodities
Deal
Confirmations: (MT 300,305,306,320, 330,340,341,360, 361,362,392, MT 600)
Accord Subscribers (>475 in 70 countries)
Banks
Brokers
Custodians
Fund mgrs
Corporates (strong growth)
Accord
subscriber or
non- subscriber
SWIFT
Copies of non-SWIFT
data: fax, , e-FX portals, Broker feeds, Reuters, etc.
Copies of
confirmations
Real-time reporting & exception handling
Integration available for various Back-Office Systems
Accord
Real-time Confirmation Matching Service
Availability of >99.97% last 5 years
>90K msgs/hour observed matching capacity
Common matching rules + user-defined rules
Financial Liability for Matching results
Introduction to SWIFT - FIRMA - 18 April 2011

33. SWIFT in Payments and Cash Management
Introduction to SWIFT - FIRMA - 18 April 2011

34. Common Payments Messages
MT 103 Scope
This message type is sent by or on behalf of the financial institution of the ordering customer, directly or through (a) correspondent(s), to the financial institution of the beneficiary customer.
It is used to convey a funds transfer instruction in which the ordering customer or the beneficiary customer, or both, are non-financial institutions from the perspective of the sender.
MT 202 Scope
This message is sent by or on behalf of the ordering institution directly, or through correspondent(s), to the financial institution of the beneficiary institution.
It is used to order the movement of funds to the beneficiary institution.
Introduction to SWIFT - FIRMA - 18 April 2011

35. Payments and cash management processes
Customer-to-Bank
Interbank
Bank-to-Customer
I N I T I A T I O N
Customer Credit Transfer Initiation
C L E A R I N G & S E T T L E M E N T
Customer Direct Debit Initiation
Payment Status Report
A C C O U N T R E P O R T I N G
A C C O U N T R E P O R T I N G
B2C Account Report
B2C Account Report
B2C Account Statement
B2C Account Statement
B2C DebitCreditNotification
B2C DebitCreditNotification
Introduction to SWIFT - FIRMA - 18 April 2011

36. High level message flow (Wire transfers)
Settlement path can change based on information exchanged using SWIFT messages
Originator
Community Bank
IBK # 1
IBK # 2
Beneficiary’s Bank
Beneficiary
Payment Initiation
SETTLEMENT
Fed
SWIFT MESSAGING
Currently banks that are members of SWIFT have the opportunity to agree on the best settlement path with their counterparties.
Introduction to SWIFT - FIRMA - 18 April 2011

37. Cover payments – Timing aspects
Mr. Jones
London
Mr. Ueda
Tokyo
Bank A
Bank D
Bank B
New York
Bank C
Pay $1000
Pay $1000
Mr. Jones
London
It’s only 03:00 ET!
It’s only 03:00
ET!
202
09:00 CET
103
09:00 CET
Bank A
London
Bank B
New York
103
202
09:00 ET
103
09:00 ET
09:00
CET
Bank C
New York
910
09:01 ET
103
09:01 ET
It’s 22:01!
Here it’s 16:00
Bank D
Tokyo
Mr. Ueda
Tokyo
Introduction to SWIFT - FIRMA - 18 April 2011

38. Cover payments – Cost aspect
Mr. Jones
London
Mr. Ueda
Tokyo
Bank A
Bank D
Bank B
New York
Bank C
Pay $1000
Pay $1000
Mr. Jones
London
Charges $20
No customer charges
202
$1000
103
$1000
Bank A
London
103
$1000
Bank B
New York
202
$1000
103
$980
Charges $15
No customer charges
Bank C
New York
910
$1000
103
$965
Charges $10
Charges $10
Bank D
Tokyo
Mr. Ueda
$955
Mr. Ueda
$990
Mr. Ueda
Tokyo
Introduction to SWIFT - FIRMA - 18 April 2011

39. Q&A ?
Introduction to SWIFT - FIRMA - 18 April 2011

40. Thank you
Introduction to SWIFT - FIRMA - 18 April 2011