Swift has a serious decision to make this year about its potential future in the securities reference data space, beyond legal entity identification and standing settlement instructions (SSI) in the FX and money markets that is…
Last month, Swift was selected by ISO as the successful candidate to act as the registration authority for its new legal entity ID (see more on which here), but what of its future role in the instrument identification space and the wider securities reference data space? Of course, the Swift, ISO and Depository Trust & Clearing Corporation (DTCC) proposition has yet to be selected by the 13 strong coalition of associations charged with providing feedback to the Office of Financial Research (OFR) about the best candidate for the legal entity ID job (see more details of the process here).
However, Swift has already pegged a slot in its upcoming Sibos conference to discuss its role in the securities reference data space of the future. I spoke to a couple of Swift’s ever-expanding reference data team this week and they noted that the session will aim to feed into the debate that is currently going on internally within its management team about the issue. A decision is unlikely to be reached before the end of the year and Swift is currently consulting amongst its own and seeking input from its key stakeholders to this end.
A lot will be predicated on whether it is selected by the OFR for the LEI role (and it is hot tipped to be the frontrunner in the race due to the bid’s handy combination of US and European flavours and Swift’s industry owned status), but that has not stopped the industry network provider from making some moves in the wider reference data space. I’ll be providing more details soon about my chat with the reference data team and their current work in the payments, FX and money markets with regards to SSIs (check the site soon), and what it may indicate about Swift’s future in the securities space.
As well as the debate about Swift’s own role in the space, the conference will also include a session about the strategy the industry should adopt with regards to tackling the reference data challenges in the securities market (see the full details of which here). The programme indicates that hot topics during the panel will include best approaches to risk mitigation, the appropriateness of the standards selected or available thus far and the actions of market players such as infrastructure providers to support these developments. For example: “Is the industry effectively tackling risk through its approach to reference data? Are we choosing the right models for provision of standard identifiers? Is this a role that should be taken by commercial or utility providers? And are market participants and market infrastructures doing enough to improve their overall reference data management strategies, not just to please the regulators, but to ensure their reporting is meaningful and their own risks are genuinely under better control?”
Another interesting session for those interested in the reference data management space will be the panel on approaches to securities regulation (see details here). By looking at the overall picture of regulatory change and its potential impact on the current industry landscape, panellists are likely to engage in some discussion about transparency and data quality in the process (a recurring theme at our own DMRAV conference last month in the context of Dodd Frank – see more on which here). Indeed, many of the regulation focused sessions such as those on Basel III, liquidity risk and market infrastructures could spend time debating the importance of data quality (see the full list of sessions here).
One thing that is certain to be debated in the exhibition halls of this year’s Sibos in Toronto is the impact of Swift’s moves in the securities reference data space on the vendor community. By providing SSI data feeds for markets such as payments and FX, and potentially beyond into securities, not only does this put Swift into direct competition with Omgeo and its Alert offering (although it is not directly competing at this point, it must be said), it would place it into competition with data vendors themselves.
What will they and the industry make of this move? I expect to hear much more in the coming months…