Fedwire® Securities Service
Modernization
Bank Depository User Group Annual Meeting
September 24, 2013
Agenda
1. Present an overview of customer-suggested postmodernization enhancements.
2. Solicit BDUG feedback on key themes being explored for
post-modernization enhancements.
3. Next steps.
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Background
•
The Federal Reserve Banks’ Wholesale Product Office (WPO) has embarked
on an effort to modernize Fedwire® Securities Service software.
•
Modernization in and of itself is not the goal. Rather, the WPO seeks to
create a service that is more nimble and flexible in responding to stakeholder
needs.
•
We plan for a “like-for-like” cutover to the modernized software in late 2015.
•
We are beginning the process of evaluating and prioritizing enhancements
suggested by customers and policy stakeholders that could be implemented
once the cutover is complete.
•
To date, we have interviewed several external customers and multiple internal
stakeholders.
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Important Note
Meetings like these are an important means by which we
solicit stakeholder feedback on the services we provide.
However, we cannot and do not guarantee that any features
or functionality discussed today will be developed or
implemented.
The Financial Services logo, the Fedwire logo, “Fedwire,” and “Wired to Deliver” are registered service marks of the Federal Reserve
Banks. A complete list of marks owned by the Federal Reserve Banks is available at FRBservices.org.
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Background - Key Fedwire
Securities Features
• Transfer of Securities
– Delivery Versus Payment (DVP) – Securities transactions involve a
simultaneous exchange of valuables.
– Secondary market activity accounts for most transfers.
– Settlement.
• Account Maintenance
– Includes securities account maintenance.
• Fiscal Agent Responsibilities
– Securities issuance support.
– Payment of principal and interest and securities redemption.
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Background - Fedwire Securities
Service Functionality
1. Customer Directory
2. Securities Directory
7.
8.
– CUSIP ® Information
– Factor File Processing
– Fail Tracking
– Interim Accounting
– Repo Tracking
3. Custody
– Par Holdings
– Repo Balances
– Merger Support
Principal & Interest Payments
Automated Claim Adjustment Process
9.
Customer Statements
4. Transfer & Settlement
5. Conversion (Strip & Reconstitution)
6. Collateral Processing
– Pend Withdrawals
– Remit/Suspend Maturity Proceeds
“CUSIP” is a registered trademark of the American Bankers Association.
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Background - Key Volume and
Value Statistics
2012 Fedwire Securities Origination Volume and Value 1
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2
Average Daily Transfer Volume
73,000
Average Transfer Value
$15.6 million
Average Daily Transfer Value
$1.1 trillion
Total Annual Dollar Value
$284 trillion
Total Annual Volume 2
18.2 million
Source: PACS Database.
99.97% of Securities volume was originated online (electronically). The remainder was originated offline (via telephone).
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Background - Customer Statistics
Fedwire Securities Service Customers (2012)
•
Approximately 6,100 participating accounts.
•
The top 25 customers account for 96 percent of the total transfer volume and
94 percent of the total transfer value originated.
•
The top 2 customers account for 67 percent of the total transfer volume and
72 percent of the total transfer value originated.
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Summary of progress
•
Over past year, interviewed broad range of customers and internal stakeholders
regarding potential post modernization service enhancements and new
functionalities.
•
Reviewed feedback and identified broad, high level themes and work streams to
further develop concepts
– Operational Efficiency and Customer Self-Service
– Communicating and Messaging
– Operating Hours
– Collateral Management
– Credit and Liquidity
•
Vetting high level themes with stakeholders
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Today’s Focus
• Operational Efficiency and Customer Self-Service
– Data Availability & Accessibility
– Account Services
– Securities Call/Redemption Process
• Message Format & Communication Standards
– Transaction Tracking
– Counterparty and Securities Mapping
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Post Modernization
Enhancements Feedback
Data Availability & Accessibility
• Discuss limitations or gaps, if any, in the availability and accessibility of
Fedwire Securities data.
• Describe enhancements, if any, to the availability and accessibility of
Fedwire Securities data that would better address your institutions’ needs.
Be prepared to discuss how potential changes would be utilized by your
organization.
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Post Modernization
Enhancements Feedback
Account Services
• Discuss limitations or gaps, if any, in the existing Fedwire Securities
account services.
• Describe enhancements, if any, to the existing account structure and
services that would better address your institutions’ needs. Be prepared to
discuss how potential changes in the account structure would be utilized
by your organization.
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Post Modernization
Enhancements Feedback
Securities Call/Redemption Process
• As it relates to securities call or redemption services, what information is
currently not provided by the Bank’s processing methodologies that would
better address your institutions’ needs?
• Describe enhancements, if any, to the call or redemption service work flow
that would better address your institutions’ needs.
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Post Modernization
Enhancements Feedback
Message Format & Communication Standards
• From the perspective of transfer messaging at a high level, describe your
institutions’ current process from trade to settlement, focusing on how
other message formats are translated or mapped to the Fedwire securities
transfer message.
• Discuss limitations or gaps, if any, in the current transfer messaging
process.
• From your organizations’ perspective, what are the potential benefits and
challenges, if any, of Fedwire Securities maintaining a proprietary
message format.
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Next Steps
• Prioritize stakeholder feedback regarding potential postmodernization enhancements.
• Develop preliminary high level post modernization roadmap by
end of 2013.
• Complete deeper dive into roadmap enhancements with
stakeholders.
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Contact Information
Cathy Zeigler – Assistant Vice President
Wholesale Operations Site
Federal Reserve Bank of Kansas City
(816) 881-2168
catherine.zeigler@kc.frb.org
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