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A-Team Analysis: Does Swift Have A Role in Securities Ref Data?

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Bank owned co-operative Swift believes the industry should enter “A new age for reference data – collaboration”. One of the opening sessions at this year’s Sibos conference in Sydney, from 9-13 October, will be an interactive panel discussion on this very topic. Based on its 30 years of managing the BIC Directory Service, Swift believes it can play a pivotal role in helping the industry by managing other types of reference data as well. Is it right? That is what the co-operative hopes to find out during this session.

In preparation for an answer in the affirmative, Swift is developing a reference data repository to be available on Swiftnet. Much of its focus is on improving and extending its BIC related services, and here its long experience should stand it in good stead.

A more controversial aspect of Swift’s securities related reference data plans centres on standing settlement instructions (SSIs). We’ve been here before. Way back in 1998 Swift’s securities team in London got as far as proposing to the Swift board the creation of a securities SSI database to sit alongside Swift’s other directories – only to be told in no uncertain terms by a very big bank to steer clear, because “this is the banks’ business, not Swift’s”. More recently, efforts have been bubbling under to position Swift as the facilitator of the SSI Fresh model, mooted as a new, more elegant solution to the problem of SSI enrichment, and moreover an opportunity to free the industry from the monopoly control of Omgeo’s Alert in this area. However this initiative came to little it seems. Swift accepts the issue of what its contribution to SSIs should be is contentious. Much rests on the outcome of discussions with Omgeo, the results of which we are told to expect soon.

For Taylor Bodman, partner at Brown Brothers Harriman, what Swift’s role should be is pretty clear. “Swift has much to offer in tackling the reference data challenge,” he says. “Swift can bring us data dictionaries, data messaging standards, and data connectivity. As it has so ably achieved before, Swift should focus on facilitating interaction among businesses with domain expertise. Using SSIs as an example, Swift should make it easy for industry players to access and use data that is stored in centralized data hubs by domain experts such as Omgeo and managed by SSI owners, namely brokers, custodians and investment managers.”

TowerGroup analyst Matt Nelson will moderate the Sibos session on collaboration. At the moment, he is unsure whether this will prove to be a valid approach for reference data. “There are issues standing in the way of collaboration,” he says. “There are trust issues. When you talk about a central utility, you are talking about trusting other participants to contribute valid, accurate and timely data. There are also commercial interests. End of day data is a $1 billion industry. Firms making their entire living out of this will not be particularly in favour of a central utility.”

That said, he does think there is a “terrific opportunity to foster discussion”, and that Swift could have a role by virtue of its success with BICs and ISO 15022 for corporate actions. Nelson highlights opportunities in developing markets – where data taken for granted elsewhere as easily available at relatively low cost may not be so accessible – and around specific “painpoints”, such as, perhaps, corporate actions data.

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