benelux forum 2014 - iso 20022

ISO 20022 for payments (and a bit more)

Where are we at?

Frank Versmessen

Benelux Business Forum, La Hulpe, 19th March 2014

Agenda

• ISO 20022: taking the world by storm?

– Overall evolution

– Impact on a global player

– Impact on FIN

• Implementation for HVPs

– Standards

– Platform

– Migration enablers

ISO 20022 seen as “convergence” standard Weeding out proprietary (domestic) standards at MI level

[1 + m(any)] standards [1 + 1] standards

Many market infrastructures adopt ISO 20022 in their renewal cycle

Purple line = ISO 20022

4

Mulitlateral space: No adoption VS ‘Interest’ No adoption/migration requests, but some interest to lead

Need for support in a coexistent world

Need for new MX solutions

(1) In the multilateral (cash, securities, fx) space,

there is no ‘adoption/migration’ requested any

time soon, as:

• there are high levels of STP today

• no business case to migrate/adopt

• lack of business rules around usage of MX

• MT business rules deeply ingrained in ‘old’ apps

• too many other (more important) projects

(2) And the advent of MX is creating new business

opportunities; some institutions want to take

advantage of the new features; also SEPA sets the

example

5

Local custody

role Global broker

role

Cash clearing

role Cash correspon

dent business

FX

Funds

ISO 20022 impact A global player’s exposure

Demand for ISO

20022 messages

for individual

payments

Direct

membership

possibilities

Move of HVP towards

ISO 20022

Changing CSD services

as a result of T2S

Migration

ending in

2015

6

YOU

EU EMEA (non-EU) –

APAC - AME

Corporate to Bank FIN traffic will move if SEPA

transactions

No major migration anticipated

(slight SEPA impact)

Bank to Bank FIN traffic will move if SEPA

transactions


Bank to ACH NA - Files NA - Files

Bank to

RTGS/HVP

This FIN traffic will move as a result of

T2 and EBA migrations


Impact on FIN Mainly new projects

Which FIN impact for Payments do we see? FIN/MT moving to ISO20022 (now – 2018)

SMALL

SMALL

LARGE

EU EMEA (non-EU) –

APAC - AME

IM to Custodian No impact No impact

Custodian to

Custodian Potential move of traffic as a result of

becoming Direct Member to T2S


Broker to

Custodian

Potential move of traffic as a result of

becoming Direct Member to T2S


Broker/Custodian

to CSD

SEE ABOVE, and when domestic

market is migrating (DK, FI, …)


Impact on FIN Mainly new projects

Which FIN impact for Securities do we see? FIN/MT moving to ISO20022 (now – 2018)

SMALL ?

SMALL ?

LARGE ?

2008 2013 2020

SEPA

DTCC

IPFA

C2B

…

SADC/

JASDEC/ASX/

SGX/KDPW/

DK Paym/VP Sec

/IN RTGS/

TSE/CLS/BNB

2014

T2S

PASA

BOJNet

Funds

…

AU Payments

T2

EBA

…

2015-

2016 2017

CPA

(Canadian

Payments)

…

UK (Payments Roadmap) and CH payments

will be added to the mApp US > Business case assessment ongoing

ISO 20022 adoption mApp Timeline of initiatives

9

ISO 20022

adoption mApp

adoption

mApp

ISO 20022

A free IOS tablet app,

providing an overview of initiatives

adopting ISO 20022 around the world

> Information provided by

initiative* owners

> Covers all regions &

business segments

> Easy to use, contribute to

and maintain

Available in

the App Store

* Initiatives who plan to adopt the official ISO 20022 messages registered on www.ISO20022.org

> 60 initiatives

ISO 20022 adoption mApp Facilitating adoption and fostering dialogue

10

Contact

[email protected] or

[email protected]

Documentation available on

www.swift.com/standardsforum

Public data available in pdf & ppt

format for users without iPad

Discover the 66 ISO 20022 initiatives Diversity across regions and business

11

Agenda

• ISO 20022: taking the world by storm?

– Overall evolution

– Impact on a global player

– Impact on FIN

• Implementation for HVPs

– Standards

– Platform

– Migration enablers

• Background

– Agreement on how to use ISO 20022 for high value clearing payments • To protect global players and global interoperability as markets move at different speeds

• In scope: credit transfers, FI direct debits and some reporting messages

• In cooperation with the Payments Market Practice Group (PMPG)

• Status

– Payments ecosystem analysis – gaps fixed

– Implementation guidelines – finalised • Like-for-like approach i.e. reducing richer ISO 20022 to MT functionality

• Some minor outstanding questions

• Used as a basis also by other jurisdictions

– Mapping tables– being finalised

• What’s next?

– Establish maintenance process for implementation guidelines

Setting global implementation guidelines Standards

Payments ecosystem gap analysis Standards

MT Name ISO 20022 Name

Payments Initiation

MT 101 Request for Transfer pain.001 Customer Credit Transfer Initiation

MT 104 Request for Direct Debit pain.008 Customer Direct Debit Initiation

MT 207 Request for Financial Institution Transfer pain.001 Covered by

Customer Credit Transfer Initiation

Payments Clearing & Settlement

MT 102 (+) Multiple Customer Credit Transfer pacs.008 FI To FI Customer Credit Transfer

MT 102 REJT Multiple Customer Credit Transfer - Reject pacs.002 FI To FI Payment Status Report

MT 102 RETN Multiple Customer Credit Transfer - Return pacs.004 Payment Return

MT 103 (+) Single Customer Credit Transfer pacs.008 FI To FI Customer Credit Transfer

MT 103 REJT Single Customer Credit Transfer - Reject pacs.002 FI To FI Payment Status Report

MT 103 RETN Single Customer Credit Transfer - Return pacs.004 Payment Return

MT 104 Direct Debit pacs.003 FI To FI Customer Direct Debit

MT 107 General Direct Debit pacs.003 FI To FI Customer Direct Debit

MT 200 Financial Institution Transfer for its Own Account pacs.009 Financial Institution Credit Transfer

MT 201 Multiple Financial Institution Transfer for its Own Account pacs.009 Financial Institution Credit Transfer

MT 202 (COV) General Financial Institution Transfer pacs.009 Financial Institution Credit Transfer

MT 203 Multiple General Financial Institution Transfer pacs.009 Financial Institution Credit Transfer

MT 204 Financial Markets Direct Debit Message pacs.010 Financial Institution Direct Debit

MT 205 (COV) Financial Institution Transfer Execution pacs.009 Financial Institution Credit Transfer

Cash management / reporting

MT 210 Notice to Receive camt.057 Notification To Receive

MT 900 Confirmation of Debit camt.054 Bank To Customer Debit Credit Notification

MT 910 Confirmation of Credit camt.054 Bank To Customer Debit Credit Notification

MT 920 Request Message camt.060 Account Reporting Request

MT 940 Customer Statement Message camt.053 Bank To Customer Statement

MT 941 Balance Report camt.052 Bank To Customer Account Report

MT 942 Interim Transaction Report camt.052 Bank To Customer Account Report

MT 950 Statement Message camt.053 Bank To Customer Statement

MT n92 Request for Cancellation camt.056 FI To FI Payment Cancellation Request

• Stable draft of pacs.010.001.01 message available

• Qualification by SWIFT IT MX*

• SWIFT to pursue ISO 20022 approval in due time

• Submit business justification (BJ) now

• Submit message for ISO 20022 approval later ISO 20022**

• Like-for-like (~ MT 204) implementation guideline available

* Message ready for deployment across our MX based services

** After testing and live-implementation in 2017

FI direct debit gap fixed Standards

Implementation guidelines - MyStandards Standards

Participant B

MT 103(+)

202(COV)

204

Participant A

SWIFT

Interface

SWIFT

Interface

• Closed user group based

• Message validation

• PKI based security

• Archival and retrieval

• Copy services

• Support MT

MI

Application

Authorisation

request MI Authorisation

response

MT 096

Payment

Instruction

Autorised/settled

Payment Instruction

Sender Notification

MT 103(+)

202(COV)

204 (**)

(**) with information for receiver

MT 012 (***)

(***) with information for sender

MT 097 (*)

(*) with information for sender/receiver

Abort Notification

MT 019 (***)

SWIFT’s solution for T2 adopting ISO 20022 Platform – Today’s FIN Copy environment

Participant B Participant A

SWIFT

Interface

SWIFT

Interface

• Closed user group based

• Message validation

• PKI based security

• Archival and retrieval

• Copy services

• Support ISO 20022

MI

Application

Authorisation

request MI Authorisation

response

xsys.001 (*)

Payment

Instruction

pacs.008

pacs.009

pacs.010

Autorised/settled

Payment Instruction

pacs

008/009/010

(copy)

xsys.002 (***)

Sender Notification

(**) with information for receiver

(***) with information for sender

(****) out of scope migration phase 1

(*) with information for sender/receiver

Abort Notification

xsys.003 (***)

SWIFT’s solution for T2 adopting ISO 20022 Platform – Future SWIFTNet Copy environment

pacs.008

pacs.009

pacs.010

(**)

FIN IA S&F

Security / integrity / reliability Service feature

High quality of service (99.999 %) Service feature

Support by R7 qualified interface Service feature

Non-repudiation with trusted third party Service feature Selected for T2

Validation Service feature Selected for T2

Undelivered message report Service feature Selected for T2

Broadcast facility Optional Not supported

Delivery notification Optional

Message priority Optional

Queue status report Optional

Non-delivery warning Optional

Session history report Optional

Load balancing Optional

SWIFT’s solution for T2 adopting ISO 20022 Messaging services

FIN IA S&F

Y copy + fallback modes Service feature

Information for use by sender or receiver Service feature

Double authentication Service feature

Reverse billing Service feature

Individual online retrieval for 124 days Service feature (available 1Q 14 for MX)

Urgent bulk retrieval for contingency 24 hours

Cold start support (reconciliation) Service feature (available 1Q 14 for MX)

Full/partial copy Service feature

Full copy selected for T2

(partial copy will be available when

required, e.g. for EBA EURO1)

Copy destination selected by sender Not supported Service feature

Copy destination BIC8 Level2 or level3 DN

Subscription/addressing BIC8/BIC11 Level3 DN

Liability framework FIN R&L SWIFTNet R&L

(to be harmonised)

RMA By-passed for copied messages Available if it adds value

SWIFT’s solution for T2 adopting ISO 20022 Copy services

Interface/Integration

SWIFT messaging platform equivalent features, common service

description and harmonised liability

framework for MT/MX

How to shield users from migration impact Interoperability at the edge

MT back-office

Send / receive MTs

to / from counterparties

Send / receive MXs to /

from counterparties

Transformation

MT to MX

and vice versa

Future route to T2

• User back offices can be shielded from the impact of migration through

– Transformation of business payload

Migration enablers

FIToFICustomerCreditTransfer … CreditTransferTransactionInformation PaymentIdentification InstructionID TransactionID End-to-EndID InterbankSettlementAmount InterbankSettlementDate InstructedAmount ChargeBearer IntermediaryAgent1 IntermediaryAgent1Account IntermediaryAgent2 IntermediaryAgent2Account IntermediaryAgent3 IntermediaryAgent3Account UltimateDebtor Debtor DebtorAccount CreditorAgent CreditorAgentAccount Creditor CreditorAccount UltimateCreditor InstructionForCreditorAgent InstructionfForNextAgent RegulatoryReporting RemittanceInformation Unstructured Structured

Tag

:20:

:23B:

:23E:

:32A:

:33B:

:50a:

:56a:

:57a:

:59a:

:70:

:71A:

:72:

:77B:

Field

Sender’s Reference

Bank Operation Code

Instruction Code

Value Date/Currency/Interbank Settl. Amount

Instructed Amount

Ordering Customer

Intermediary Institution

Account With Institution

Beneficiary Customer

Remittance Information

Details of Charges

Sender to Receiver Information

Regulatory Reporting

K

K

J K K K K

L

L

L K

K K K

K K L K K K K

L L

Seamless transformation payload Enabled by a like-for-like implementation

FIToFICustomerCreditTransfer … CreditTransferTransactionInformation PaymentIdentification InstructionID InterbankSettlementAmount InterbankSettlementDate InstructedAmount ChargeBearer IntermediaryAgent1 IntermediaryAgent1Account Debtor DebtorAccount CreditorAgent CreditorAgentAccount Creditor CreditorAccount InstructionForCreditorAgent InstructionfForNextAgent RegulatoryReporting RemittanceInformation Unstructured Structured

Tag

:20:

:23B:

:23E:

:32A:

:33B:

:50a:

:56a:

:57a:

:59a:

:70:

:71A:

:72:

:77B:

Field


Bank Operation Code

Instruction Code


Instructed Amount

Ordering Customer





Details of Charges




K

K

J K K K K

K

K K K

K K

K K K K

FIToFICustomerCreditTransfer … CreditTransferTransactionInformation PaymentIdentification InstructionID InterbankSettlementAmount InterbankSettlementDate InstructedAmount ChargeBearer IntermediaryAgent1 IntermediaryAgent1Account Debtor DebtorAccount CreditorAgent CreditorAgentAccount Creditor CreditorAccount InstructionForCreditorAgent InstructionfForNextAgent RegulatoryReporting RemittanceInformation Unstructured Structured

Tag

:20:

:23B:

:23E:

:32A:

:33B:

:50a:

:56a:

:57a:

:59a:

:70:

:71A:

:72:

:77B:

Field


Bank Operation Code

Instruction Code


Instructed Amount

Ordering Customer





Details of Charges




J

J

J

J J J J

J J J

J

J J

J J J

J



– Transformation of business information, currently part of technical

header

Migration enablers

MT MX

Sender BIC* BANKBEBBABC Requestor DN ou=abc,o=bankbebb,o=swift

Receiver BIC* BANKDEFFXYZ Responder DN ou=xyz,o=bankdeff,o=swift

Message type 202 Request type pacs.009.001.03

Priority U/N Priority Urgent/Normal

Delivery notification 1/2/3** Delivery notification TRUE/FALSE

Obsolescence period 003 (fixed 15 mins) Overdue warning delay 5 mins to 24 hours

Field 103

FINCopy service code

TGT

Service name e.g. target.copy

Copy indicator TRUE (copy forced by service set-

up T2)

Field 108

Message user reference Reference Request ref Reference

Field 113

Banking priority

(4 characters***)

H_ _ _ (options H/U/N) Settlement priority H (options H/U/N)

_Y_ _ (options Y/N) Authorisation notification

indicator TRUE (options TRUE or FALSE)

Field 119

Validation flag STP, COV Will be part of validation offering (see next slide)

* For settlement purposes

** MT 010 Non-delivery warning, MT 011 Delivery notification or both sent in

combination with chosen priority

*** Mapping local usages of 3rd and 4th characters to be investigated

More transformation business information Mapping (business) information in MT header

• SWIFT will perform central validation of constraints and cross-

element rules of global ISO 20022 message standards*

• SWIFT will validate compliance with globally agreed like-for-like

implementation guidelines for use of ISO 20022 for HVPs

• SWIFT will not validate community-specific implementations (in line

with today’s services)

* Network validated (or cross-element) rules are almost fully aligned between MT and ISO 20022. EU-

inspired network validation in MTs will be incorporated as part of the like-for-like implementation of ISO

20022

Validation: what’s in, what’s not



– Transformation of business information, currently part of technical

header

– Shielding from protocol changes

• To be further assessed during Premium Services Forum, Amsterdam, and

future sessions

Migration enablers

• Standards

• Change in syntax – not in business data or message flows

• Implementation guidelines to be brought under well known SWIFT

processes & release cycles

• Platform

• Equivalent network & messaging services

• MX based SWIFTNet Copy solution matches MT based FIN Copy

solution

• Contractual

• Pricing principles remain the same

• R&L to be harmonised

Summary TARGET2 from MT to MX… a technical migration

benelux forum 2014 - iso 20022

Economy & Finance