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Swift Gears Up for CIVICs, Nears Selection of Data Partners

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As it evaluates third party database solutions and prepares to select a partner or partners to bolster its data gathering and validation capabilities, bank-owned messaging services provider Swift is making progress towards the creation of a directory of collective investment vehicle identification codes (CIVICs) based on the bank identifier code (BIC). However it is resolute in its decision not to become the registration authority for the proposed international business entity identifier (IBEI).

The lack of a willing volunteer for the RA role for IBEI is threatening to derail the initiative entirely, which is a cause for concern among some industry observers, who believe a universal, centrally managed IBEI is essential for efficient transaction reporting under MiFID. (Others, it has to be said, believe more pragmatic, less purist solutions will save the day (see stories, pages 17, 20, 22).)

“We do not have the resources to allocate BEIs to huge volumes of corporates and it is not within our strategy to do so as, for instance, a registration authority for ISO,” says Chuck Wiley, senior product marketing manager at Swift. “I cannot comment on what will happen with the draft IBEI standard that is out there. There is the some potential to restructure it, to make it more of an envelope like-syntax – like ISIN or IBAN: an envelope that allows the local market code to be embedded inside the larger one. We won’t classify the BIC as the new standard for IBEI, but maybe there will eventually be a standard that could accommodate it.”

Swift’s concern about becoming the RA for IBEIs is that “potentially we might be responsible for creating them for literally millions of corporate entities”, says Wiley. “Corporates are relatively new to the network. Even under our new SCORE model via which corporates can join Swift, the universe of entities from which we are seeking to get corporates to join is only some 22,000 firms – for example, the number of entities listed on stock exchanges in FATF countries.” Corporates can get what Swift terms a business entity identifier (BEI) through a sponsorship process undertaken by an existing community member. “There is a minor one-time charge for this, which would probably prevent a wholesale influx of requests for BEIs for corporates.”

The CIVIC could serve a dual purpose, Wiley says. “First, the Swift community, which is very large, has a requirement for funds to be identified in the context of Swift messages. Second, the CIVICs could also have a role outside Swift, as an IBEI for funds.”

Swift’s planned Common Reference Data Management Platform (Reference Data Review, September 2006) is slated to go live early next year. The database itself will be a third-party software package, modified to meet Swift’s requirements; Wiley says the co-operative is investigating a couple of possible solutions now. Among the first deliverables will be the CIVIC directory.

In December the Swift board approved the use of the BIC as the basis for the CIVIC. Swift has now determined that, because it does not anticipate funds doing direct messaging on its network, it will base the CIVIC specifically on the BIC1 syntax – that is, the type of BIC allocated to entities that need to be identified in Swift messages but are not live on Swift, which has a 1 as the eighth character. Swift will not charge for allocation of CIVICs; rather it will charge a subscription to access the database.

The directory “will not cover every fund in the world at the outset”, Wiley says. “The goal initially is to have the major markets in Europe covered from a retail perspective in release one, and to work with our larger customers to put together a list of institutional funds to be identified, since there are no official registration lists for them like there are for retail funds.”

Wiley anticipates Swift will need third-party help with data collection. “An outside firm will be required to help us in the processes of validation, cross-checking and supplementing of data. We have had discussions with potential candidates – companies such as Avox, CounterPartyLink, D&B et cetera. It may be that on a sub-contractor basis they work on our behalf to help gather and validate the required data,” he says. Swift plans to announce its choice of partner(s) within the next couple of months.
The data partner or partners could also help Swift in its stated undertaking of cleaning up the BIC1s – which Wiley admits Swift hasn’t maintained as well as it could have done. Swift has also undertaken to extend BIC coverage and resolve issues of multiple BICs per entity in preparation for MiFID. “In the context of MiFID, CESR has said it would require the use of a BIC as the basis for identifying firms in transaction reporting activities to regulatory bodies,” says Wiley. “This raises the importance of cleaning up the BIC1s and expanding the pool of BICs so that every firm that needs one has one.”

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