Memorandum submitted by SWIFT
1. SWIFT is an industry owned co-operative supplying
secure financial messaging services to more than 7,500 of the
world's leading financial institutions, including central banks.
SWIFT also provides secure messaging services to leading financial
market infrastructures such as the inter-central bank TARGET system,
CLS and many central securities depositories.
2. In addition to its role as a trusted financial
communications network, SWIFT also acts as a messaging standards
body for the global financial industry and is the registration
authority for key financial messaging standards approved by the
independent International Organisation for Standardisation (ISO).
SWIFT acts as registration authority for ISO15022, the ISO standard
for financial messaging in the securities industry, and its successor
ISO20022 for standardised messaging in the broader financial industry,
ie payments, treasury, FX, trade etc. ISO 20022 is the single
ISO approved messaging standard for the financial industry. ISO
compliant messages are "open standards" that can be
used, without payment of royalties, on any financial network.
3. Both globally and within the EU, ISO20022
is the recommended solution for standardised messaging in a number
of key infrastructure initiatives, such as G30 and Giovannini
for harmonisation of cross-border securities clearing & settlement
and Target 2 for the European Central Bank's Real Time Gross Settlement
system for the Euro. ISO20022 has also been recently adopted as
the messaging standard for the SEPA (Single European Payments
Area) initiative.
4. In the context of the increasing use of ISO20022
across the financial transaction lifecycle, SWIFT wishes to draw
the Committee's attention to the desirability of the use of ISO20022
for key MIFID data flows, to establish a single standard that
will underpin the concept of true straight through processing
(STP) lowering both the cost and the risk associated with securities
trading across Europe. It should be noted that SWIFT has already
publicly committed to users of ISO standards in the pre-trade/trade
market space, that these standards will be updated to accommodate
the requirements of MiFID and will be "fit for purpose"
when MiFID compliance becomes mandatory on 1 November 2007. In
particular, MIFID will give rise to new and extensive flows of
information to provide greater price transparency which, if costs
are to be manageable, will need to be easy to consolidate and
therefore a common standards approach to the format in which the
information is supplied will be important. Given the need for
transactions, once dealt, to then clear & settle against payment,
it would seem a logical proposition to use the same standard as
far as possible across the entire transaction lifecycle. ISO20022
provides the necessary linkage between the securities trading,
clearing, settlement and payment processes. ISO20022 can also
play an important part in helping to standardise end of day regulatory
transaction reporting. For maximum efficiency and lowest cost
and risk, this should be harmonised across all 25 EU States, reporting
in one agreed format as opposed to 25 different proprietary formats.
5. SWIFT would, therefore, ask the Committee
to take note of the opportunities for greater efficiency afforded
by the use of ISO20022 as a message standards approach for key
MIFID data flows, particularly post trade price reporting and
regulatory transaction reporting. We note today that no recommendations
in respect of open industry messaging standards such as ISO20022
have yet been made by either the EU Commission or the regulators
relating to the practical implementation of MIFID. We would very
much appreciate the Committee considering this issue in its future
discussions.
April 2006
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