Swift has broken its reference data strategy down into three main pillars: its response to the Sifma led, Office of Financial Research (OFR) sanctioned working group focused on developing a new legal entity identification (LEI) standard; its payments reference data efforts; and its (rather nebulous at the moment) securities reference data strategy. Fabian Vandenreydt, Swift’s head of Securities and Treasury Markets, speaks to Reference Data Review at its annual Sibos conference in Toronto about the details; such as they are at the moment…
Swift’s LEI efforts are a definite buzzword for the industry network operator at this year’s conference, as well as the more routine discussion of its other big Depository Trust and Clearing Corporation (DTCC) partner project, corporate actions. A number of ‘big issue debate’ discussions in Toronto have involved passing references to the topic of the LEI and, later this week, it is due to be directly addressed in a couple of dedicated sessions.
Vandenreydt is certainly upbeat about the partners’ chances in scoring the gig of LEI issuer and facilities manager, as proposed by Sifma back in July, and they are both busily working on the “planning” stages of the project ahead of the final OFR decision, which is expected soon (well, perhaps this quarter, or maybe next). He is, in fact, hopeful that the impending Financial Stability Board (FSB) meeting in Basel will herald some sort of signal in this regard; whether it is the final decision itself, or even a potential timeline. This is all provided that there isn’t a Eurozone crisis in the meantime that is.
On the LEI planning that the partners are able to do before the final decision is made, Vandenreydt says: “We will definitely be looking to link the LEI codes to the Swift Bank Identifier Codes (BICs) and corporate actions data as a value added service for our community. This will help risk managers to more accurately track counterparty risk in their own systems.”
On a more technical note, the Avox infrastructure for the AVID will be extended for the new ISO standard in order to support the issuing and maintenance process. As Vandenreydt states, however, the LEI is aimed to serve the “public good” by assisting regulators in their oversight duties and is, in this regard, only a number. The real value added stuff will be out to tender, for any of the other players in the market to provide cross referencing and other value added services, as well as Swift and DTCC, of course.
This begs the question of whether as the LEI utility operators, they will have a significant competitive advantage over the rest of the market, and that will likely be a key discussion topic for months to come.
At the moment, Swift is also assessing the impacts the new identifier will have on its client base as a result of member requests for more information about the costs and potential complexities involved. There is, however, no plan to phase out the BIC and replace it with the LEI, Vandenreydt confirms. The BIC remains as the network address to use for Swift message routing purposes, and there is potential for it to be updated in the future, provided there is interest from the Swift user community.
Of course, the LEI is only one of the three pillars: reference data in the payments and securities markets are both on the agenda. On the payments side, the plan is to extend the global coverage and value added services related to Swift’s reference data dictionary and its recently launched standing settlement instruction (SSI) project, which began with the FX market earlier this year. Vandenreydt notes that “for now” there is no overlap with Omgeo’s Alert solution set.
On the securities side of things, the plan is much vaguer, but he indicates that “real-time is not on the agenda” and that the intention is therefore not to compete with the data vendors that are already well servicing this market. However, there will be support for corporate actions data developments such as getting closer to the issuer and automating the issuance process, right from announcement. Instrument identification and corporate event identification are also both on the radar for the future, but detail is scant for now. Vandenreydt notes that the derivatives markets and, initially, swaps data repository developments are both being monitored closely at Swift HQ with regards to this. Watch this space…