Central Securities Depositories,
ISO Standards and SWIFT
Automation today and for the
future
Edward de Courcy-Ireland
Regional Manager - Securities
4th November 2006
20061019_AECSD
Slide 1
Agenda
SWIFT update
Securities Market Infrastructures using SWIFT
ISO Standards
20061019_AECSD
Slide 2
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 99.999%
20061019_AECSD
Slide 3
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%
31
31
1.8%
8
8
-3.4%
301
337
11.3%
1,641
1,877
13.6%
Trade Finance
System
Category 9
TOTAL
20061019_AECSD
Slide 4
Pricing and traffic
Harnessing economies of scale
Price
(EURcent/msg)
50
Traffic
(Millions of messages)
2500
45
40
2000
35
30
25
1500
1000
20
15
500
10
5
20061019_AECSD
0
Slide 5
Agenda
SWIFT update
Securities Market Infrastructures using SWIFT
ISO Standards
20061019_AECSD
Slide 6
Securities strategic priorities
(set by the industry)
Market space
Strategic priorities
Equity and fixed income
Pre-trade / Trade
Succeed in Pre trade
/Trade messaging
Post Trade /
Pre-settlement
Platform of choice for
Post-trade / Pre-set.
Clearing and
Settlement
Custody Services
Investment funds
20061019_AECSD
Grow traffic in Clearing
and Settlement and
Custody services
Be the
messaging
platform of
choice for
market
infrastructures
Drive Industry
towards
Standards
convergence
Become messaging platform of choice
for the Funds industry
Slide 7
A world without SWIFT
Different Standards, Messaging & Connectivity
User
Market
Infrastructures
20061019_AECSD
Slide 8
Single Window from SWIFT
Reusing Standards, Messaging and Connectivity
User
Market
Infrastructures
20061019_AECSD
Slide 9
Securities Market Infrastructures
Outsource Messaging & Network
Infrastructure
has full
vertical
implementation
Messaging
Mechanisms
Infrastructure
outsources
Physical
network
Infrastructure
outsources
Messaging
& network
Focusing on
core values
Outsourcing
connectivity to
specialist
Messaging
Mechanisms
Messaging
Mechanisms
Messaging&
Network
Vendor
Physical
Network
20061019_AECSD
Network
Vendor
Network
Slide 10
SWIFT’s messaging services
Financial
institutions
Infrastructures and
service providers
SWIFTNet FIN
SWIFTNet InterAct
SWIFTNet FileAct
SWIFTNet Browse
20061019_AECSD
Slide 11
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
HK Futures Exchange
Hong Kong Monetary
Authority
SEHK Options Clearing
House
Portugal
Banco de Portugal – SITEME
MTS
Russian
Federation
Depository Clearing Company
The National Depository Center
Hungary
Keler
Singapore
Central Depository
Singapore Exchange
Israel
Tel Aviv Stock Exchange
Slovakia
Bank of Slovakia
Italy
CCG
Monte Titoli
Slovenia
Central Securities Clearing
Corporation – KDD
Japan
JSCC
Tokyo Stock Exchange
South Africa
STRATE
JSE Securities Exchange
Kazakhstan
Kazakhstan Stock Exchange
Spain
Korea
Securities Depository
Latvia
Bank of Latvia
Central Depository
OMX
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
Hong Kong
Dubai
DIFX
Estonia
Estonian Securities
Depository
OMX
Lebanon
Midclear
Lithuania
OMX
NCSD Finland – APK
OMX
Luxemburg
Clearstream Banking SA
Mexico
S.D. Indeval
Netherlands
Euroclear Nederland
MTS
Norway
VPS
Poland
National Depository for
Securities – KDPW
Finland
France
Euroclear France
Euronext Paris – MATIF
MTS
Germany
Eurex Clearing
Clearstream Banking AG
MTS
Greece
Central Securities Depository
Bank of Greece
20061019_AECSD
Slide 12
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)
20061019_AECSD
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
Slide 13
Agenda
SWIFT update
Securities Market Infrastructures using SWIFT
ISO Standards
20061019_AECSD
Slide 14
SWIFTNet FIN:
Settlement & Reconciliation Process
CSD
Trade
Date
Settlement
Date
MT 540-3
Settlement
Instruction
MT 537
MT 548
Pending
Status of
Instruction Transactions
MT 544-7
Confirmation
of Settlement
CSD participant
20061019_AECSD
MT 535
Statement of
Holdings
MT 536
Statement of
Transactions
Slide 15
SWIFTNet FIN:
CA Message flow - non elective event
Stock Exchange/CSD
Announcement
MT 564
Notification
of Announcement
Ex Record
Date Date
MT 564
Notification of
Entitled Position
Payment
Date
MT 566
Confirmation
of account activity
CSD participant
20061019_AECSD
Slide 16
SWIFTNet FIN:
CA Message flow - elective event
Stock Exchange/CSD
Ex/
Announcement Record
Date
of offer
Response period
Deadline
Date
Receipt of
new shares
MT 565
Instruction
MT 564
MT 564
Notification Notification
of Offer
of Ex date
Entitlement
MT 567
Status of
Instruction
CSD participant
20061019_AECSD
MT 566
Confirm of account
activity
MT 564
Notification
Entitlement Calculation
Slide 17
SWIFTNet FIN:
Post-trade pre-settlement matching (model I)
CSD
MT 540-3
Settlement
Instruction
MT 515
Trade
confirmation
Receiver
20061019_AECSD
MT 540-3
Settlement
Instruction
Matching utility
MT 509
Trade status
MT 515
Trade
confirmation
Deliverer
Slide 18
SWIFTNet FIN:
Post-trade pre-settlement matching (model II)
CSD
MT 540-3
Settlement
Instruction
Receiver
20061019_AECSD
Matching engine
MT 548
Status of
instruction
MT 540-3
Settlement
Instruction
Deliverer
Slide 19
Typical usage by Securities Market Infrastructures of
all SWIFTNet Messaging services
FIN
Instructions
Confirmations
Status
Statements
CA reporting
CA confirms
Coll Mgmt
ISO 15022
FileAct
Putting legacy
(domestic
standards) on
file transfer
on
SWIFTNet
(proprietary
formats or
ISO 15022 or
ISO 20022)
InterAct
Browse
Putting legacy
messaging
on
SWIFTNet
(proprietary
formats or
ISO 15022 or
ISO 20022)
Putting legacy
screen-based
access on
SWIFTNet
Proxy Voting
20061019_AECSD
Slide 20
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
20061019_AECSD
Slide 21
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
20061019_AECSD
Slide 22
Accessing CSDs through SWIFT:
Market needs






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
20061019_AECSD
Slide 23
Thank you
for your
attention
20061019_AECSD
Slide 24
Central Securities Depositories,
ISO Standards and SWIFT
Automation today and for the
future
John Falk
19 October 2006
20061019_AECSD
Slide 25
Back-up
20061019_AECSD
Slide 26
New SWIFTSolution:
SWIFTNet CSDAccess
CSD participants
CSDs
1-by-1 messaging channel
File transfer channel
Operator-based access
ISO 15022
ISO 20022
...
20061019_AECSD
Potential added value:
Notary function
Copy function to regulators
MT/MX translation
…
...
Global solution – Giovannini compliant
and EU Harmonisation aligned
Slide 27
Agenda
SWIFT update
Securities MIs using SWIFT
EU C&S harmonisation
New SWIFTSolution: SWIFTNet CSDAccess
SN Kits: Connectivity for small users
20061019_AECSD
Slide 28
SWIFT usage for local intermediaries

Local CSD, Central Bank & settlement agents

International Cash Correspondents

Global Custodians

International B/Ds
20061019_AECSD
Slide 29
Making SWIFT cost-effective
Services
Security
Messaging soft
Connectivity soft
Complete
set-up
Special
SN Kits
for specific solutions
Network
20061019_AECSD
Slide 30
Market Infrastructure CUGs:
A closed community of users on SWIFT
Service
participant
SWIFT
user
“Service
Participants within
a Closed User
Group”
Service
participant
Service
participant
Market
infrastructure
SWIFT
user
SWIFT
user
SWIFT
member
SWIFT
user
SWIFT
user
Through Closed User Groups, the administrator
takes full control: which messaging options,
which billing option, who has access, …
20061019_AECSD
Slide 31
The SWIFT community
securities market
data providers
banks
found SWIFT
1973
- broker/dealers
- central depositories
& clearing institutions
- exchanges
travellers cheque
issuers
fund administrators
money brokers
MA-CUGs
2000
- treasury counterparties
- treasury ETC service
providers
- payments MIs
- proxy voting agencies
- non-shareholding
financial institutions
20061019_AECSD
1996
securities MIs
- registrars & transfer
agents
- custody providers
- trust or fiduciary
services companies
investment
managers
trading
institutions
treasury securities ETC
service providers
Slide 32
Using SWIFT to communicate with
securities market infrastructures
Benefits for system owner
Exchange
IM
Order
Trade
B/D
Trade
B/D
Mission critical levels of
> reliability, security and support
CH /
CCP
MU /
ETCP
CM
CM
Time to market is
> short
GC
SC
SA
SA
Low entrance barriers for
(I)CSD
> 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
20061019_AECSD
Slide 33
Using SWIFT to communicate with
securities market infrastructures
Benefits for system member
Exchange
IM
Order
Trade
B/D
Trade
B/D
CH /
CCP
MU /
ETCP
CM
CM
Technical standardisation: single window
access to domestic and international
systems through one interface
> cost efficiency
GC
SC
SA
SA
Mission critical levels of
(I)CSD
> reliability, security and support
Business standardisation: ISO 15022, XML, FIX
> Market Practice standardisation > straight-through processing
> Real-time DVP > shorter settlement cycles > risk reduction
20061019_AECSD
Slide 34