Evolution of Standards – ISO 20022International Seminar on Adoption of ISO 20022 for RTGS

Stephen Lindsay – Head of Standards, SWIFT

30th December 2013

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ISO and Standards

About ISO (1/3)

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• International Organization for Standardization• Formed after World War II (in 1946)

– 65 delegates from 25 countries met in London to discuss standardization

About the name:

Because 'International Organization for Standardization' would have different acronyms in different languages (IOS in English, OIN in French for Organisation internationale de normalisation), our founders decided to give it the short form ISO. ISO is derived from the Greek isos, meaning equal. Whatever the country, whatever the language, the short form of our name is always ISO.

About ISO (2/3)

• Federation of 164 National Standards Bodies (NSBs), e.g.:– Bureau of Indian Standards (BIS/India)– British Standards Institute (BSI/UK)– American National Standards Institute (ANSI/US)

• Formal liaison with 700 international/regional organisations, such as UN, WTO, WCO, OECD, BIS, WB, ICC, CE, EC

• 150 staff based in Geneva and 50,000 volunteers from NSBs and liaison organisations involved in 730 committees (agriculture, industry, health, services, etc.)

• 19,500 international standards, 65 with a Registration Authority (RA)

• TC68 – Financial Services: 31 NSBs, 51 standards (9 with an RA), 13 liaison organisations (ANNA, UN/CEFACT, ECB, EPC, Clearstream, Euroclear, FIX, ISDA, ISITC, SWIFT, Mastercard, Visa, ITU)

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About ISO (3/3)

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National Standards Bodies (BIS, BSI, ANSI, AFNOR, DIN, UNI, etc)

General Assembly

Council

Technical Management Board (TMB)

Central Secretariat

TC TC TCTC 68

Financial Services

WG 6 LEI

SC 7Banking

SC 4Securities

SC 2Security

WG4 & 5ISO 20022WGWG WG WGWG WG WGWG WG

163 Countries

224 Technical Committees

513 Subcommittees

2,516Working Groups

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Some key ISO standards managed by TC68 and its subcommittees SC4 & SC7

TC/SC Standard Description RA

SC4 ISO 15022 Securities Messages SWIFT

TC68 ISO 20022 Universal Financial Messages SWIFT

TC68 ISO 17442 Legal Entity Identifier (LEI) -

SC4 ISO 6166 International Securities Identification Number (ISIN)

ANNA

SC7 ISO 9362 Business Identifier Code (BIC) SWIFT

SC7 ISO 13616 International Bank Account Number (IBAN) SWIFT

SC4 ISO 10383 Market Identifier Code (MIC) SWIFT

SC7 ISO 8583 Financial cards -

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SWIFT & ISO Messaging Standards Timeline

Proprietary MT

•1973 - •Payments, Cash, Treasury & Trade

ISO 777

5•1984 – 1997•Securities only

ISO 15022

•1999 -•Securities only

ISO 20022

•2004 -•All markets

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About ISO 20022

• Grew out of ISO 15022:– Notion of re-usable components (financial dictionary)– Broader scope (all financial services)– Syntax independent– Extensible

• Methodology– A ‘recipe’ for making financial messaging standards– Latest version ISO 20022:2013

• Content– Business Model– Collection of message definitions

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The ISO 20022 Methodology

• Published in 8 parts by ISO• Implemented by Registration Authority

The methodology distinguishes 3 layers:

Business / Conceptual

• Defines financial concepts, e.g., ‘Credit Transfer’

Logical• Defines e.g. credit transfer messages, to serve the business

process

Physical

• Defines physical syntax, e.g. XML

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Methodology - Business / Conceptual Layer

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Methodology - Logical Layer

Elements in the Logical Layer refer to the Business / Conceptual layer for their definitions

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Methodology - Physical Layer

XML– The commonest syntax

for ISO 20022 but not the only one

– Defined by an XML Schema (XSD)

– Easy to integrate in modern IT environments

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Content – www.iso20022.org (1/2)

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Content – www.iso20022.org (2/2)

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ISO 20022 Governance

• Technical Committee 68 (TC68) [Conv.: K. McKenna]

–Registration Management Group (RMG) [Conv.: J. Whittle]

• Submitters of new messages and maintenance requests• Registration Authority (RA)• Technical Support Group (TSG)• Standards Evaluation Groups (SEGs)

– Payments– Securities– Cards– FX– Trade Services

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How to become a member of the RMG, SEGs or TSG?

• RMG members are nominated by participating member* countries and category ‘A' liaison organizations of ISO TC68 or one of its subcommittees.

• SEG and TSG members are nominated by participating and observer member countries or any category of liaison organization of ISO TC68 or one of its subcommittees.

Nominations must be addressed to the ISO TC68 secretariat by the national standards body of the country or by the liaison organization that the member represents.

* India/BIS is a participating member in TC68.

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For more information see the TC68 Homepage

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ISO 20022 Adoption

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IPFA

SEPA,EU

BR

DK

CH

US – retail division of FRB

CPA, CA

IPFA

T2, EU

AU

Zengin, JP

CNAPS2, CN

IN

Low-value

High-value

BOJNet, JP

CPA, CA Live

Live

Live

NZ

SG

CO

PE

ISO 20022 Adoption – Payments MI & initiativesFrom discussion to implementation

Live

PG

CL

UK

SADC

Hybrid

ZA

PL

BN

US

US

Status overview – Payments MI

Status Planned live date

EU-SEPA(33 countries)

Live Live – end date 2014 (euro-countries)

IPFA Live Since 2010

IN - RTGS Roll-out 2013

SADC Planned 2014

JP-BOJNet Roll-out 2015

ZA Planned 2015

CH Roll-out 2015-2018

AU-LVP Planned 2017

T2 Committed 2017

CA-all payment systems Roll-out 2020

CNAPS2 Under discussion TBD

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ISO 20022 in the corporate-to-bank space

More than 60 banksreceiving

payment initiationmessages

(over SWIFT)

Around70 members

(corporates and banks)defining

common global implementation

guidelines

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ISO 20022 Adoption ‘mApp’ for iPad

ISO 20022 allows for more flexibility than MT to cater for local/specific needs:• Implementation guidelines

formal way to express market practice

• Extensions

• Right tools and services available to manage flexibility

ISO 20022 Awareness Training Live Meeting V01 25

Why adopt ISO 20022? a global standard to meet local needs

Who (and what) is driving ISO 20022 adoption?

• New initiatives– Market infrastructures– Global harmonization & regulation (e.g. SEPA in Europe)– Automation in specific markets

(e.g. the ‘investment funds’ market)

• New players– Corporates, fund managers

• New technology– XML, SOA, web services

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How to adopt ISO 20022?Managing diverging local implementations

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• Is a risk – but still better - Coordinationthrough working

group defining HVP implementation

guidelines- Best practice sharing

- Tools allow to harmonize MyStandards- Mitigate risks

A risk that can be mitigated by a coordinated approach: • Collaboration and best practice sharing in working

groups (e.g. HVP implementation guidelines)

• Services to help communities migrate and implement (roadmap/creation of guidelines/mapping/etc)

• Tools to facilitate sharing and harmonization

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Case Study: SEPA (1/2)

• Goal– A single ‘domestic market’ for retail euro payments– 33 countries – not all part of euro area or EU – Principal instruments: Credit Transfer and Direct Debits

• Replace country-specific retail payment schemes

• Replace domestic standards with ISO 20022– Bank-to-Bank– Corporate-to-Bank

• Bank-to-bank, cross-border: live 2008• Corporate-to-bank, domestic: end-date Feb 2014

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Case Study: SEPA (2/2)

• First major implementation of ISO 20022

• First phase successful, subsequent phases still ongoing

• Lessons learned:– Importance of clear governance and ownership– Need to involve all stakeholders– Communication – clear and consistent messages– Consider impact on legacy systems– Clear market practice – formally defined

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SWIFT’s role(s) in ISO 20022

• Inventor of ISO 20022• Principal submitter (80%+ of content submitted by SWIFT

Standards)• Registration Authority• Members of:

–TC68, SC2, SC4, SC7–RMG –SEGs–TSG

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SWIFT’s ISO 20022-related services

• Consulting services for submitters• Adoption and implementation consulting• Standards tools and technology (MyStandards)• Network provider:

–Connectivity–Value-added services

• Integration• Testing• Validation• Copy services

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Any Questions?

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Thank you

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Backup (Securities Adoption)

DTCC, US

JASDEC, JP[Post-trade]

Euroclear

Clearstream

ANBIMA, BR

T2S, EU

CSD, LI

CSD, PL

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CSD, EE

CSD, LT

ASX, AU

Live

Live

ISO 20022 Adoption – Securities MI & Treasury MI – From discussion to implementation

CLS

Treasury MISecurities MI

SGX, SG

JASDEC & TSE, JP

[Corp.Act]

VN

Live

CN

Live

BR, CSD

Live

NSD, RU

VP Lux

VP Sec DK

BN

Status overview – Securities & Treasury MI

Status Planned live date

FR-Euroclear / Funds Live

Clearstream/Funds Live

US- DTCC/Corporate Actions Live

BR-Anbima Live

AU- ASX-Corporate Actions Roll-out End 2013

JP- JASDEC – Post-Trade Services

Roll-out 2014

JP –JASDEC + TSE – Corp. Actions

Roll-out 2014

CLS Roll-out 2014

T2S Roll-out 2015

SG- SGX/Corporate Actions Under discussion TBD

BR – BM&FBOVESPA Committed TBD

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ISO 20022 Adoption – Funds (live traffic Jan-Oct 2012)

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GB

CH

AU

TW

SE

FINO

IE

ES

ITGR

EE

BE

NL

LU

KRUS FR

DE

SG

HKBM