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Swift Talks up the Cost Saving Benefits of ISO 20022 Adoption, New Concepts

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This week’s Swift Standards Forum event in Sydney is part of the network operator’s push to convince the financial services industry at large of the benefits of migration to ISO 20022. Obviously, the securities industry and, more specifically, the corporate actions space represent key opportunities for the ISO messaging standard and Swift has therefore been doing its level best to communicate the benefits of lower costs and greater flexibility.

Swift standards analyst Tom Alaerts, who has previously championed the idea of an online standards development platform for Swift, elaborated on the recent developments around ISO 20022, including new “concepts” such as extensions and subsets of data, and provided an update on the DTCC project for the corporate actions market. One of the main benefits of the adoption of the standard, according to Alaerts, is the introduction of a common reference to allow for operational cost reduction. Rather than mapping each standard to each other, ISO 20022 could be positioned as a common standard to cross reference to, he contended.

The new ISO 20022 concepts include the potential to include supplementary data with the messaging standard in the form of an ‘extension,’ which would most likely be located at the end of the message. This would be an optional add on for users of the standard and has not yet been fully defined. Alaerts indicated that it could be formally structured with a separate scheme or it could be simply “well formed XML”.

These extensions could therefore be used to add in required data from a national regulatory compliance or market practice perspective to a message, where particular regulators and markets require specific nationally defined formats. They could also be used in instances such as data related to role specific requirements, where supplementary data is needed to further meet role specific requirements, or even extra data that is needed as the market evolves from a standards perspective.

The other new concept is a subset, which would essentially be the inclusion of a restricted set of rules for a specific schema or message that must remain valid with the standard’s ‘master’ schema.

Alaerts also elaborated on the differences between ISO 15022 and ISO 20022 from the corporate actions messaging perspective, with the inclusion of new elements such as the business application header. He noted that this, in particular, could ease the message routing process by grouping routing information together in a single location and providing a more defined structure for message processing.

As for reference data messaging, Swift has also developed two new messages – MT 670 and MT 671 – to allow for updates to be made to standing settlement instruction (SSI) data from a payments industry perspective. The network operator has therefore been working with industry players such as Omgeo to develop this functionality, even if it is beginning to tread on its toes in certain spaces.

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