Post Trade Services

ARC 2015 - WorkSession

Secure and Reliable

Messaging Service

Provide Community Solutions

Custodian of

Message Standards

Who we areSWIFT is the global provider of secure financial messaging services

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SWIFT is the global provider of secure financial messaging services

6,000+Securities Industry Users

4billionMessages per year

20millonPeak day messages

99.999%Availability

Supporting Securities

Participants since 1987

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Sub-Sahara Africa Business Plan

Africa is rising – we want to be part of this – Being part of it means contributing and

benefiting from thisVision

Ambition To double footprint over the next five years

MissionTo grow SWIFT’s market share across all market segments and all SWIFT services and solutions

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Sub-Sahara Africa Business Plan - Challenges

Being “close to the customer”

Providing “tailored

solutions” Offer “competitive

pricing”

Ability to penetrate

new market segments

Stay abreast of the market

Sub-Sahara Africa Addressing the Challenges

• Open satellite offices in Ghana (Accra) and Kenya (Nairobi)– Ability to service the regional hubs

• Establish business development capacity– Unlock new market segments

• Strengthen the sales support capacity• Entrench relationship with the Business Partner• Establish Africa Advisory Group

We have come a long way!!

BUT – this abundance of information/data makes us feel like we are trying to drink water from a fire hydrant

SWIFT delivers a common shared infrastructure for the securities industry

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SWIFT connects the financial community10,000+ members globally

Banks

Asset Managers

Corporates

Fund Administrators

Broker-Dealers

Transfer Agents

Clearing & Settlement Systems

Custodians/ Depositories

• Debt instrument

• Represent a loan

• Issuer = government or corporate borrower

Financial instrument types

EquitiesBonds

• Investment defining ownership in a company

• Companies issue shares to raise funds

Derivatives

• Linked to bonds, equities or commodities

Investment Funds

• Managed pool investment

Transaction lifecycle

Modelling

Re-balancing

Compliance

Order Management

Confirmation

Settlementinstruction

Portfolio maintenance

Reconciliation

Open Outcry Trading Floor Automated Electronic Trading Platform

Changes in trading practices

The impact of automation on trade volumes

2013 Trades vs 1998 2013 1998 % Change

Trades 38,964,070 3,656,073 965.74

Volume (Mil) 63,892 34,405 85.70

Value (R Mil) 3,981,618 319,338 1,146.84

Internationalization of the CSD business

New Regulations

Industry Integration

• Attract and satisfy the service requirements of more sophisticated foreign participants

• Offer services on other markets (if regulation allows)• New competitive situation with new entrants

To improve efficiency at all levels (CPSS-IOSCO)Increased resiliency needs with software diversityPushing towards • new services such as trade repository, collateral management • higher automation, especially in S&R space (e.g. T+2)

Major regional projects (e.g. SADC, EAC,ISO 20022 adoption) New business models emerging (e.g. Corporate Actions, Collateral Management)

CSD market trendsCentral Securities Depositories (CSDs) evolve…..

CSD Business flows supported through SWIFTCovering all aspects of CSD business

Settlement Services

Investor Services

Issuer Services

Financing Services

Information Services

Custodian/Bank

CSD

Broker-Dealer

Other CSD

CSD community Funds Services

Revenues/ Portfolio

The leaking pipe syndrome

Net Profits/ Portfolio

Performance

Multiple Standards

Complex Products

Manual Processes

Legacy Systems

Lack of Systems Integration Multiple Links

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Increased cost

Missed opportunity

Why Standardise?

Where to start…..at the beginning

• Focus on –

• Standardisation – across the market

• Automation

• ISO15022 is widely uses and the most accepted protocol globally in the post trade space.

• Standards are not stagnant and continue to evolve with market needs and technology, hence ISO20022

• Need even more automation and standardisation between parties – less time to process errors as settlement cycles decrease

• In other words there is a need for real-time systems allocation resulting in contract note and settlement allegements being generated within seconds thereafter

• Failed Trade processing – focused on automation

• DR/BCP reliance – less time to fix issues

MyStandards how does it work ?

www.swift.com/mystandards

Implement

Publish PDF, Excel & XML schema

BrowseIndividual consumers

Premium Licence Owner

Publish

Analyse

Capture guidelines

Collaborate

Browse

MI FI MPG

So What’s the big DEAL?

STP

Market Evolution

The key market players

Investment Managers

Brokers

Dealers

Stock Exchanges

Custodians - Global, Regional, Local/Sub

Central Securities Depositories

SWIFT broadly used in Securities marketsmore than 50% of SWIFT’s total traffic is securities messages (2014)

Investment Manager

Execution venue

Broker

CSD

Clearingvenue

ICSD

Bank Custodian/Settlement

Agent

Global Custodian

Post Trade, Pre-settlement: Trade confirmation

These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Broker / Dealer) or service provider (e.g. electronic trade confirmation provider) to provide early information about a deal, to instruct the allocation of a block trade, to confirm the details of a trade, and to affirm the details of a confirmed trade.

Clearing and settlement: Securities

Securities reporting

Cash Reporting

Cash management and payment status details are exchanged using the Category 9 FIN messages or XML cash management messages. These messages are exchanged between financial institutions, either on behalf of themselves, other financial institutions, or customers.

Input

Our purpose is to assist our user community to reduce risk, cost improve efficiency and performance

Output

Cost Reduction and Improved Performance

In a nutshell

• Network: highly-resilient, high availability, worldwide, secure, internet • Messaging: message/file/browse, authentication, non-repudiation, optional validation• Interfaces: industrial size to standalone, highly-resilient, high availability, secure• Security: SWIFTNet PKI (on SWIFTNet) or 3Skey (for other comms solutions)• Integration: Transformation, enrichment, fully integrated with interface

Technology

• ISO standards: ISO 15022, ISO 20022• Other FIN standards: MT for payments, FX, trade• Tools: MyStandards, Readiness Portal

Standards

• Support: 24/7/365 follow-the-sun support, support centres in all time-zones• Project management• Technology support: reviews, implementation & operational• Standards: consulting• Business: internal reviews

Services

How do Securities Markets benefit from the adoption of SWIFT?

• Improved Efficiency• Reduction in Risk• Reduction in Costs• The ability to manage by exception rather than process• The Ability to become volume insensitive• Delivery of value added services• Internal System Connectivity• Industry Connectivity• Attractive to regional & international investors• Increased Competitiveness• International Standards• Secure & Reliable message delivery

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• By adopting international standards and using the SWIFT network the market players achieve best in class processing

• Able to meet CPMI/IOSCO and G30 standards

• Effectively operate both domestically, regionally and globally

Conclusion

Conclusion

Q&A

Thank you!