Standards Fundamentals

Sibos 2012

Prof. Poppe

29 October 2012

First there was….

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Telex

Paper

Fax

What was wrong with it

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Ambiguous content

Low potential for automation

Risks for errors &

misunderstanding

High operating cost

Labor intensive security

Unstable connections

The Solution 1: A network

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1977: Launch of the Swift Network

Solution 2: Standards

Managed by SWIFT

and

SWIFT working groups

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MT 100, first Developed Message

Payments Category

later 101, 200, 201, 202, 203, 205, 210, 900, 910, 950

The MT 100 /103 becomes a defacto

standard

Used on other networks and applications

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Standard way of presenting a payment

Followed by other categories

• MT0xx System Messages

• MT1xx Customer Payments and Cheques

• MT2xx Financial Institution Transfers

• MT3xx Treasury Markets

• MT4xx Collection and Cash Letters

• MT5xx Securities Markets

• MT6xx Treasury Markets - Metals and Syndications

• MT7xx Documentary Credits and Guarantees

• MT8xx Travellers Cheques

• MT9xx Cash Management and Customer Status

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This is what it looks like

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MT 103 Single customer credit transfer

MT 541 Receive (securities) against payment

1st digit is the category number = business area

1 = Customer payments & cheques

3 = Treasury markets - FX, money markets & derivatives

5 = Securities markets

Naming Convention

This is what it looks like

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:20:12345

:32A:120731EUR1958,57

Sender's reference

Value date/currency/interbank settled amount

Tag Based

This is what it looks like

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Field Options

The field option defines HOW the data in the field is provided

This is what it looks like

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Strong Format specification

C6: If field 23B contains one of the codes SPRI, SSTD or SPAY, field 54a may

be used with option A only (Error code(s): E05).

C7: If field 55a is present, then both fields 53a and 54a must also be

present (Error code(s): E06).

This is what it looks like

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Strong Format specification

SWIFT MT messages: example Sender: OELBATWWAXXX

Message type: 103

Receiver: ABNANL2AXXXX

Full details of headers in UHB

Block 4 is text block:

– Fields appear in order

given in UHB

– Detailed content must

conform precisely to UHB

specification

– UHB specification covers

content of each field, and

cross-field validation

rules

MT Messages on the Swift Network

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Invalid messages are Nacked !

Valid messages are Acked !

MT Messages on the SWIFT Network

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Delivery Notification

Non Delivery Warning

Bulk Retrieval Request

Y Copy

T Copy

MT Messages on the Swift Network

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Every year a new MT release

Big Bang

Then other financial institutions joined the

Swift network

Need for Securities messages: Category 5 Messages

Published as an ISO 7775 standard

Managed/maintained by Swift

The standard needed to be enriched to

cope with the complexity of securities….

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1987,The answer: ISO 15022,

The securities Industry Standard

Fields with Qualifiers

Field 94a: Place

Same syntax as MTs

Financial Dictionary, Managed by Registration Authority

Only Cat 5 and Securities related messages in Cat3

Open Standard. Can be used on other networks ….

Developed and maintained by SWIFT and user community

(maintenance working groups)

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Order M/O Qualifier R/N CR Options Qualifier Description

1 O CLEA N H Place of Clearing

2 O TRAD N B Place of Trade

Clear marking of sequences

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The next step, ISO20022

All categories

Presentation title – dd month yyyy – Confidentiality: xxx 20

Early 90’s Internet standards became

dominant, o.a XML

Financial Dictionary

Model Driven

Reverse engineering of

ISO 15022 messages

ISO Validated

New messages

Open. Development by anybody

ISO 20022, A recipe to build standards

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Underlying analysis in

collaboration with industry

Capture

the basic foundations of the business

Agree on how to use

and/or exchange those concepts in a

financial messaging

context

More than just messaging! A repository …

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Based on a Business model

ISO 20022 Repository

Debtor

InstructedAmount

PaymentDate

Payment

CreditorAccount

Creditor

DebtorAccount

Remittance

More than just messaging! A repository …

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GUI

Functional layer

Data layer

GUI

Functional layer

Data layer

ISO 20022 Repository

Debtor

InstructedAmount

PaymentDate

Payment

CreditorAccount

Creditor

DebtorAccount

Remittance

Business model

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Definition of

payment

Technical Schema

Message

Information needed

to communicate, eg,

credit transfer

instruction

More than just messaging! A repository … ISO 20022 Repository

Debtor

InstructedAmount

PaymentDate

Payment

CreditorAccount

Creditor

DebtorAccount

Remittance

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Reusable Message Components

More than just messaging! A repository …

Data Types

Formal Model

Formal Descriptions

This is what it looks like, the naming

convention

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Payments

initiation

pain Payments clearing &

settlement

pacs Cash management camt

Securities

trade

setr Securities settlement sese Securities

management

semt

Securities

events

seev Reference data reda Foreign exchange

trade

fxtr

Business area examples:

setr.010.001.03 Subscription Order Message Identifier Message Name

Business area

Identification # Variant #

Version #

MX Messages on the Swift Network

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MX messages vs.

ISO Messages

Validation

per Service No Embedded Network

related features

Business Application

Header Extension Mechanism Build in

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Thank you