MT-MX Coexistence
Event name, Location
Name, Title, SWIFT
September 2008
Agenda
Coexistence update
Framework and improved approach
New products and tools
Questions and answers
MT-MX Coexistence - September 2008
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Coexistence update
MT-MX Coexistence - September 2008
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Financial industry standards
→ The current situation
SWIFT
Edifact
?
?
?
Proprietary
?
?
?
Domestic
MT-MX Coexistence - September 2008
?
FIX
FpML
4
Financial industry standards
→ The way forward (Coexistence)
ISO
20022
Proprietary
ISO
20022
Edifact
SWIFT
This slide
dates from
2004 !
ISO
20022
Domestic
ISO
20022
FpML
ISO
20022
FIX
MT-MX Coexistence - September 2008
ISO
20022
5
What is driving the move to ISO 20022?
• New initiatives
– Global harmonisation
– Giovannini and SEPA in Europe
– Market infrastructures
– Automation in the ‘funds’ market
• New players
– Corporates, fund managers
• New technology
– XML, SOA, web services
MT-MX Coexistence - September 2008
6
FIN message categories
• Category 1 – Customer Payments & Cheques (18 messages)
• Category 2 – Financial Institution Transfers (17 messages)
• Category 3 – Treasury Markets – Foreign Exchange,
Money Markets & Derivatives (27 messages)
• Category 4 – Collections & Cash Letters (18 messages)
• Category 5 – Securities (67 messages)
• Category 6 – Treasury Markets – Metals & Syndications
(20 messages)
• Category 7 – Documentary Credits & Guarantees (29 messages)
• Category 8 – Travellers Cheques (18 messages)
• Category 9 – Cash Management & Customer Status (29 messages)
MT-MX Coexistence - September 2008
5
ISO
15022
53
ISO
15022
7
ISO 20022 messages
Payments, Cash and Trade
Securities, FX and Derivatives
• Payments
• Investment Funds
– Payments Initiation (5)
– Payments Clearing and Settlement (7)
•
•
•
•
Payments Exceptions & Investigations (14)
Cash Management (3)
Trade Services Utility (50)
Invoice Financing Request (3)
–
–
–
–
Securities Trade (30) and Settlement (16)
Reference Data (3) and Acct Mgmt (5)
Securities Management (7)
Cash Forecast (6)
• Other Securities
–
–
–
–
Pre-trade / Trade messages (32)
Securities Transaction Regulatory Reporting (4)
Proxy Voting (8)
Issuers’ Agents Communication (22)
• Foreign exchange and OTC Derivatives
82 messages
176 UNIFI messages
MT-MX Coexistence - September 2008
– Non-Deliverable Forwards (7)
– Currency Options (4)
– Generic (4)
148 messages
54 Candidate UNIFI messages
8
Current ISO 20022 development pipeline
Securities, FX and Derivatives
•
•
•
•
•
•
•
•
•
•
Funds Processing Passport Report (2 messages) (SWIFT)
Settlement and Reconciliation (SWIFT)
Corporate Actions (SWIFT)
Triparty Collateral Management (SWIFT)
Securities Post-trade (Omgeo)
Market Claims/Transformations (Euroclear)
Securities Registration and Holder ID (Euroclear)
Securities Issuance (Euroclear)
Total Portfolio Valuation Statement (ISITC)
Alternative Funds (SWIFT) – not yet approved
MT-MX Coexistence - September 2008
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Current ISO 20022 development pipeline
Payments, Cash and Trade (and others)
•
•
•
•
•
•
•
Cash Management (+/- 28 messages) (SWIFT)
E-invoice (UN/CEFACT TBG5)
Change/Verify Account Identification (GUF)
E-Mandates (SWIFT)
Bank Account Management (SWIFT)
Creditor Payment Activation Request (ACBI)
ATM Interface for Transaction Processing and ATM
Management (IFX)
• Card Payments Exchanges (EPAS)
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Coexistence – what is it?
MTs
(FIN)
MXs
(InterAct/FileAct)
MT 103
MT 502
MT 300
Etc…
pacs.008.001.01
setr.010.001.03
No equivalent
Etc…
247 MTs
MT-MX Coexistence - September 2008
X
230+ MXs
11
Coexistence – current status
• The MTs are not going away anytime soon
• SWIFT will support customers through the
coexistence period with additional products
and services designed to make coexistence
‘easier’
• A coexistence implementation plan was
started in 2007, but community feedback
indicates it may be too early for consensus
on milestones and dates for many MTs
• SWIFT remains fully committed to ISO
20022 for all standards development
MT-MX Coexistence - September 2008
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Guidelines for message development
• New business areas – MX
– TSU
• MTs not adequate – MX to replace MT
– Proxy voting, Funds, E&I
• Regulatory or infrastructure driver – Both
MX and MT
– Payment infrastructures, SEPA, T2S
• No business case for MX development –
MT, for now
– Precious and base metals
MT-MX Coexistence - September 2008
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Community feedback and case studies
• Six cases studies for ISO 20022 implementation completed in the
first half of 2008
– No clear positive business case, 50/50 split between positive and
negative business cases
– Replacing existing messages usually results in a negative case,
new implementations often result in a positive or neutral case
– Other drivers often help ‘make the case’ (technology, reputation,
customer demand)
• Country and national member group feedback even more
strongly polarised
– Some countries want quick ‘migration’, others want no migration
– Some communities want to continue using existing MTs and see no
business case to replace them with new MX messages
– Pockets of adoption for some business areas (SEPA, Funds, E&I,
cash management), but no overall critical mass yet
MT-MX Coexistence - September 2008
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Framework and improved approach
MT-MX Coexistence - September 2008
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Overall coexistence framework
1. Prepare MX
2 . Introduce MX
MT
MX
Decision to
build/use MX
MX live
on SWIFT
3. Implement MX
MT/MX
MT
MX
Milestones, dates and length
of phase to be determined by
each MT or MT group,
governed by users
MT removal
Decisions by Standards Committee (STC) and business committees
(BPC and SSC)
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Coexistence – improved approach
1. Prepare MX
2 . Introduce MX
MT
MX
• Strengthen the fundamentals of
ISO 20022 by re-focusing on
the ‘core’ (models, repository,
dictionary)
• Reinforce our toolkit of products
that support implementation,
mapping and translation
MT-MX Coexistence - September 2008
3. Implement MX
MT/MX
MT
MX
• Let the market ‘catch-up’
and allow each business
area and community to
move at its own pace,
while providing guidance
on syntax
17
Draft
Proposed timeline for
Investment funds
1. Prepare MX
2 . Introduce MX
MT
MX
2004
3. Implement MX
MT
MX
MT/MX
End 2009
End 2011
MX messages go live
Dates to be confirmed
at December 2008
Board meeting
MT-MX Coexistence - September 2008
102 Key users must be
ready to send and receive
new MX messages
MT template messages are
removed from the network
18
Draft
Proposed timeline for
Exceptions & investigations
1. Prepare MX
2 . Introduce MX
MT
MX
3Q2006
3. Implement MX
MT
MX
MT/MX
End 2010
End 2011
MX messages go live
Dates to be confirmed
at December 2008
Board meeting
MT-MX Coexistence - September 2008
Key users must be ready to
send and receive new MX
messages
MT 195, 196, 295 and 296
are removed from the
network
19
Why ISO 20022 for securities?
Cost of a double
migration, ISO
15022 followed
by ISO 20022
Have ISO 20022
for core areas
available in time
for Giovannini
MT-MX Coexistence - September 2008
Payback of
migration costs to
ISO 15022
ISO 15022
should have a 10
year lifespan
Cost of
coexistence
Design ISO 20022
for easy
coexistence with
ISO 15022
20
What does this mean for the core clearing
and settlement messages?
• SWIFT to develop ISO 20022 syntax versions of the core clearing
and settlement messages:
– Ready for functional validation 2Q2009
– Final documentation available January 2010
– Live deployment Standards Release 2010
• Ensure mapping between ISO 15022 and ISO 20022
• Limit ISO 20022 functionality to that which is available in ISO
15022 and synchronise maintenance
• Provide solution to support coexistence, including translation and
directory
MT-MX Coexistence - September 2008
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New products and tools
MT-MX Coexistence - September 2008
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Smart Test Messages

Translation Rules



Translation Reference



Standards Repository for Implementers


MT-MX Coexistence - September 2008



SCORE
Cash Management
Proxy Voting
Investment Funds
Priorities aligned with
market initiatives,
regulatory requirements
and coexistence
framework
SEPA
Standards Products
Easing the implementation of ISO 20022


23
Standards Products
What and When
Current Status
Planned
Delivery
Smart Test Messages
Live
See
UHB
Translation Rules
Live
See
UHB
Beta
End
2008
Beta
End
2008
Translation Reference
Standards Repository for Implementers
Current plan, subject
to change
MT-MX Coexistence - September 2008
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Standards Products
Smart Test Messages
• Ready-to-use, pre-filled messages (payload)
• Customers use to test their internal applications
• Inbound to the customer, simulating messages they received
from a customer, counterparty or correspondent
• Realistic business data content, not dummy data
• Valid (no errors) and invalid (with errors) test messages
• Customizable content – e.g., BIC, IBAN, etc.
• SWIFT-provided documented test results
• Fully documented “how to” user guide
• Packaged for use with SWIFT solutions
Smart Test
Messages
MT-MX Coexistence - September 2008
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Standards Products
Smart Test Messages
•
•
•
•
SEPA Credit Transfers
SEPA Direct Debits
Proxy Voting
SCORE (payment initiation)
Smart Test
Messages
MT-MX Coexistence - September 2008
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Standards Products
Translation Rules
• Comprehensive documents .pdf
(human readable)
• Downloadable today from swift.com
• Provide guidance when implementing
equivalent MT/MX
• Organised by business area
• Credit Transfers and Investments
Funds already available, Cash
Management planned for end
October 2008
MT-MX Coexistence - September 2008
MT
MX
BIC
ValueDate
ValueDate
IBAN
IBAN
BIC
27
Translation Rules
Downloadable now on swift.com
MT-MX Coexistence - September 2008
MT
MX
BIC
ValueDate
ValueDate
IBAN
IBAN
BIC
28
Standards Products
Translation Reference
• Used to test that an
implementation conforms to the
published translation rules
• Sample framework including test
messages, XSLT and Java
• Licensed as a reference product
(not supported for production use)
• Updated for MT and MX
standards maintenance
MT
MX
BIC
ValueDate
ValueDate
IBAN
IBAN
BIC
SWIFT and partners will provide translations services and
customisation tools
MT-MX Coexistence - September 2008
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Standards Products
Commercial Solutions
• SWIFT Integrator
• Partners with Message Data
Services (MDS) label
– IONA (Progress Software)
– Trace Financial
– Volante Technologies
• All of the above are based on the
Translation Rules provided by
SWIFT and tested with the
Translation Reference
MT-MX Coexistence - September 2008
MT
MX
BIC
ValueDate
ValueDate
IBAN
IBAN
BIC
30
Standards Products
Standards Repository for Implementers
• Processable XML repository (ISO 20022 and SWIFT MX)
– Financial dictionary (reusable)
– Message definitions (structures)
• Contains detailed information that is not in the final schemas, but
currently only available in documentation or web query tool
• Contain all MX messages of all solutions, whether ISO registered
or not
• Future functionality is foreseen for
– Formal definitions for business message usage rules
– Business process definitions
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Q&A
?
MT-MX Coexistence - September 2008
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Thank you
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