Domain: Securities
Questionnaire
Forewords: SWIFT intends to explore 4 expansion areas beyond the securities core business
1. Securities Core Business
Revisit custodians value proposition
Driven by regulations, the custodians are going through a deep organic ( r)evolution where
operational efficiency becomes key along with cost reduction.
- SWIFT wants to revisit the value proposition for custodians and especially, in their
interactions with their asset managers and broker-dealers clients.
- SWIFT start from the challenges Custodians are facing to come with more adapted product
and services.
Questions
- Which solutions and services would you expect SWIFT to develop for helping custodians (e.g.
big data, resilience services,…)
- Geographically, what are the measures we could take to increase our penetration in nonEuropean countries?
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2. Product and Services expansion
T2S
- T2S impacts the Eurozone and adjacent markets
- 24 CSDs and their markets will join T2S
- SWIFT is one of 2 providers selected as Value Added Network (VAN ) providers
Questions
- SWIFT is currently deploying adjacent services to help the T2S community such as
Readiness Portal, testing facilities… Is this the right way? Are there other priorities
or areas SWIFT should focus on?
Funds
- SWIFT’s focus on growing and protecting its core funds order flow activity - in the main
cross-border markets and in some selected domestic countries.
- SWIFT plans to develop its offering by:
- Protecting the core: further standardise order placement flows
- Developing standardised volumes with new flows: go broader than the historical
‘distributor to TA’ coverage + further automate full processing lifecycle (transfers,
account opening, price report, cash forecast)
- Expanding the core: explore a new set of services for the funds community,
including a referencing & reporting utility, a pension portal and compliance services.
Questions
Beyond the opportunity for SWIFT to develop its core Funds presence to the full order processing
flow, what are the conditions/limitations SWIFT should keep in mind while exploring the expansion
to a referencing & reporting utility, a pension portal and compliance services?
Collateral Management
- SWIFT is supporting the collateral management process by providing messaging solution
aiming to enhance the Straight Through Processing of the collateral instructions
- SWIFT offers solutions for both bilateral and tri party collateral management. Coupled with
our S&R products, this allow for a complete solution from negotiation to settlement.
Tri party traffic is up by 20% for the 6th consecutive years. Our bilateral product is expected
to be launched this year with major CCP and clearing members adopting the solution.
Questions
- Beyond the messaging, how would you expect SWIFT to help you to tackle the collateral
management challenge (increased volumes, increased velocity, account segregation) ?
- Do you see collateral/agreements inventory management as an issue yet to be undertaken?
Especially, when clearing mandate will take effect?
Financial Crime Compliance
- SWIFT would like to explore the broadening of its counter-financial crime offerings into the
securities industry beyond the already planned correspondent banking offering, SWIFT is
consistently instructed to ensure that the focus on Correspondent Banking remains the
priority.
Questions
- Do you think developing compliance products for securities is relevant for SWIFT today?
Why?
3. Segment expansion
Asset managers
- Driven by regulatory pressure, institutionalisation of client base, need to put more focus on
counterparty risk management, shrinking margins and the related needs to implement
multi-market/multi-assets investment strategies, investment managers are rethinking of
their business models. Operational efficiency becomes key along with cost reduction and
regulatory compliance.
- Given their pivotal role in the financial industry, SWIFT wants to revisit the value proposition
for investment managers and especially, in their interactions with their custodians and
broker-dealers servicers.
- SWIFT start from the challenges Investment Managers are facing to come with more
adapted product and services.
- Which solutions and services would you expect SWIFT to develop for helping asset
managers?
o Solution geared towards custodians to insource asset managers business?
o Resilience solutions and services?
o Partnerships with PMS/OMS software providers
o Big data solutions covering reference data and standards repository?
o Others?
ICSD
Half of the world CSDs and ICSDs are connected to SWIFT
- CSDS and ICSDs represent 30 % of FIN securities traffic and more than 50 % of InterAct
Beyond the ICSDs and a handful of CSDs, SWIFT usage is extremely low and represents less
than 5 % market share in volume
- Major trends impacting (I)CSDs : regional initiatives changing market model (T2S, MILA,
ASEAN), new regulations (T+2, CSD-R, EMIR), increased focus on risk management and
resiliency, move towards ISO (20022)
Questions:
- Where should SWIFT focus its attention and efforts in the coming years? Does it make sense
to continue to try and connect all CSDs? What should be SWIFT priority ?
- How should SWIFT prioritise its effort to get more usage at domestic level with CSDs ?
- Major versus smaller or emerging markets? in which geographies ?
- core settlement business or adjacent business streams such as assset servicing, funds and
Collateral management?
How/how much should we focus on resiliency, regulations impact and compliance in the
CSD space?
4. Value Chain expansion
Issuer Space
- Lack of automation and standardisation in Corporate Actions between issuers and the rest of
the actors in the value chain.
- Shareholder transparency has become important for issuers, because of the globalization of
investments.
Questions:
- Are there any drivers such as regulation shift in market structure and stakeholder groups,
value migration across the value chain, etc., which have led to the issue(s) becoming
bigger/more important in past years/months?
- What is the nature of the problem (eg, corporate actions processing inefficiency, Issuance
(IPO), operational risk, data integrity, shareholder transparency/reporting)?
- What is, in terms of order of magnitude, the size of the problem and hence the size of the
opportunity in solving the problems, eg, cost reduction, reduced operational risk and risk
capital, enhanced speed, etc.
SWIFT