standards messaging landscape v1 5

8/3/2019 Standards Messaging Landscape v1 5

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Standards Messaging Landscape

23 August 2011


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Legal Notices

Copyright

Copyright S.W.I.F.T. SCRL (SWIFT), avenue Adle 1, B-1310 La Hulpe, Belgium, 2011. All rightsreserved.

The recipient is, however, authorised to copy or reproduce this document within its own organisation asmay be reasonably necessary for the purpose for which it is supplied. Any such copy or reproduction will

include all notices set out on this page.

Confidentiality

This document may contain proprietary and/or confidential information of SWIFT and/or its suppliers. Therecipient should not disclose this document or the information it contains to third parties without the priorwritten permission of SWIFT.

Trademarks

SWIFT, S.W.I.F.T., the SWIFT logo, Sibos, Accord and SWIFT-derived product and service names - suchas but not limited to SWIFTNet, SWIFTAlliance and SWIFTStandards - are trademarks of S.W.I.F.T.SCRL.

SWIFT is the trading name of S.W.I.F.T. SCRL.

All other product or company names that may be mentioned in this document are trademarks or registeredtrademarks of their respective owners.

IMPORTANTThis document is supplied for information purposes only, and shall not be binding nor shall it be construedas constituting any obligation, representation or warranty on the part of SWIFT.

The information in this document is the latest available at the date of its production and may change from


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Standards Messaging Landscape Page 4

5 OTC Derivatives .......................................................................................... 335.1 Business overview ........................................................................................ 335.2 High-level standards landscape .................................................................... 345.3 Detailed standards landscape ....................................................................... 355.4 Additional opportunities ................................................................................. 375.5 Standards Coordination Group Investment Roadmap .................................. 376 Commercial and Syndicated Loans .......................................................... 386.1 Business overview ........................................................................................ 386.2 High-level standards landscape .................................................................... 396.3 Detailed standards landscape ....................................................................... 406.4 Additional opportunities ................................................................................. 407 Commodities................................................................................................ 417.1 Business overview ........................................................................................ 417.2 High-level standards landscape .................................................................... 427.3 Detailed standards landscape ....................................................................... 437.4 Additional opportunities ................................................................................. 438 Trade and Supply Chain ............................................................................. 458.1 Supply Chain Overview .............................................................................. 458.1.1 Business overview ........................................................................................ 458.1.2 High-level standards landscape .................................................................... 478.1.3 Detailed standards landscape ....................................................................... 488.1.4 Additional opportunities ................................................................................. 498.2 Documentary Collections (Payment Instrument)..................................... 508.2.1 Business overview ........................................................................................ 508.2.2 High-level standards landscape .................................................................... 518.2.3 Detailed standards landscape ....................................................................... 528.2.4 Additional opportunities ................................................................................. 52


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8.3 Documentary Credits (Payment Instrument) ............................................ 53 8.3.1 Business overview ........................................................................................ 538.3.2 High-level standards landscape .................................................................... 558.3.3 Detailed standards landscape ....................................................................... 568.3.4 Additional opportunities ................................................................................. 588.4 Demand Guarantees/ Standby Letters of Credit (Payment Instrument) 59 8.4.1 Business overview ........................................................................................ 598.4.2 High-level standards landscape .................................................................... 608.4.3 Detailed standards landscape ....................................................................... 608.4.4 Additional opportunities ................................................................................. 62


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Big potential

Medium potential

Some potential

Kicked off

Halfway

Near completion

100%

80%

50%


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Payment initiation

Payment related processes

(cancellation, reversal, e-payment

request & guarantee, e-mandate

exchange)

Payment clearing & settlement

(customer & FI payments)

Payment related processes

(cancellation, reject, reversal, return)

Routing

Booking

Netting

Reporting

(payments & balance)

Matching

Reconciliation

Liquidity management

Initiation Clearing & Settlement Cash Management

Transversal

Exceptions & Investigations

Bank account management

Risk management

Counterparty management

Regulatory reporting

KYC - AML compliance

Reference data (SSI)

Charging & Billing

1 Payments1

1.1 Business overview

A payment is the transfer of cash from one party (such as a person, a company or a financial institution) to another. A payment is usually made inexchange for the provision of goods, services, or both, or to fulfil a legal obligation.

1 As this document primarily focuses on business domains catered for by SWIFT, the payments landscape does not contain an assessment of the (ISO) standards

used for card payments.


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Initiation

A payment transaction always starts with the initiation of the payment, be it a customer or a financial institution payment, a credit transfer or adirect debit. The initiation of a payment might be preceded by other processes, for example, the exchange of mandate information for direct debitsor of guarantees for electronic online payments. Bank customer may initiate a payment by paying a visit to their bank or using online banking. Acompany may initiate a payment by means of electronic access to banking services to instruct payments out of their accounts. A payment may

also be initiated by a bank as the result of their normal daily business, for example, as a result of a loan, a FX deal or the acquisition of stocks,bonds, commodities, metals etc.

The initiator of the payment may decide to request cancellation, to reverse or to query a payment.

Clearing & Settlement

Upon receipt of the payment instruction, and prior to execution, control processes and filtering mechanisms are applied - such as anti-moneylaundering and sanction list screening, ensuring that necessary mandates are in place, verifying the authority of the initiator to request thepayment, the availability of funds etc. Depending on the nature of the payment, the bank will use the most appropriate means for executing thetransaction. High value or urgent payments might be channelled through high value payment systems (real time gross or net settlement systems),whereas low-value payments are typically batched and sent for clearing and settlement through an automated clearing house (ACH). Crossborder payments will be sent to a correspondent bank in the currency of the transfer. Charges are taken as appropriate and regulatory reporting is

done if required. Payment related processes such as cancellation, reject, return, reversal and investigation of a payment may also occur.

Cash Management

Advices and reports, for example, end of day statements, are sent to account holders, on which they can start their matching and reconciliationprocesses. Liquidity is monitored based on incoming transaction and balance reports or interactive online monitoring and may trigger actions, forexample, collateralisation of assets to obtain liquidity and process pending payments in queues.

Transversal

Transversal processes can occur across the different business areas. Throughout the lifecycle of a payment, exceptions andinvestigations may be initiated, managed and resolved and this by all parties in the chain. All players will have the necessary tools in place

to manage their accounts (for example, opening and closing of accounts), to manage risk, to meet regulatory requirements (for example,KYC procedures, AML screening) and to manage their counterparties and reference data to optimise the payment processing.


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Initiation Clearing & Settlement Cash Management

Exceptions & Investigations Bank Account Management Charging & Billing

(planned)

Regulatory Reporting &Screening

Reference Data MTMXTWISTIn developmentPotential

1.2 High-level standards landscape


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1.3 Detailed standards landscape

Process Area Availability of MT, ISO 15022 and

ISO 20022

Availability of other standards Ongoing & planned activities

OpportunitiesInitiation Full coverage:

Customer and Financial Institution Requestfor Transfer/Direct Debit MT messages incategory 1 and 2 to initiate payments.

Common Group Request for CancellationMT message in category 1 and 2 to cancelpayments.

Corporate-to-Bank Payment Initiation(pain) ISO 20022 messages to initiatepayments, request cancellation ofpayments and report payment status.

E-mandate ISO 20022 messages for theInitiation, Amendment, Cancellation andConfirmation/Validation of e-Mandates.

E-payment XML messages for the Requestand Guarantee of electronic onlinepayments.

Mainly governed by domestic standards(best case) or bank-proprietarycommunication protocols.

EDIFACT (Payext and Paymul)

Significant opportunities to deploy thestandards:

- Important progress is being made byagreeing on common implementation ofISO 20022 in the corporate to bankpayment initiation and reporting spacethrough the Common GlobalImplementation (CGI) initiative.

- E-mandate ISO 20022 messageimplementation guidelines included in EPCrulebooks for SEPA direct debits.

Furthermore: opportunities in ensuringstandards support for new channels suchas mobile and e-payments. For exampleTC68/SC7/WG10 NWIP to createinternational standards for mobilebanking/payments.


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Process Area Availability of MT, ISO 15022 andISO 20022

Availability of other standards Ongoing & planned activitiesOpportunities

Clearing andSettlement

Almost full coverage:

Customer and Financial Institution CreditTransfer and Direct Debit MT messages incategory 1 and 2 to clear and settlepayments, including payment returns.

Common Group Request for CancellationMT message in category 1 and 2 to cancelinter-bank payments.

FI-to-FI Payment Clearing and Settlement(pacs) ISO 20022 messages to clear andsettle payments, request cancellation,reverse, return and report status ofpayments.

ISO 15022 messages for StandingSettlement Instructions (SSI) available.

Domestic standards in local clearingsystems.

EDIFACT (Finpay)

The ISO 20022 interbank messages havebeen implemented for SEPA and IPFA.Other players around the world are

enabling the use of ISO 20022 next to thedomestic proprietary formats. Themessages have also been selected bymajor securities industryplayers/organisations as the futurestandards to process payments related tounderlying securities transactions.

More and more players work towardsobtaining at the minimum a standard that isinteroperable with ISO 20022, for exampleFedwire, CHIPS, NACHA etc.

Opportunities:

- complete the coverage with developmentof a financial market direct debit / clearingallocation message

-define common global implementation foruse of ISO 20022 for interbank high-valuepayments (cross-border, RTGS etc.) aheadof global implementation initiatives

- develop common standard operatingguidelines for interbank clearing business


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CashManagement

Full coverage:

Cash management MT messages incategory 9 for payment confirmations,reports, statements and status reporting.

Cash Management (camt) ISO 20022messages for debit/credit notifications,notification to receive, account and balancereports and statements for the bank-to-corporate and interbank space.

Cash Management (camt) draft ISO 20022messages to retrieve business informationand manage limits and cash reservationswithin high value payment systems.

Domestic and bank proprietary standards

EDIFACT (Debmul, Cremul and Finsta)

Significant opportunities to deploy thestandards globally. Important progress isbeing made by agreeing on common

implementation of the ISO 20022 in thebank to corporate space through theCommon Global Implementation (CGI)initiative.

The cash management messages for usewithin high value payment systems arebeing fine tuned through maintenance toincorporate requirements for Target2-Securities (T2S), as well as being alignedwith the existing ISO 20022 paymentstandards.

There may be opportunities in ensuringthat new products like e-bil l presentmenthave adequate reporting and reconciliationmeans and in this area also card paymentsmay require some more attention andpotentially SWIFT involvement.

Work to define a Liquidity RiskManagement Rulebook is planned.

Transversal Partial coverage:

Common Group Query/Answer MTmessages in category 1, 2 and 9 toinvestigate payments and reportedtransactions.

Exception and Investigation (camt) ISO20022 messages to investigate paymentsand reported transactions.

Bank Account Management (acmt) ISO20022 messages to Open, Maintain andClose a cash account, including mandatemanagement (account permissions). Theset also includes messages to reportaccount (parameter) information.

Domestic and bank proprietary standards

TWIST (Charging & Billing)

Reverse engineering in ISO 20022 of anexisting TWIST Bank Services Billingmessage used in the bank to corporatespace and requirements analysis toenhance message for use in the interbankspace is ongoing. There is an opportunity

to investigate the use of the messageoutside of the payments industry.

The development of a message formaintenance of mandates ("deltamessage") is foreseen, but not yet started.

The SWIFT Sanctions Advisory Group isdiscussing standardisation of sanction listswith The Wolfsberg Group, United Nations,OFAC, European Commission.


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1.4 Additional opportunities

Most value will be added in the coming years by supporting our different customer profiles with guidance on how to implement the existingstandards in a harmonised and consistent, but at the same time flexible, manner to address their specific needs.

There is a big opportunity for the securities industry to identify the complete set of ISO 20022 messages or potential messages that will allow fullautomation of cash processing for the buy-side, custodians, and fund administrators.


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Order to buy or sellTrade executionTrade agreement and matching

Pre-allocationTrade reporting

Order book reconciliationFixingsRoll-over

Indication o f in terestQuote

Trade matchingAllocationGive up

Confirmation & affirmation

Pre-trade Trade Post-trade

Trade validation and matchingNettingRequest for settlement

Risk ManagementRegulatory reporting

ReconciliationNovation

Reference data (SSI)

Clearing / Pre-settlement Settlement

FinancingProcess adjustmentSettlement

ReconciliationTransaction reporting

2 Foreign Exchange


The foreign exchange business and process flow covers pre-trade, trade, post-trade, clearing/pre-settlement and settlement processes where twodealing parties, for example, foreign exchange dealers, investment managers, banks, custodians, corporations, central banks, amongst othersmay play various roles in any individual step of the process.

Pre-trade


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The pre-trade area of the foreign exchange business includes business flows prior to the placement of an order, for example, a financial institutionor corporation is searching for quotes to exchange one currency for another and provides an indication of interest for a specific quote to a foreignexchange dealer, bank or other financial institution.

Trade

The trade area of the foreign exchange business includes the placement or amendment of orders as well as their agreement, matching andexecution and the communication of results and statuses. It may also include pre-allocations (if investment managers are involved) and orderbook reconciliation.

Post-trade

The post-trade area of the foreign exchange business covers all activities performed once a trade has been executed, such as matching,allocation (if investment managers are involved), confirmation and affirmation.

Clearing / Pre-settlement

The clearing / pre-settlement area contains processes such as netting, risk management, regulatory reporting, etc.

Settlement

Settlement takes place when the currencies are exchanged between the trading parties. This can happen on a gross basis (through normalpayment channels), on a net basis (bilateral or multilateral netting between parties) or through CLS Bank on a continuous linked settlement basis.


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Pre-trade Trade & Post-trade Clearing & Pre-settlement

(on hold)

(CLS)

MTMXFIXFpMLPotential



ProcessArea

Availability of MT, ISO 15022 andISO 20022


Pre-trade None. A series of proprietary standards forquoting of foreign exchange rates, forexample, the US Fed, ECB,Bloomberg, Reuters, FIX, exist in thepre-trade space for FX.

This process is very often notautomated and is usually executedthrough an electronic trading platform.

Opportunity to analyse the need forISO standards for pre-tradeadvertisements, indications of interest

(IOIs) and quotes of foreign exchangerates.


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ProcessArea



Trade Some MT coverage for orders andtrade execution/notification but verylow usage.

TWIST, IFX, FIX and FpML all havelimited coverage in this area.Additional proprietary standards exist

for trade activity, for example,Bloomberg, Reuters, etc.

Parties can currently exchange tradedata using any number of protocols orsyntaxes. The process remains

heavily focused on a manualenvironment, meaning that tradingparties manually enter and confirmtrades via one or more user interfaces

mainly dependent upon whichtrading platform(s) they use withspecific counterparties.

The reverse engineering of the MTcategory 3 messages in ISO 20022 ison hold.

Post-trade Some coverage in the confirmation

space using category 3 messages.

FpML has some coverage in the FX

post-trade area, mainly concentratingon FX derivatives. FIX has limitedcoverage for confirmation, allocationand matching.

Parties can currently exchange post-

trade data using any number ofprotocols or syntaxes.

Projects pending on enhancing ISOmessages for FX allocations.

The reverse engineering of the MTcategory 3 messages in ISO 20022 ison hold.

Clearing /Pre-settlement

Some coverage is available for pre-settlement, netting and matchingmessages using category 3 and ISO20022 messages (CLS).

FIX has limited coverage in this area,as messages to support clearing andpre-settlement are available, butspecific FX related information is often

missing.

There are specific pockets ofopportunity, specifically with regard torisk management, reconciliation, tradematching and transaction reporting.

Further, efforts to move FX clearingactivities to CCPs provide additionalopportunity for standardisation.

Discussions ongoing for thedevelopment of an FX Netting PositionAdvice message.

Settlement Please refer to payments. Please refer to payments. Please refer to payments.


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One key area to look at within the foreign exchange market is the corporate market, which is growing rapidly and generally looks for a higherlevel of automation for this process. Efforts should be made to simplify the standards and to make more granular transactional flows wherenecessary and appropriate to allow for less sophisticated potential users of messages to fully benefit.

There is a significant level of interest in the global markets with regard to synthetic (algorithmic) FX trading and exchange traded FX, both

markets that currently lack standards. Opportunities exist to expand on the pre-trade/trade business model in ISO 20022 with the FIX Protocol.Further opportunities exist for ISO standardisation of referential data, ie, currency and interest rates.


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Clearing / Pre-settlement Settlement Corporate Events Management

Advertisement

Indication of interest

Quote

Order to buy or sell

Trade execution

Trade agreement and matching

Trade reporting

Order boo k reconciliation

Notice of execution

Confirmation and affirmation

Allocation instruction

Trade capture

Reconciliation

Novation

Netting

Risk Management

Collateral, depo sit & margining

Buy-in


Financing

Process adjustment

Settlement & Reconciliation

Registration

Liquidity management

Transaction reporting

Event publication

Event capture

Event details notification

Entitlement calculation

Entitlement notification

Reconciliation

3 Securities (equities, fixed income, listed funds and listed derivatives)


The securities business covers a wide range of business processes and transactions from security issuance, reference data and corporateevent management through pre-trade, trade, post-trade, clearing/pre-settlement ending with settlement and reconciliation. As the business areacovers so many processes, it also includes a multitude of parties involved, for example, investment managers, custodians, broker/dealers,exchanges, matching systems, market infrastructures, data vendors, corporate, accounting agents, central counterparties and central banksamongst others.

Pre-trade

The pre-trade space covers business flows prior to the placement of an order where a financial institution is looking for quotes to buy or sellsecurities.


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Trade

The trade space covers the placement or amendment of orders as well as their execution and the communication of results and statuses. It mayalso include pre-allocations and order book reconciliation.

Post-trade

The post-trade space covers all activities performed when the trade has been executed, such as notice of execution, allocation, confirmation,affirmation, reporting of completed trades and reconciliation.


The clearing / pre-settlement area contains processes such as novation, netting, risk management, collateral management etc.

Settlement

The settlement process starts with the validation and matching of the settlement instructions. The effective settlement will typically take place atan (International) Central Securities Depository ((I)CSD). Once the settlement has happened, advices are sent through thesettlement chain. Status reports are sent throughout the lifecycle of the settlement transaction and periodic statements summarise thetransactions and balances and allow for the reconciliation process to happen.

Corporate Events Management

Corporate actions events, for example, dividend or coupon payment, will occur during the life of a security. The issuer agent is responsible fornotifying the central securities depositories, stock exchanges, data vendors etc. of the event details. Thereafter it becomes the responsibility ofthe local and global custodian to ultimately inform the security holder of the event details and entitlement. Corporate event management alsoincludes processing of market claims and automatic transformations, shareholder meetings and tax processing.


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Security issuance

The issuer appoints an issuer agent to coordinate all aspects of the security issuance process such as syndication, collection and placement ofthe orders and allotments. The issuer agent will request the relevant numbering agency to assign a security identification, for example, ISIN, that

he will then distribute to interested parties together with the characteristics of the security published in the legal publication or prospectus. Thisdata can be used by data vendors and financial institutions to set up the security in the securities master file.

Reference Data Management

This process includes the creation of a security and all its attributes in a securities database. During the life of the security some of the attributescan change, for example, a name change due to a merger. This information must be maintained and updated in the securities master file.

Portfolio Administration

Security Issuance

Portfolio Related


Portfolio Administration

Client reference data

Account administration

Standing instructions

Transfers/conversions

Market info rmation & advice

Collection & placement of o rders

Security master management

Corporate events management

Lending

Cash investment

Master custody

Registration

Account Statement & reporting

Pricing & p rice reporting

Portfo lio v aluation & measurement

Static data management

Asset Management Portfolio Management

Legal publication

Syndication

Gray market trading

Collection and p lacement o rders

Allotments

Identification assignment

Information distribution

Notification of c hange in ref data

Information publication

Information update


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The portfolio administration area includes the exchange of messages between account servicers and their clients in support of account opening,modifications, closing and transfer or conversion of portfolios from one account servicer to another.

Asset Management

Asset management includes business transactions associated with maintaining security master files for updates that are outside of corporateaction events and are exchanged between data providers, issuers and regulatory bodies and end-users of security master file data. An exampleof asset management messaging would be price reporting, where prices and updates to rates are provided in an electronic format.

Portfolio Management

The portfolio management segment includes the exchange of messages between account servicers and their clients, regulatory bodies or otherinterested parties and include portfolio valuation, tax management (reclaims) and position reconciliation.


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Pre-trade/Trade Post-trade Clearing & Pre-settlement Settlement

Corp Events Issuance Ref data

Portfolio ManagementAsset ManagementPortfolio Administration

(maps to ISO)

(on hold)

(on hold)

MTMXFIXIn development

Potential



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Pre-trade None FIX and proprietary standards exist in thesecurities pre-trade space with FIX beingthe most widely used standard.

The pre-trade/trade business model hasnot yet been finalised. FIX is working onfinalising the review for sign-off in 2011.

Trade ISO 15022 messages available

FIX is currently working on making theirsyntax become a business area specificISO 20022 compliant syntax.

FIX and proprietary standards exist for thesecurities trade business providing closeto full coverage for all instruments.

The pre-trade/trade business model hasnot yet been finalised. FIX is working onfinalising the review for sign-off in 2011.

Post-trade ISO 15022 messages exist for tradeexecutions, allocations and confirmationprocess. We are observing increasinginterest from our customers for these

messages in the SWIFT securitiesmatching and CCP projects.

ISO 20022 messages have beencreated for regulatory reporting as aresult of MiFID (Markets in FinancialInstruments Directive) that mandates thereporting of financial transactions toregulators in each EU market and thesharing of such information betweenregulators.

Proprietary and FIX standards exist for thesecurities trade business providing closeto full coverage for all instruments.

ISO 20022 business models are beingdeveloped jointly with Omgeo for post-trade matching. Final drafts will besubmitted to ISO for validation in 2011.

ANBIMA (a banking association in Brazil)and Jasdec (JP CSD) will beimplementing some of the ISO 20022messages in that area.

Expansion of regulatory reportingmessages to OTC would benefit theindustry and regulators for future reportingneeds such as MiFID2.


ISO 15022 messages exist for bi- andtri-party collateral management.

Candidate ISO 20022 clearingmessages for the core communicationbetween CCPs and clearing memberswill be piloted in 2011.

ISO 20022 candidate collateralmanagement messages covering allexposure and instrument types will bepiloted in 2011.

Proprietary standards exist for domesticclearing and settlement.

FIX standards exist for the securitiesclearing/pre-settlement business providingonly limited coverage of the process.

Phase 2 clearing messages will coverremaining flows and may be expanded tocover OTC derivatives.


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Settlement Almost full coverage in ISO 15022 andISO 20022. Only ISO 15022 is availablein general use.

Part of the registration process is notcovered.

Proprietary standards exist within thedomestic settlement markets.

Euroclear is developing ISO 20022messages for the registration process(project currently on hold).

Identified settlement process gaps arebeing filled by SWIFT and the 4CB

2in the

context of T2S. This includes allegementmanagement and modification processes.

CorporateEventsManagement

ISO 15022 and ISO 20022 messagesexist for corporate actions and proxyvoting (limited in ISO 15022). The proxyISO 20022 messages cover processessuch as meeting notification, voting, andconfirmation of vote execution anddistribution of meetings results.

Proprietary standards exist forcommunication and processing ofcorporate events.

SWIFT, DTCC and XBRL arecollaborating on a solution for issuers totag corporate action information usingXBRL and produce an electronic versionof the announcement in line with ISO

20022.

ISO 20022 messages for market claimsand automatic transformation are underdevelopment by Euroclear (projectcurrently on hold).

Standardisation in Europe of Holderdisclosure process.

The International Securities MarketAdvisory Group (ISMAG) has produced

operational market practices for corporateactions. It is important that this initiative bealigned with new ISO 20022 messages inthis domain.

SecurityIssuance

None EPIM (European Pre-IssuanceMessaging) used by DTCC, Euroclear andClearstream for the issuance ofinternational securities.

The security issuance flows will becovered by the ISO 20022 SecuritiesIssuance messages under developmentby Euroclear (project currently on hold).The first phase includes the issuance ofsecurities by non-ICSDs, internationalsecurities will be covered in a later phase.

The International Securities MarketAdvisory Group (ISMAG) has producedoperational market practices for theissuance of international securities. It isimportant that this initiative be aligned withnew ISO 20022 messages in this domain.

2In this document,4CB stands forDeutsche Bundesbank submitting change requests and new messages on behalf of the 4CB (Banque de France, Banco de

Espaa, Banca d'Italia, Deutsche Bundesbank) in the scope of the T2S project.


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ReferenceDataManagement

None. Proprietary and FIX standards exist forreference data dealing with the distributionand trading of securities, providing only

limited coverage.Further proprietary best practicerecommendations exist for communicationof standing settlement instructions (SSI)for securities based on decisionsdocumented by ISITC.

Covered in the ISO 20022 business modelby the Financial Instrument BusinessInformation Model (FIBIM) as designed by

ISO WG11.In the context of T2S, ISO 20022securities reference data messages arebeing developed.

T2S 4CB are developing ISO 20022messages for party and account relatedreference data.

Opportunities exist in other reference dataareas such as standing settlementinstructions for securities.

EU and US data gathering requirementsfollowing new regulations.

Tax processing is another area for whichthere are no standards available yet.

PortfolioAdministration

ISO 20022 standards exist for thetransfer or conversion of portfolios fromone institution to another as well as foraccount opening, modifications andclosing.

None Opportunities exist to extend the currentISO 20022 standards for portfolioadministration to allow support for agreater variety of portfolio type, forexample, trust, funds, safekeeping,investment, credit, etc...

AssetManagement

Limited coverage in standards exists forpricing and reporting in ISO 20022.

Proprietary standards exist and are usedwidely for the provision of assetmanagement data.

Current messages for pricing in ISO20022 should be extended to includemore products outside of the investmentfunds business area.

ISO 20022 securities reference datamessages developed by SWIFT and the4CB in the scope of T2S could be used forthe exchange and management ofsecurities reference data.

PortfolioManagement

SWIFT, ISO 15022 and ISO 20022standards exist in the assetmanagement area by means of variousreconciliation messages.

FpML provides limited coverage forportfolio valuation, but has recentlyexpanded the scope of their message toinclude products outside of the derivativesdomain.

Development of the Total PortfolioValuation business model with ISITC willbe completed in 2011. Further possibilitiesexist for collaboration with XBRL, notablythe general ledger reporting segment ofthis project.


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Analysis is required to determine the need for ISO 20022 messages for processes such as securities lending or tax processing.

ISO 20022 messages could be developed for Settlement Standing Instructions (SSI) for securities in collaboration with ISITC.

STAQS could also be leveraged as an added value product for participants in the securities lifecycle value chain.

Current pre-trade/trade business models could be expanded to cover a wider array of financial instruments in support of the investmentroadmap.

ISO 20022 securities reference data messages developed by SWIFT and the 4CB in the scope of T2S could be used for the exchange andmanagement of securities reference data.

TPV family of messages represents an opportunity to standardise the fund administration related data provided to the buyside. There are nostandards in this space today. Also represents an opportunity to bring a number of pure play fund administrators onto the SWIFT network (i.ethose that are not already on the network because they are also custodian banks)

We have an opportunity to create a technical representation of market practice through the use of message subsets. Need to identify suitablecandidate messages and organisations willing to collaborate with SWIFT to develop,

3.5 Standards Coordination Group Investment Roadmap

Another important source of information for the securities standards landscape is the Standards Coordination GroupInvestmentRoadmap,

The Standards Coordination Group gathers standards organisations that have a history of industry collaboration in the creation andimplementation of financial markets open standards. The group recommends through itsInvestment Roadmap, the emergence of oneISO 20022 business model providing standardized standardised processes, communication flows and terminology to the financialindustry. The group recognises the need for multiple communication protocols under ISO 20022, based on specific industry technicalneeds. The Investment Roadmap therefore identifies the protocols best suited for each business area and instrument type and highlightsthe areas for collaboration.

The Standards Coordination Group is a collaboration between FIX Protocol Ltd. (FPLFinancial Products Markup Language (FpML),International Securities Association for Institutional Trade Communication (ISITC), Society for Worldwide Interbank Financial

Telecommunication (SWIFT), eXtensible Business Reporting Language (XBRL US) and Financial Information Services Division of SIIA(FISD).
http://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdfhttp://www.iso20022.org/documents/general/InvestmentRoadmap.pdf


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Advertisement

Order to subscribe

Order to redeemOrder to switchTrade reporting

ConfirmationReconciliation

Cash forecast


Settlement

Transfer & Registration

ReconciliationTransaction reporting

Event publicationEvent captureEvent details notificationEntitlement calculation

Event details & entitlement notificationReconciliation


Issuance

Legal publicationCollection & placement of ordersIdentification assignment

Information distribution


Notifi cation of change in reference data Information publication Information update Price Reporting

4 Investment Funds


The investment funds business covers a wide range of business processes and transactions from issuance, reference data and co rporate

event management through pre-trade, trade, post-trade up to settlement. As the business area covers so many processes, it also includesa multitude of parties involved, for example, investment managers, promoters (fund management company, sponsor), transfer agents(registrar), administrators, custodians, distributors (retail banks, funds supermarkets), investors amongst others. The roles of funds agents(transfer agent, administrator, custodian) and the fund itself may also be combined.

Issuance

The fund promoter is responsible for the fund set up as well as for the strategy of the fund. An investment fund represents a basket of underlyingassets (bonds, equities, real estate, commodities etc.) and the strategy will determine the kind of assets that t he fund will invest in. The promoter


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informs relevant parties of the information that is required to support distribution of the fund. This is the kind of data that is available in theprospectus of a fund.

Pre-trade

The advertisement and sales of investment funds are done by the distributors.

Trade

Exchange traded funds and other similar products are covered in sectionSecurities (equities, fixed income, listed funds and listed derivatives).

Post-trade

Subscription, redemption or switch confirmations confirm execution and the executing parties inform relevant parties of the incoming and outgoingcash of the fund, as a result of subscriptions and redemptions respectively.

Settlement

Settlement for investment funds is done through the registration process (used to define the legal status of ownership) allocates/removes units

to/from the transfer agent. Periodic statements summarise the transactions and balances and allow for the reconciliation process to happen.Some CSDs enable that process through a plain vanilla settlement process comparable to the warrant settlement process.


Corporate action events, for example, dividend or coupon payment, will occur on the assets underlying an investment fund as well as on the funditself. The process is similar to the corporate events management of securities.


This process includes the creation of an investment fund and all its attributes in a securities database. During the life of the investment fund someof the attributes can change, for example, a name change. This information must be maintained and updated in the securities master file.

Reference data management also includes the reporting of the price or the net asset value of a fund. The net asset value is typically calculated ata specified frequency (daily, weekly, etc.) and is the price to be used for subscriptions and redemptions. This information needs to be conveyed toall interested parties. For example, the transfer agent / fund administrator needs to be kept up to date with the price per unit that is to be appliedto subscriptions and redemptions. Other parties may need to know the net asset value of the fund itself.



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Pre-trade/Trade Post-trade Settlement

Corp Events Issuance Ref data Portfolio Administration

MTMXFIXIn developmentPotential


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Issuance The ISO 20022 Fund ProcessingPassport messages exist to reportfunds static data.

Proprietary and FIX standards existfor reference data dealing with thedistribution and trading of securities,providing only limited coverage.

ANBIMA has submitted a businessjustification for the creation of FundsProspectus messages. Interest forthis has been expressed by ESMA,the European Securities MarketAuthority. To be investigated further.

Pre-trade None FIX and proprietary standards exist inthe pre-trade space.

Opportunities exist to extend the pre-trade coverage in ISO 20022business models.

Trade ISO 20022 and ISO 15022 messagesexist for investment fund orders.

Proprietary and FIX standards existfor the securities trade businessproviding close to full coverage for all

instruments.

None

Post-trade ISO 20022 and ISO 15022 messagesexist for the confirmation ofinvestment fund orders.

ISO 20022 messages exist to reportcash in and cash out as result ofsubscriptions, redemptions, switchesto/from an investment fund (fund cashforecast).

Proprietary (EMX , NSCC). FundsXML is also a standard used in thisarea.

Opportunity to engage EMX (now partof E/C) and NSCC, both parentorganisations are active players in the20022 space

Settlement ISO 20022 messages exist for thetransfer of investment funds.

Proprietary (EMX , NSCC) None

CorporateEventsManagement

ISO 15022 and ISO 20022 messagesexist for corporate actions and proxyvoting.

Proprietary standards exist forcommunication and processing ofcorporate events.

SWIFT, DTCC and XBRL arecollaborating on a solution for issuersto tag corporate action informationusing XBRL and in line with ISO20022.


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ReferenceDataManagement

The ISO 20022 Fund ProcessingPassport messages exist to reportfunds static data.

ISO 20022 messages exist for pricereporting.

Proprietary and FIX standards existfor reference data dealing with thedistribution and trading of securities,

providing only limited coverage.

ANBIMA has submitted a businessjustification for the creation of FundsProspectus messages.


Additional opportunities exist for the standardisation of investment fund commission reporting.

ANBIMA has submitted a business justification for the creation of Funds Prospectus messages. Some interest for this project has beenexpressed by the European regulators. SWIFT could play the interface and ensure the future standards will be usable by regulators in Europe.To be investigated.



The Standards Coordination Group gathers standards organisations that have a history of industry collaboration in the creation andimplementation of financial markets open standards. The group recommends through itsInvestment Roadmap, the emergence of oneISO 20022 business model providing standardized standardised processes, communication flows and terminology to the financialindustry. The group recognises the need for multiple communication protocols under ISO 20022, based on specific industry technicalneeds. The Investment Roadmap therefore identifies the protocols best suited for each business area and instrument type and highlightsthe areas for collaboration.

The Standards Coordination Group is a collaboration between FIX Protocol Ltd. (FPLFinancial Products Markup Language (FpML),International Securities Association for Institutional Trade Communication (ISITC), Society for Worldwide Interbank FinancialTelecommunication (SWIFT), eXtensible Business Reporting Language (XBRL US) and Financial Information Services Division of SIIA(FISD).


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Credit agreement


Trade execution

Trade agreement and matching

Pre-allocation

Trade reporting

Order boo k reconciliation

Trade matching

Novation

Increases & decreases

Allocation

Confirmation & affirmation

Terminations


Settlement

Settlement (payment)

Reconciliation

Transaction reporting

Netting

Risk Management

Collateral, depo sit & margining

Buy-in


Reconciliation


5 OTC Derivatives


The over-the-counter (OTC) derivatives business covers pre-trade, trade, post-trade, clearing/pre-settlement and settlement processes where twodealing parties, for example, dealers, investment managers, accounting agents, custodians, corporations, and service providers amongst othersmay play various roles in any individual step of the process.

Pre-trade

The pre-trade area of the OTC derivatives business includes the process of agreement of a contract and associated credit terms between twodealing parties.

Trade

The trade space covers the placement or amendment of trade as well as their execution and the communication of results and statuses. It mayalso include pre-allocations (if investment managers are involved) and order book reconciliation processes.


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(Collateral Management)

Pre-trade/Trade Post-trade Clearing & Pre-settlement Settlement

MT

MXFIXFpMLIn developmentPotential

Post-trade

The post-trade space covers all activities performed when the trade has been executed, such as novation, matching, modification, allocation (ifinvestment managers are involved), confirmation, affirmation and termination.


The clearing / pre-settlement area contains processes such as netting, risk management, regulatory reporting, etc.

Settlement

The nature of many OTC derivatives is such that some do not settle in the traditional way at the end of a contract period. Some cash does flowbetween parties according to the normal cash flow schedule (such as rate swaps) and some cash is occasionally settled as part of an expirationor maturity of a particular type of contract. Settlement is done through the normal payment channels (see payments section).



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ProcessArea

Availability of MT, ISO 15022 and ISO20022


Pre-trade None

FpML committed to map to ISO 20022but without clear timeline.

FpML has limited coverage of thequoting process.

The pre-trade process is currently notsupported very well by any one of thecommonly known standards in theindustry and remains a highly manualprocess.

FpML and FPL are currently working onexpanding usage of FpML within a FIXmessage for pre-trade activity.

Trade Current ISO coverage within the tradesegment for OTC derivatives is limitedand waning, as value added serviceproviders are looking to use the FpML

standard and in some cases moving toa proprietary method of communicationin line with dealing systems.

FpML and FIX to map to ISO 20022

FpML has limited coverage in the tradesegment, but as of recent months hasbeen working with FPL to incorporateFpML extensions into the FIX trade

messages. FIX are gaining additionalfooting in the trade area for OTCderivatives.

The trade segment for OTC derivativesis effectively split across multiplestandards and proprietary methods ofcommunication.

Opportunities exist for modelling theOTC trade business in ISO 20022models. FpML with whom such workwould have to be done is not very pro-active in starting the process. Mightchange with the regulation frameworkchange.

Post-trade There are SWIFT standards in this areabut the support for the various andcontinuously growing number ofderivatives products is limited.

The post-trade segment for OTCderivatives is dominated by FpML.

Opportunities exist for modelling theOTC trade business in ISO 20022models. FpML with whom such workwould have to be done is not very pro-

active in starting the process. Mightchange with the regulation frameworkchange.


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ProcessArea

Availability of MT, ISO 15022 and ISO20022


Clearing /Pre-settlement

The ISO 20022 standard providesregulatory reporting support via a seriesof messages designed for MiFID, but

may require updates to further supportthe full range of derivatives products.

ISO 20022 collateral managementmessages covering all exposure andinstrument types (including OTCderivatives) will be piloted end of 2010.

FpML has fairly sizeable coverage forclearing of OTC derivatives, riskmanagement and regulatory reporting.

FpML has developed collateralmessage with the same scope than theISO 20022 messages. The ISO 20022business justification was a co-submission by FPL, FpML and SWIFTwith the support of ISITC.

Opportunities exist for modelling theOTC trade business in ISO 20022models. FpML with whom such work

would have to be done is not very pro-active in starting the process. Mightchange with the regulation frameworkchange.

ISO 20022 candidate clearingmessages, currently covering equityand fixed income might be expanded toalso cover OTC considering the pushfrom the regulators to clear most OTCtrades.

Settlement Please refer to payments.

Part of OTC derivatives positionreconciliation (and potentially regulatoryposition reporting) is covered by theISO 20022 position reports.

Please refer to payments. Current transaction reporting and

reconciliations coverage within the ISOstandards should be extended to bettersupport OTC derivatives.


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OTC derivatives are an open field of opportunity for the standards environment with many challenges at the same time. The OTC market israpidly expanding with transactional volumes expected to show continued growth in the years to come.

One of the biggest challenges for any standards initiative within the OTC derivatives landscape will be an organisation s ability to quicklyaddress and support new derivatives products and changes to the structure of current products. There have been cases where th e timeline from

creation of a new derivative product to the release of a messaging standard for a specific class of derivative has been as low as four (4) months.This will obviously create challenges for anyone attempting to standardise this business area, and thus far looks to be best achieved using theFpML syntax.

SWIFT Standards should look to continue to gain forward momentum on full ISO 20022 businesses modelling of the FpML covered derivativesand associated set of messages in support of all business transactions within the life of an OTC derivative.

As for post-trade, SWIFT should also expand the coverage of clearing messages to standard OTC derivatives. CCPs and their clearingmembers will be interested in a solution that covers all the instruments they deal with, not a solution for equities and fixed income (based on ISO20022 XML) and another for OTC derivatives based on FpML. Especially considering that OTC derivatives now cleared could be considered asbeing listed. Need to engage CME, ICE, LCH, all of whom have developed their own proprietary messages.

Additional opportunities to automate the OTC operations between buy-side and custodian/fund administrator

FpMLs involvement in the regulatory reporting space represents an opportunity to nudge FpML towards 20022 by ensuring that t he FpML

Reporting view is aligned with a 20022 model.



The Standards Coordination Group gathers standards organisations that have a history of industry collaboration in the creation andimplementation of financial markets open standards. The group recommends through itsInvestment Roadmap, the emergence of oneISO 20022 business model providing standardized standardised processes, communication flows and terminology to the f inancialindustry. The group recognises the need for multiple communication protocols under ISO 20022, based on specific industry technicalneeds. The Investment Roadmap therefore identifies the protocols best suited for each business area and instrument type and highlightsthe areas for collaboration.

The Standards Coordination Group is a collaboration between FIX Protocol Ltd. (FPLFinancial Products Markup Language (FpML),International Securities Association for Institutional Trade Communication (ISITC), Society for Worldwide Interbank FinancialTelecommunication (SWIFT), eXtensible Business Reporting Language (XBRL US) and Financial Information Services Division of SIIA(FISD).


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Credit agreement

Conditions precedent-

notice

Position allocation

Upfront f ee payment

Confirmation of Upfront fee

Drawdown notice

Rate reset

Interest payment

Principal repayment

Fee repayment

Rollover

Commitment adjustment

Origination Syndication Loan Administration Secondary Trading

Lender position record

Trade confirmation

Funding memo

Trade sett lement payment

Assignment Ag reement

6 Commercial and Syndicated Loans


For commercial and syndicated loans the borrower (issuer) is most likely to be a large corporation, a government agency or a nationaldevelopment bank intending to borrow a large sum of money for a large project. It awards a loan mandate to a lead / agent bank that is in chargeof originating, structuring and syndicating the transaction.

Origination

The borrower and lead bank will enter into a credit agreement and will form the syndicate by bringing together other syndicate members anddisseminating information related to the credit agreement.

Syndication

During the syndication stage position allocation is decided on and the syndicate members are advised. If any upfront fees are required to be paid,

it will be advised and paid during this phase and payment will be confirmed.

Loan Administration

During the loan administration phase, the lead bank will advise the syndicate members about any drawdown requested by the borrower as well asrate resets and principal repayments by the borrower. The principal repayments may be scheduled or unscheduled, mandatory or voluntarilyrepayments. The lead bank will also advise the syndicate members about any fee payments due by the borrower and any one-off fee payments.During the life of the loan the lead bank has to advise syndicate members about loans rollovers and adjustments in commitments.

Secondary Trading


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Origination Syndication Loan Administration Secondary Trading

FpMLIn development

Loan sales are structured as either assignments or participations. In an assignment, the assignee becomes a direct signatory and receivesinterest and principal payments directly from the agent. This type of trade requires the consent of the borrower and or agent. A participation is anagreement between an existing lender (syndicate member) and a participant. The buyer is taking a participating interest in the existing lenderscommitment; however the original syndicate member lender remains the official holder of the loan. No input is required from the borrower or theagent. Most lending today is done via assignments and not participations.



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Origination None None FpML plans to cover the Credit

Agreement and Conditions PrecedentNotice in a later phase ofdevelopment.

Syndication None None FpML will cover the PositionAllocation and Upfront Fee paymentin future.

LoanAdministration

Some coverage is available for theLoan Administration process usingcategory 64x messages.

FpML has some coverage in the LoanAdministration area, concentrating onthe message flows between theAgent Bank and Lenders.

FpML is currently developingmessages to cover Simple andComplex Rollovers, Letter of CreditEvents and Price Changes and will infuture development cover

Commitment Adjustment andPayment in Kind (PIK).

SecondaryTrading

None None FpML is currently developing aLender position snapshot and aLender Position History and will coverTrade Confirmation, Funding Memo,Trade Settlement Payment andAssignment Agreement in futuredevelopment.


This market currently lacks automation. FpML, with the assistance of LSTA and ISITC in the US and the LMA in Europe, is in the process ofaddressing this need. SWIFT is maintaining a watching brief on the progress of this initiative. FpML has also indicated a need to create FpMLpayments messages. The market and SWIFT have responded and recommended that the cash settlement function utilise existing ISO and MTmessages.


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Indication of interest

Quote


Order to buy or sell option

Advice to receive funds

Advice to receive commodity

Transfer o f funds

Transfer o f c ommodity

Credit/Debit advice

Statements

Undelivered/unexercised Notice

Pre-trade Trade Settlement

Trade Confirmation

Trade Matching

Post-Trade

7 Commodities


Pre-trade

The pre-trade space covers business flows prior to the placement of an order (advertisements, indication of interest and quote) where a f inancialinstitution is looking to buy a physical commodity or futures/option contract (synthetic) on a commodity.

Trade

The trade area of commodities includes the agreement of trade or contract, based on acceptance of a previously provided quote for a physicalor synthetic commodity. The trade area also includes the order process for the agreed trade.

Post-trade

The post-trade area covers activities performed once a trade has been executed, such as matching and confirmation of the trade.

Settlement

Settlement of commodities may be either in physical form or via cash settlement. The trading parties will initiate transfer of funds or physicaldelivery with their counterparty and advise their account servicing institutions of the delivery or receipt transaction. Upon settlement, the accountservicing institution(s) will provide debit and credit advices for cash accounts as well as commodities accounts as necessary. Statements arealso sent between account servicing institutions and clients to reconcile positions and outstanding contracts.


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Pre-trade Trade SettlementPost-Trade

MT

MXFIXPotential



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ProcessArea



Pre-trade None Limited coverage of pre-trade activitiesis provided in FIX for syntheticcommodities.

No standards for physical commoditiesare available at present.

Working with FIX on pre-tradestandards. Scope should be expandedto include synthetic commodities in theISO 20022 business model.

Trade Limited coverage with MT messagesfor post-trade on precious and basemetals.

ISO 15022 for carbon emissionssettlement using the category 5messages has been documented.

Limited coverage for syntheticcommodities exists in the FIX standard.

FpML for physical commodities andOTC derivatives of commoditiestrading.

Awaiting business case from Marketson ISO 20022 solution for commoditiestrade, post-trade and settlement.

Post-trade Limited coverage with MT messagesfor post-trade on precious and basemetals.


Limited coverage for syntheticcommodities exists in the FIX standard.

FpML for physical commodities andOTC derivatives of commoditiestrading.

Awaiting business case from Marketson ISO 20022 solution for commoditiestrade, post-trade and settlement.

Settlement ISO 15022 and ISO 20022 messagessupport cash settlement.


None Awaiting business case from Marketson ISO 20022 solution for commoditiestrade, post-trade and settlement.


Additional opportunities exist with commodities corporations, such as mining corporations etc., in communication with their banks, which is acompletely un-tapped and fully manual market. Both banks and corporations have indicated a need for Alliance Lite in this space as well asstandards development to automate a fully manual process.


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The FpML Commodities working group has recently initiated discussions on providing coverage for physical delivery and settlement ofcommodities, specifically oil and gas via pipeline and barge. SWIFT Markets business case should provide clarification on whether the marketwants standardisation efforts to continue in FpML or ISO 20022.


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8 Trade and Supply Chain

8.1 Supply Chain Overview

8.1.1 Business overview

Over recent years large strides have been made to improve efficiencies in the commercial supply chain (movement of goods or servicesbetween buyer and seller) - reduced lead times, lower inventories, more responsiveness, increased variety, more collaboration on planning andforecasting, and improved customer service. Along with this trend has been a move from traditional financing instruments such as documentarycredits to open account settlement.


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Open account settlement agreements rely more on the stable trading relationship between the buyer and seller and typically have a lessrigorous compliance regime. Such agreements are giving rise to the development by banks of a range of supply chain finance products, for pre-and post-shipment financing. For example, buyers seeking to extend their payment terms by requesting their banks to cooperate in financingdesignated suppliers and to collaborate in the supply chain process by contributing to the provision of information relating to the status of thedocumentation and finance process.

The SWIFTNet Trade Services Utility (TSU) is a collaborative centralised matching utility, designed to address supply chain financing. Bankscan build individually on the core functionality of the TSU to offer competitive services that will be complementary to their existing offerings totheir corporate customers.

Procurement

Importer (buyer) and exporter (seller) negotiate a sales contract and the importer issues a purchase order to the exporter. Depending on thepurchase agreement, the exporter may issue a pro-forma invoice.

Pre-shipment Financing

The exporter requests financing from the financing bank, which authenticates the purchase order or export letter of credit, confirms thecreditworthiness of the importer and/or exporter, and provides advance financing to the exporter.

Matching

The exporter ships the goods, issues an invoice and presents the documents to the financing bank. The importer confirms his intention to pay.In collaboration with its bank, the importer matches the documents and undertakes the obligation to pay. The exporter may contract a third partyfor invoicing and receivables services including finance through factoring of its invoices.

Post-shipment Financing

The exporter requests financing from the financing bank, which authenticates the invoice, confirms the creditworthiness of the importer and/orexporter, and provides advance financing to the exporter. The exporter may seek finance through factoring or discounting of its invoices.

Settlement

The importer receives the goods and pays the exporter (or factor in the case of factoring) who in turn then repays any advance financing to thefinancing bank. Under open account settlement, the goods are typically shipped and delivered before payment is due, for example 30, 60, or 90day terms after invoice or bill of lading date.


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8.1.2 High-level standards landscape

Procurement Pre-shipment financing Matching

Post-shipment financing

(EDIFACT,UBL, X12,CEFACT, etc)

(TSU C2B)

(TSU, e-Invoice)

(TSU, e-invoice)

MT

MX

OtherIn development

Potential

(TSU, e-Invoice)

(Numerous) (Numerous)

(Numerous)


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8.1.3 Detailed standards landscape



Procurement None UN/CEFACT, ANSI X12, UBL,

RosettaNet, TWIST, etc

Pre-ShipmentFinancing

1 ISO 20022 message for InvoiceFinancing:Trade Services Initiation- tsin.004.001.01 (Financial Invoice)

50 ISO 20022 messages for theTrade Services Managementbusiness area in support of the TSUPhase 1 & 2), tsmt.001 tsmt.052

UN/CEFACT, ANSI X12, UBL,RosettaNet, TWIST, etc

Bolero DC Advice

Matching 50 ISO 20022 messages for the

Trade Services Managementbusiness area in support of the TSUPhase 1 & 2), tsmt.001 tsmt.052.

1 ISO 20022 message for InvoiceFinancing:Trade Services Initiation- tsin.004.001.01 (Financial Invoice)

UN/CEFACT, ANSI X12, UBL,

RosettaNet, TWIST, etcProprietary factoring standards

Development of corporate-to-bank

and bank-to-corporate ISO 20022messages in support of the TSUplanned for 2011.


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Post-ShipmentFinancing

5 ISO 20022 messages for InvoiceFinancing:Trade Services Initiation

- tsin.001.001.01 (Invoice FinancingRequest)- tsin.002.001.01 (Invoice Financing

Request Status)- tsin.003.001.01 (Invoice Financing

Cancellation Request)- tsmt.044.001.01 (Intent To Pay

Notification)- tsin.004.001.01 (Financial Invoice)

50 ISO 20022 messages for theTrade Services Management

business area in support of the TSUPhase 1 & 2), tsmt.001 tsmt.052

UN/CEFACT, ANSI X12, UBL,RosettaNet, TWIST, etc

Proprietary factoring standards

Settlement Existing MT and ISO 20022payment initiation messages andpayment reporting messages.Please refer to Payments.

50 ISO 20022 messages for theTrade Services Managementbusiness area in support of the TSUPhase 1 & 2), tsmt.001 tsmt.052

in support of the Bank PaymentObligation (BPO)

8.1.4 Additional opportunities

Development of further Corporate-to-Bank and Bank-to-Corporate messages, particularly in support of existing and new supply chain financemodels. As the TSU offering expands and is further rolled out, there is likely to be further development on the trade services (tsmt) messages.


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Presentation

Negotiate Contract

Compile Documents

Prepare Collection Request

Lodge

Prepare Collection Instruction

Endorse Bill of Ex change

Dispatch

Present

Examine & Confirm

Release Documents

Transfer Funds

Payment

Request Settlement

8.2 Documentary Collections (Payment Instrument)


A documentary collection can be defined as the collection of a sum of money due from a buyer by a bank against delivery of certain documents.

The bank acting as trustee and intermediary between exporter and importer presents documents by order of the exporter which are proof ofthe actual delivery of a product or service rendered and in exchange receives payment of the amount owed or obtains acceptance of a bill ofexchangeor receives a signedpromissory note.

The documentary collection offers, in comparison with open account terms (buyerpaysupon thereceiptofgoods, orondeferredpaymentbasis), considerably more security for the seller, but not to the same extent as a documentary credit. The basis for theexecution of documentary collections is provided by the Uniform Rules for Collections (URC).

Request

Importer (buyer) and exporter (seller) will negotiate a sales contract. The exporter will then compile the required documents, prepare thecollection request and lodge the cover letter and documents with the remitting bank.

Presentation

The remitting bank will prepare the collection instruction, endorse the bill of exchange and dispatch the collection instruction and documents tothe presenting bank, which in turn will present the collection documentation to the importer in exchange for the importer accepting the bill ofexchange / making out the promissory note or paying for the proceeds of the collection.

Settlement

The importer will examine the documents and confirm the payment to the presenting bank, which will release the documents and transfer thefunds to the remitting bank. Finally, the remitting bank will pay the exporter.
http://www.businessdictionary.com/definition/bill-of-exchange-BOE.htmlhttp://www.businessdictionary.com/definition/bill-of-exchange-BOE.htmlhttp://www.businessdictionary.com/definition/bill-of-exchange-BOE.htmlhttp://www.businessdictionary.com/definition/bill-of-exchange-BOE.htmlhttp://www.businessdictionary.com/definition/promissory-note.htmlhttp://www.businessdictionary.com/definition/promissory-note.htmlhttp://www.businessdictionary.com/definition/promissory-note.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/receipt.htmlhttp://www.businessdictionary.com/definition/receipt.htmlhttp://www.businessdictionary.com/definition/receipt.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.investorwords.com/9376/cut_down_on.htmlhttp://www.investorwords.com/9376/cut_down_on.htmlhttp://www.investorwords.com/1365/deferred_payment.htmlhttp://www.investorwords.com/1365/deferred_payment.htmlhttp://www.investorwords.com/1365/deferred_payment.htmlhttp://www.investorwords.com/1365/deferred_payment.htmlhttp://www.iccwbo.org/http://www.iccwbo.org/http://www.iccwbo.org/http://www.iccwbo.org/http://www.investorwords.com/1365/deferred_payment.htmlhttp://www.investorwords.com/1365/deferred_payment.htmlhttp://www.investorwords.com/9376/cut_down_on.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/receipt.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/promissory-note.htmlhttp://www.businessdictionary.com/definition/bill-of-exchange-BOE.htmlhttp://www.businessdictionary.com/definition/bill-of-exchange-BOE.html


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PresentationRequest Settlement

MTMX

BoleroPotential



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Request None Bolero XML (Corporate-to-Bank):Remitting Banks Collection Instruction

Collection Amendment Request

Presentation 3 MT messages (plus 7 commongroup message types) for use in theBank-to-Bank exchanges:MT 405 Clean CollectionMT 410 AcknowledgementMT 430 Amendment of Instructions

Bolero XML:Collecting Banks Collection InstructionCollection Amendment Advice

Settlement 5 MT messages for use in the Bank-to-Bank exchanges (excludingpayment messages):MT 400 Advice of PaymentMT 412 Advice of AcceptanceMT 416 Advice of Non-Payment /Non-AcceptanceMT 420 TracerMT 422 Advice of Fate and Requestfor Instructions

Bolero XML:Collection Advice of Non -Payment orNon Acceptance

Collection Status RequestCollection Status Advice

8.2.4 Additional opportunities

ISO 20022 Documentary Collection messages could leverage ISO 20022 developments for Documentary Credits and Guarantees, in particularthe support for inclusion of functionality to support the electronic submission and exchange of electronic documents (instead of paper).


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Issuance

Negotiate Contract

Apply o r amend L/C

Issue L/C

Inform applicant

Authenticate L/C

Transfer L/C

Advise Exporter

Accept L/C

Application / Amendment Advising

Negotiation

Ship Goods

Compile Documents

Present Documents to Examining Bank

Examine Documents

Present documents to Issuing Bank

Claim payment

Pay Exporter

Examine Documents

Obtain payment

Release documents

Presentation Settlement

8.3 Documentary Credits (Payment Instrument)


A documentary credit represents a commitment of a bank to pay the seller of goods or services, a defined amount provided the seller presentsstipulated documents evidencing the shipment of goods or the performance of services within a prescribed period of time. Strict requirementsgovern the composition of documents used in the documentary credit. The buyer is ensured that payment is not made until the conditions of thecredit are met.

There exist many different types of documentary credit (revocable/irrevocable, confirmed/unconfirmed, by payment/by negotiation, at sight/byacceptance, etc). The basis for judging the conformity of the documents is provided by the Uniform Customs and Practices for DocumentaryCredits (UCP).
http://www.iccwbo.org/http://www.iccwbo.org/http://www.iccwbo.org/http://www.iccwbo.org/http://www.iccwbo.org/http://www.iccwbo.org/


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Application / Amendment

Importer (buyer) and exporter (seller) negotiate a sales contract. The importer will request the issuance or amendment of a documentary creditto the issuing bank, which will check the creditworthiness of the importer.

Issuance

The issuing bank will issue (or amend) the letter of credit and inform the applicant. The advising bank will authenticate the letter of credit.

Advising

The advising bank will inform the exporter of the issued or amended letter of credit, which the exporter will accept or refuse.

Presentation

The exporter will ship the goods, collect the required documents and present them to the examining bank, which will after examination present the documents to the issuing bank.

NegotiationThe examining bank will claim payment from the nominated bank and pay the exporter.

Settlement

The issuing bank will examine the documents, obtain payment from the importer and re lease the documents to importer.


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IssuanceApplication / Amendment Advising

NegotiationPresentationMTMXBoleroPotential



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Process Area Availability of MT, ISO 15022 and ISO20022


Application /Amendment 2 MT 798 message flows under MT

Implementation Guide for Corporate-to-Bank use:- Application for issuance of

Documentary Credit- Request for amendment of

Documentary Credit

Bolero:DC Application

DC Amendment RequestDC Acknowledgement

UN/EDIFACT:DOCAPP (Documentary creditapplication message)DOCAMR (Request for an amendmentof a documentary credit)

Issuance 3 existing MT messages under MTImplementation Guideline for Corporate-to-Bank use:

- MT 700 as a notification of issuance ofDocumentary Credit

- MT 701 as a notification of issuance ofDocumentary Credit Continuation

- MT 707 as a notification ofamendment to a Documentary Credit

3 MT 798 message flows under MTImplementation Guide for Corporate-to-Bank use:- Notification of issuance of

Documentary Credit- Notification of amendment of

Documentary Credit- Request for Transfer of a

Documentary Credit

Bolero:DC NotificationDC Amendment

Documentary Credit (DC)

UN/EDIFACT:DOCINF (Documentary credit issuanceinformation)DOCAMI (Documentary creditamendment information)

Advising 6 MT 798 message flows under MTImplementation Guide for Corporate-to-Bank use:- Advice of Documentary Credit- Advice of amendment of Documentary

Credit

Bolero:DC AdviceDC CopyBeneficiarys DC AmendmentAcceptance or RefusalAdvice Of A Third Banks Documentary


57/62


- Advice of Acceptance/Refusal ofAmendment

- Advice of Transfer DocumentaryCredit

- Advice of Third Bank DocumentaryCredit

- Notification of Acceptance/Refusal ofAmendment

Credit

UN/EDIFACT:DOCADV (Documentary credit advice)DOCAMA (Advice of an amendment of adocumentary credit)