The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Swift Not Fast Enough For Reference Data Role

Swift’s core strengths of security and resilience are also the major impediments to it fulfilling its aims in the securities reference data space, where it is speed that counts. This was one key message delivered during a panel session entitled “A new age for reference data – collaboration”, which took place on the first day of Swift’s Sibos conference in Sydney earlier this month.

Swift believes its 30 years’ experience of managing the BIC directory position it well to offer other reference data services. But its record on BICs – for which it is only just moving to monthly rather than quarter-ly updates – worked against it during the session, when it was pointed out that securities data changes rather more frequently than once a month.

The news from this panel discussion was by no means all bad for Swift. Delegate digi-voting registered a resounding “yes” to the questions: Is it desirable and feasible for the industry to collaborate on reference data?, and Would the industry benefit from an independent third party to host, manage and disseminate a broad range of reference data? When asked what types of reference data the industry should collaborate on and share, delegates placed “counterparty and business entity identifiers” at the top of the priority list, followed by standing settlement instructions (SSIs).

So far so good for Swift, which, as reported in Reference Data Review, September 2006, is hoping to leverage its experience of managing the BIC directory to play a bigger role in reference data management. Among its plans are to improve and extend BIC coverage, and work either alone or with partners on a solution for both payments and securities SSIs.

However, the true picture that dev-eloped during this Sibos session was far more complex than the answers to the above questions imply. Predictably, Swift’s contribution to reference data in the payments industry looks set to be far more straightforward than its role in reference data for the securities industry.

The payments specialist on the panel – Martine Brachet, head of interbank relationships at Societe Generale – was strongly supportive of Swift becoming the independent third party that hosts, manages and disseminates reference data for the industry. Her principal concern regarding reference data was the impact of Target 2 and SEPA. “In both cases the banks face difficulties,” she said. “We have to match the current national reference data with the new European reference data. There needs to be clear mapping between the BIC and the IBAN, and the national codes. Without a very strong central database, which Swift could offer us, we have no chance. For the payments industry, Swift is surely the most neutral and efficient third party you could find.”

By contrast, Steve Clifford, chief technology officer, Global Transaction Services at Citigroup, was more circumspect. “Swift has great strengths – project management capabilities, secure and resilient communication – but because they’re secure and resilient, they may not be able to support requirements for freshness and speed of data,” he said. “It has taken years for Swift to move from quarterly to monthly BIC delivery. In the securities industry, information moves in seconds not months. Because of Swift’s security and resilience, it might be harder for them to manage that changing data.”

There is a role for Swift, he continued, if it partners with other solution providers. “Swift should play off its strengths, and set up a network that could connect to any number of providers in a free market. Swift could enhance its billing capability and be a Yahoo for SSIs, for example. Let’s turn market forces on, and use the strengths of Swift combined with those of other market players.”
Swift has been talking to Omgeo, the dominant commercial provider of an SSI database, about potential collaboration for some time.

Related content

WEBINAR

Upcoming Webinar: Sanctions – The new pre-trade challenge for the buy-side

Date: 22 September 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Sanctions screening at the security level is a relatively recent requirement for the buy-side. It dives deeper than traditional KYC and AML screening and is immensely challenging as firms must monitor frequently changing sanctions lists, source up-to-date sanctions data...

BLOG

GLEIF Details Technologies Underlying Digital Version of LEI, the Verifiable LEI

The Global Legal Entity Identifier Foundation (GLEIF) has published issuance and technical infrastructure models for the verifiable LEI (vLEI) system it introduced back in December 2020. The vLEI is a secure digital attestation of a conventional LEI and is designed to extend the use of the identifier and, ultimately, enable instant and automated identity verification...

EVENT

RegTech Summit London

Now in its 6th year, the RegTech Summit in London explores how the European financial services industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...