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A-Team Insight Blogs

Swift to Launch Corporate Actions Pilot Scheme for ISO 20022 Messages in December, Seeking Out Willing Participants

In line with its 2015 strategic focus on corporate actions, industry network operator Swift has announced that it will begin piloting its new ISO 20022 messaging system in December this year. The pilot will include the 13 new corporate actions messages that have been reverse engineered by Swift from ISO 15022 messages, 22 issuer agent messages developed by Euroclear and one settlement and reconciliation message, also reverse engineered from 15022.

This work is all to get the industry ready ahead of the go live for the new ISO 20022 corporate actions messages on 5 March next year. Swift has already launched an integration test bed for vendors to test their functional capabilities for the new messages and this next step is to get practitioners directly involved. It is therefore now looking for willing participants to get involved in this new pilot scheme.

Swift first published the drafts of the reverse engineered messages back in January and they were then made available on the ISO 20022 website here. The 13 Swift reverse engineered messages include message reference guides and schemas for implementation purposes and cover notifications, status advices, elections, cancellations, reminders, movements and statement reports. The one settlement and reconciliation message is for intra-position movement confirmation and the Euroclear developed issuer agent messages include deactivation and standing instructions.

It has also been working closely with the Depository Trust & Clearing Corporation (DTCC) and XBRL US in order to ensure the compatibility of ISO 20022 messages with the XBRL taxonomy for the US market in particular. In June, the group released a case study for the US market that suggested annual savings of around US$400 million could be realised as a result of the introduction of XBRL tagging of issuer source documents for investors. Intermediaries are estimated to recognise US$230 million in savings between reduction in losses, third party costs and staff and investment managers are expected to realise US$172 million in savings, according to the case study.

Unsurprisingly, given their involvement thus far, Swift expects DTCC and Euroclear to be the first market infrastructures to adopt the new standards.

In related news, Swift is also planning a new release of its corporate actions message testing service, Simulation Test and Qualification Service (STaQS), which it launched back in April 2008. The service allows Swift’s customers to see how their usage of corporate action messages compares to market practice guidelines established by global and local business standards groups. The service is updated annually or in reaction to market practice changes and Swift is planning the next update for November.

The update will take into account the mandatory adoption of the market practice guidelines for element locations of dates, periods, rates and prices, which are known as the D versus E guidelines (DvE), as part of the Swift network validation process. The DvE guidelines, which were developed by the Securities Market Practice Group (SMPG), recommend the placement of these elements in specific locations in order to avoid misinterpretation of messages. This means many qualifiers and codes that are used today in multiple sequences will only be available in the preferred sequence in the MTs 564 and 566 and some network validation rules will also be updated. Any message that is non-compliant with the DvE rules will then be rejected by the network.

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