How can SWIFT be used on the Russian Securities Market?

Steven Palstermans

Head of Russia, CIS & Mongolia

2

Eligibility criteria – 27 SWIFT user categories

SWIFTCommunity

SWIFTCommunity

Members Non shareholding Members

Sub-members

Brokers & Dealers

Central Depositories& clearing Institutions

Subsidiary Providers of custody & Nominee Services

Recognised Exchangesfor Securities & relatedfinancial Instruments

Fund Administrators

IMI’s

Money Brokers

Non shareholding Financial Inst.

Trading Institutions

Registrar & Transfer Agents

Trust or Fiduciary Services CompaniesRepresentative Offices

Travellers Cheque Issuers

Securities Proxy voting Agencies

Treasury ETC Service Providers

Securities Electronice TradeConfirmation Service Providers

Securities Market Data Providers

Financial Market Regulators

Treasury Counterparties

Corporates

Participants in MA-CUGs

Payments System Participants

Securities System Participants

CREST Participants

3

CIS0.98%

ROW99.02%

CIS : Traffic Share

Source : FIN_per Sales Area

RU75.11%

Rest of CIS

24.89%

BY18.50%

GE3.57%

KG2.39%

MD3.43%MN

1.66%

TM0.40%

TJ1.13%

UA33.67%

UZ3.33%

KZ16.02%

AM2.67% AZ

13.21%

4

Russia : Messages by market

Russia

Payments73.6%

Trade0.5%

Treasury12.7%

Securities13.2%

CIS

Payments76.7%

Trade0.7%

Treasury12.2%

Securities10.3%

Aug/2008 Growth

Payments 18.10%

Securities 74.07%

Treasury 10.20%

Trade 14.01%

Total 21.84%

Aug/2008 Growth

Payments 15.75%

Securities 72.79%

Treasury 11.75%

Trade 10.40%

Total 18.77%

5

Russia : Weight Domestic Traffic per Market

0

5,000,000

10,000,000

15,000,000

Payments Securities Treasury Trade

Total Dom

Weight:54%

Weight:26%

Weight:70%

Weight:15%

6

Securities Market Infrastructures on SWIFT>80 institutions from 50 countries

Hong Kong Exchanges and Clearing

Hong Kong Monetary Authority (CMU)

Hong Kong

Estonian Securities Depository

OMX

Estonia

MCSD MISR for Clearing, Settlement and Depository

Egypt

Central Securities DepositoryBank of Greece

Greece

Eurex ClearingClearstream Banking AGMTS

Germany

Caja de ValoresArgentina

France

Finland

Czech Republic

Croatia

Canada

Brazil

Belgium

Austria

Australia

Euroclear FranceEuronext Paris – MATIFMTS

NCSD Finland – APKOMX

UNIVYC

Sredisnja Depositarrna Agencija

CDS

CBLC

Euroclear Belgium

Euroclear BankMTSNational Bank of Belgium

OeKB

Australian Securities Exchange

Austraclear

Keler

KSEI

Euroclear UK & Ireland

Hungary

Indonesia

Ireland

Euroclear NederlandMTS

Netherlands

RBNZ Austraclear

NZX Ltd

New Zealand

The National Depository Center

Depository Clearing CompanyRussian

Federation

National Depository for Securities – KDPW

Poland

Banco de Portugal – SITEMEMTS

Portugal

VPSNorway

S.D. IndevalMexico

Clearstream Banking SALuxemburg

OMXLithuania

Midclear

Central Depository

Lebanon

Bank of LatviaCentral DepositoryOMX

Latvia

Korea Securities DepositoryKorea

Central Securities Depository

Kazakhstan Stock ExchangeKazakhstan

Bank of JapanJasdec

Japan

CCGMonte Titoli

Italy

Tel Aviv Stock ExchangeIsrael

Central Bank of Sri Lanka (LankaSecure)Sri Lanka

DIFXUAE - Dubai

Reserve Bank of ZimbabweZimbabwe

ISE Settlement and Custody Bank INCTurkey

The Central Depository (Pte) Ltd

Monetary Authority of Singapore

Bank of Slovakia

CDCP

Singapore

Slovakia

Chicago Mercantile ExchangeClearing CorporationDTCCFederal Reserve BanksOmgeoOptions Clearing Corporation

USA

Euroclear UK & IrelandLCH.ClearnetLondon Stock Exchange

United Kingdom

Thailand Securities Depository Co. Ltd.Thailand

Taiwan Depository & Clearing Corporation

Taiwan

SISSIS x-clear

Switzerland

NCSD Sweden – VPCOMX

Sweden

IberclearMEFFMTS

Spain

STRATEJSE Ltd

South Africa

Central Securities Clearing Corporation – KDD

Slovenia

DenmarkOMX

VP

How can we talk to each other in one language: ISO Standards?

8

Existing standards working groups for CSDs

Giovannini working groups

Global CSD working group•Consolidate CSD views

on standards

9

National Market Practice Groups

www.smpg.info

NMPG countriesNMPG countries specified on EIG

10

Market Need – Manual data entry problem

CSD

Issuer Issuer Issuer

Registrar

Investor

Custodian

On-Line(very few markets)

ISO 15022

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Market need – Corporate Actions

Challenges Significant shortfall in

message quality and market practice compliance

Limitations of software vendor solutions

Difficult business case – management buy-in for improvement projects

Drivers Losses / risk mitigation Operational efficiency Reducing costs Regulatory compliance Customer Service Maximise portfolio

performance Achieve scalability

The Drive for STP Standards Market practice and tools Best practices

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• Simulation Testing and Qualification Service (STaQS)

• Test MT 564 Notification and MT 566 Confirmation messages for compliance to market practice

… a health check for Corporate Actions messages

• What can you do with this service?– Measure conformance– Identify improvement areas– Benchmark progress– Improve counterparty automation

STaQS for Corporate Actions

13

How to make it easier and cheaper to use SWIFT?

15

80%

18%

2%

Low volume customers

Messages per day

180

5,700

300,000

Low volumecustomers

Medium volumecustomers

1,000 40,000

Inst

itu

tio

ns

High volumecustomers

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• Easy to order, install and use

• SWIFT security

• FIN and FileAct enabled

• Attractive price

• Available now.

Product

Simple connectivity

Alliance Lite

17

Attractive pricing

4,000650

1 EUR/item

Items/month

EUR/month

Pay as you go

Flat Fee

1 item = 1 FIN MT, or 1 FileAct chunk of 100 KB, sent or received

850

Monthly billing200

Subscription for 1 year, tacitly renewed, cancellation with 3 months notice

18

Questions?

19

Thank you