the use of iso standards and the swift messaging platform ... · the use of iso standards and the...

The use of ISO standards and the SWIFT messaging platform in payment systems.

Steven PalstermansHead of Russia, CIS & MongoliaCentral Bank of the Russian Federation, 27 June 2011

Agenda

• SWIFT in Payment Systems

• Areas covered by ISO 20022

• Consultancy examples

2

SWIFT for HVPSScope

Low-value payment MI

ACH(CSM)

Indirect Participants

Participants Direct Participants

ConsumersCorporates

3

Payment processing

Risk management

Serviceadministration

Payment reporting

Transaction input & validationPayment routing Clearing & SettlementPayment investigation

Cash optimisationLiquidity managementTreasury reconciliation Reserve management

Payment scheme management Member profile managementParticipant identification (Reference data)

OperationalStatisticalRegulatory

High-value payment MI

Central bank

Participants

Direct Participants

CSDGovt

Entities

3

SWIFT for High value payment market infrastructures Live system market Status…

AfricaAngola Algeria BotswanaCentral African States (BEAC) EgyptGhana Kenya LesothoMauritius Morocco NamibiaSierra Leone South Africa Swaziland Tanzania Tunisia Uganda Zambia Zimbabwe ComesaWest African States (BCEAO)

Asia PacificAustraliaFijiHong KongNew ZealandPhilippinesSingaporeSri LankaThailand

Central & Eastern EuropeAlbaniaAzerbaijanBosnia & HerzegovinaBulgariaCroatiaHungaryRomaniaLatviaNorth America

CanadaUS (TCH)

Central & Latin AmericaBahamasBarbadosChileDominican Rep.ECCBEl SalvadorGuatemalaTrinidad & Tobago VenezuelaCMCA

Western EuropeDenmarkEurozone (EBA-EURO1/STEP1&TARGET2)NorwaySwedenSwitzerlandUK

Middle EastBahrainIsraelJordanKuwaitOmanPalestineUAE (DIFC)

Systems on Y Copy topology 4

SWIFT for High value payment market infrastructures Systems under implementation

5

HVPMI Type of system StatusCENTRAL BANK OF THE GAMBIA RTGS Implementation (Y-Copy)BANK INDONESIA RTGS Implementation (Y-Copy)BANQUE DU LIBAN RTGS Implementation (Y-Copy)BANK OF SIERRA LEONE RTGS Implementation (Y-Copy)BANCO CENTRAL DE HONDURAS RTGS Implementation (Y-Copy)BANQUE CENTRALE DE LA REPUBLIQUE DE GUINEE RTGS Implementation (Y-Copy)CENTRAL BANK OF LIBERIA RTGS Implementation (Y-Copy)BANCO CENTRAL DEL URUGUAY RTGS Implementation (Y-Copy)EAST AFRICAN COMMUNITY (EAC) Regional RTGS ImplementationCENTRAL BANK OF RUSSIAN FEDERATION RTGS Implementation NARODOWY BANK POLSKI (NATIONAL BANK OF POLAND) RTGS Implementation (Y-Copy)BANCO CENTRAL DEL PARAGUAY - RTGS RTGS Implementation (Y-Copy)WEST AFRICAN MONETARY ZONE Regional RTGS Discussion

Central banks using SWIFT for Regulatory Live systems market Status

AfricaGhanaSouth Africa Tanzania Zimbabwe

Central & Eastern EuropeCroatia

Central & Latin AmericaEcuador

Systems using FINInform Copy topology6

7

1

2

4

5

1 Payment Instruction

3

SWIFTNet

Bank A Bank B

Y- Copy

5

SWIFT Interface

Central RTGS application

6

Authorisation request2

Authorisation response3

Final Payment Instruction received

4

Sender notification and reporting (Optional)5

Position and collateral management6

Transaction input from ancillary systems7

Ancillary systems

7

Central Bank

6

SWIFT for HVPSTypical topology

StandardsMX , ISO 20022 compliant messages

• SWIFT supports the co-existence of the two main industry standards MT and MX.

• As stated, MT messages are the commonly used standard message today for HVPS.

• MX Messages have been created by SWIFT as a set of standards – Covering payment initiation, inter-bank settlement and cash

management – ISO20022 compliant catering for high and low-value, single and

multiple, and urgent and non-urgent payments.

8

StandardsMX/XML in the context of an RTGS

The two key categories of SWIFT MX messages to be used within the context of an RTGS willing to use ISO 20022 are :

– Payments Clearing & Settlement PACS messages, which are ISO20022 approved

– Cash Management CAMT messages which are ISO 20022 approved• An industry group CGI(Common Global Implementation) is in the process of finalizing

usage rules.

9

10

Serial model (V-Shape) • InterAct (MX) for single transactions

exchange using MX/ISO PACS

Copy model • InterAct Copy (MX) for single transaction

exchange using MX/ISO PACS

SWIFTNetInterActV-topology

InternalPayment system

Participant ASWIFT interface

Participant B

SWIFT interface

Payment processing Central web server

Payment Infrastructure

Bank A Bank B

FIN/InterAct transaction flow

Inter-bank payment exchange Payment clearing and settlement transfer

SWIFTNetCopy



Participant B

SWIFT interface

Payment processing Central web serverBank A Bank B

FIN Copy transaction flow

Payment message

Payment message(settled)

Settlementrequest


Authorisation/refusal

10

11

In one transaction• FileAct (MT/MX) for multiple transactions

exchange using MX/Pacs (e.g. Ancilliary system settlement )

• InterAct (MX) for confirmation delivery

In series• InterAct (MX) to send settlement movement

as a series of single transaction exchange using MX/ISO PACS

Net settlement transferPayment clearing and settlement transfer

11

SWIFTNetInterActV-topology


Ancillary systemSWIFT interface

Participant A,B,C

SWIFT interface



Bank A Bank B


SWIFTNetFileAct/InterAct


Ancillary systemSWIFT interface

Participant A,B,C

SWIFT interface



Bank A Bank B


12

Serial model (V-Shape) • FileAct (MT/MX) for multiple transactions

exchange using MX/Pacs

Copy model • FileAct Copy (MT/MX) for multiple

transactions exchange using MX/ISO PACS

SWIFTNetFileAct



Participant B

SWIFT interface



Bank A Bank B


Retail payment with immediate settlement in RTGSPayment clearing and settlement transfer

12

SWIFTNetCopy



Participant B

SWIFT interface

Payment processing Central web serverBank A Bank B

FIN Copy transaction flow

Payment message

Payment message(settled)

Settlementrequest


Authorisation/refusal

13

Browse information • Browse, provides secure user-to-application

browsing to access the market infrastructures to monitor & control functions

Secure instructions• InterAct, to support interactive monitoring &

control functions with MX/CAMT message

Liquidity & Cash management

13

Payment Infrastructure(HVP & LVP)

Browse onlineInfo query

SWIFTNetInternal

Payment system


Participant B

SWIFT interface


InterAct real-time information exchange

and control

Bank A Bank B

14

Report management • SWIFTNet Interact (MX) to support the sending

of balance report and statement messages on an individual basis

Large reports exchange FileAct is ideal for exchanges of

– Operational, statistical or regulatory reports– Raw data– Directories– Contract information

Report & directory management

SWIFTNetInternal

Payment system


Participant B

SWIFT interface


FileAct forreporting

Bank A Bank B

InterAct forstatements


14

15

• SWIFTNet Interact in a real-time mode will use MX/ISO CAMT messages.

• SWIFTNet Browse makes it possible to access the web-services of the HVPMI, allowing the participant to monitor and control service administration data (e.g. static data related to its profile)

• SWIFTNet FileAct will allow the HVPMI to exchange large volumes of static data, such as the reference data needed by participants to secure a efficient STP.

Report & directory management

SWIFTNetInternal

Payment system


Participant B

SWIFT interface


FileAct forreporting

Bank A Bank B

InterAct forProfile Mgt


15

Browse onlineInfo query

Alliance Lite

Direct connection

Indirect connection

Integration Connectivity options

Secure Internet

VPN

Secure Internet or VPN

Network partners

SWIFT software

Service Bureauor Bank

SWIFT software

16

SWIFT for Payment Systems on ISOSWIFT Services for Payment Systems

SWIFT provide an E2E solution Including

Coexistence MT/MX

Integration

CUG PKIHSMRMA Delivery notification Multi-site

StandardsMessagingServices

FIN,InterActFileAct, BrowseCopy

MT messagesMX (ISO20022)Market practices

Security

Alliance InterfacesIntegration tools

Alliance Connect Bronze/Silver/Gold

ConsultingImplementationProject Management TrainingCustomer support

17

Standards consulting services

Advisory services Analysis/mapping Formal subsets Market practice & implementation rules

End-user testing Training

Examples of implementation services and tools1818

Standards Consulting Services Expertise right from the source

19

• We are a pool of 42 Standards experts

– more than half are possible consultants

– 12 distinct resources active since Jan. 2009

• We cover all of SWIFT Standards’ business areas

• We collaborate closely with Consulting Services, other SWIFT areas

• We have experience in most major economies and numerous

emerging markets, with broad language skills

• We possess industry knowledge and project management skills

through previous engagements, working groups and prior experience

• We have extensive technical expertise in Standards implementation

Case Study 1: JASDEC / ISO 20022

• Large, strategic engagement

• Japan Securities Depository Center Inc.• Objective: extend services to overseas investors

– ISO 20022• Current state

– ISO 15022 – like proprietary messages– Complex flows; many actors

• SWIFT role– Enable transition to ISO 20022

• Benefit to SWIFT– Influence an entire market

20

21

JASDEC / Project Blueprint

Securities transactions processing on the Japanese market

Non

-sto

ck e

xcha

nge

tran

sact

ions

(n

on-D

VP)

Non

-sto

ck e

xcha

nge

tran

sact

ions

(DVP

) St

ock

exch

ange

tr

ansa

ctio

ns (D

VP)

TSE participant

TSE participant

Tokyo Stock Exchange

ClearingMember

BETS

Depository MemberClearing

Member

Trading Clearing/Pre-settlement Settlement/registration Cash/collateral Mgt

Depository Member

BETS

Depository Member

Broker/dealer

Asset Manager

Broker/dealersInvestors

PSMS

Depository MemberDepository

Member

PSMS

BETS

Depository Member

Depository Member

BoJ

Depository Member

Same as above

BoJ

Payment bank

Payment bank

JSCC

JDCC (HOKURI)

Securities collat.

PSMS

JDCC

Receive Deliver

BETS

JDCC Receiver Deliverer BoJ

JDCC Receiver Deliverer

Cash management – Net settlement (deadline 14:00). In case the receiver cannot pay for the securities, JDCC pay on his behalf -> liquidity risk for JDCC

Gross settlement. Securities to be received are held in JDCC account until cash is settled at BoJ (Receiver can still trade these securities)

Cash settlement proprietary messages

Risk management (to cover liquidity risk)

Cash collat.

Securities to be

received

Net cash position

The bigger the margin level is the more transactions can settle real-time before 14:00. The DM (receiver) can also make advanced payments to ensure additional settlement.

Use of collateral for DVP transactions

Receiver

Message flows, message scope, usage and a high-level mapping with ISO 20022

JP market landscape, JASDEC project and the main features of the future platform

1

2

Gap analysis 1/2

22

1Document flows and execute gap analysis between proprietary flows and ISO 20022 message standards

2 High level gap analysis

Gap analysis 2/2

23

3 Harmonisation analysis

4 High level mapping analysis

Analysis showing where harmonisation makes sense, by reducing the number of messages to gain efficiency (business processes) and save costs (less to implement).

Mapping proprietary fields to ISO 20022 elements; flagging ISO mandatory elements (including cross-rules); providing advice on way forward to close gaps (harmonisation, mapping to free text, use of extensions, etc)

Documenting the business model

24

1 Project boundary 2 Description of business process and sub processes

3 Use cases

4 Activity diagrams

Case Study 2: T2S

1. High level gap analysis - T2S requirements vs available MXs

2. Detailed gap analysis for flows where ISO 20022 MXs exist

3. Project Management support to Bundesbank, which is responsible amongst the 4CB for the messaging and registration areas in the T2S project

4. MX development support

25

SCOPE OF ISO 20022 MESSAGES

Existing standard

New Standard

T2S-specific

Pillar I

Pillar II

Pillar III

WORK REQUIRED, BY

Maintenance (Regular procedure involving BVGs, industry consultations, etc.)

---Development, by SWIFT Standards

---Development, by 4CB, with SWIFT Standards support

Developedin the course

of T2S

SWIFT Standards involvement

Consultancy(limited -business) & Development

Development

Consultancy (extensive -technical)

SW

IFT

Sta

ndar

ds4C

B

Business Areas

---S&R; Cash management;

---Queries; Securities Reference Data; S&R Audit Trail; Cash Management; Cash Account Management

--- Queries (various business areas); Party Reference Data, Securities Account Reference Data, Billing; Collateral Management Price Reports

TARGET2-SecuritiesA multifaceted, long-term, SWIFT Standards consultancy relationship

Consultancy (extensive –project management and business) 26

The Future: Services and Products

• Standards strategy aims to

– Formalize the content we already have to be re-used or re-purposed

– Create new Standards ‘content cartridges’ to help with known implementation pain points

– Change Management – Translation

– Enable (more) asset-based consulting– Formalized Market Practice rules– ISO 20022 Business Model– ‘Change Management’ documentation

– PoC exercises and prototyping work are ongoing

27

SWIFT 2015: TCO reduction strategy

Change ManagementReusable ContentCustomizationMarket Practice

28

Goal:Reduce industry TCO by 200 million EUR / year

Standards has a significant part to play in TCO reduction

29

In case of further questions

Steven PalstermansHead of Russia, CIS & Mongolia

SWIFT8 Novinsky boulevard 121099 Moscow Russia

+7 495 228 5923

+7 495 228 5924

+7 903 164 6095 or + 32 478 40 30 23

[email protected]

www.swift.com

T

F

M

W

E

the use of iso standards and the swift messaging platform ... · the use of iso standards and the...

Documents