fStandardsorum

WHERE BUSINESS AND STANDARDISATION MEET MAy 2010

01 — 03 The case for ISO 20022

04 SWIFT Standards in a changing world

05 You say potato, I say potahto

06 Defining roles in the standards ecosystem

07 T2S: a test case for ISO 20022

07 — 08 Bringing automation to hedge funds

08 Reverse engineering: mission accomplished

09 Standards Forum: upcoming events

10 Reducing the costs of standards implementation

11 — 12 SunGard capitalizes on processable standards definitions

Newsletter

The case for ISO 20022

Content

While segments of the financial services industry are already benefiting from ISO 20022 in a measurable way, an industry-wide business case remains a work in progress.

The time for talking is almost over. After holding Standards Forums in three continents – and taking soundings from multiple interested parties across the finance industry – SWIFT will present the organisation’s board with a strategy paper on standards coexistence in June. More is at stake than how long MT messages will continue to carry financial communications around the globe. As well as being an active developer and user of ISO 20022 messages, SWIFT is also the registration authority for the standard, and as such its deliberations will set the tone for the entire industry. In fact, the question of how best to utilise ISO 20022 tests the willingness of the finance industry to put standards-based competition and costly interoperability headaches behind it, grasping the opportunity to deliver value to customers via the automation of transaction value chains from beginning to end using a universal standard.

To proponents the benefits seem obvious. But the extensive feedback gathered by SWIFT has unveiled division, both across geographies and product lines and within institutions.

The funds caseSWIFT Standards’ work on the use of ISO 20022 in the European Central Bank’s TARGET2-Securities initiative remains a work in progress. Nevertheless, real-life examples of the benefits of ISO 20022 already exist. SWIFTNet Funds offers tangible benefits today. Designed to automate funds distribution using messages based on ISO 20022 standards, SWIFTNet Funds has brought new opportunities to deliver value to end-customers, according to David Campbell, securities product manager, investment services, at technology vendor Fiserv.

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“One of our clients creates funds domiciled in Luxembourg that they distribute through a technology hub in the US to an Asian broker network. Automating that entire chain is something that they couldn’t really do in the ISO 15022 world,” explains Campbell. “By facilitating global distribution, ISO 20022 has allowed them to do business in an automated fashion that previously wasn’t possible.”

But Campbell acknowledges that, in those areas of activity where existing message standards are already in place, investment management firms are struggling to identify a solid business case for migrating to ISO 20022. “Firms may have their difficulties with ISO 15022, but overall they’re comfortable with it and it works,” he asserts. Campbell echoes the feelings of many financial institutions when he says that the business case for investment managers should be more robust to compete with other priorities. “They’ve got a lot of other pressing matters to worry about, especially if they’re in the OTC derivatives market, where the weight of regulatory change is forcing them to make investment decisions now that they don’t want to make.”

Irene Mermigidis, senior vice president, product management - core products at Clearstream, recognises that factors such as having to upgrade legacy IT platforms to use ISO 20022 messages make some financial institutions reluctant to commit to migration by a fixed point in time. She is wary, however, of too long a coexistence period – where ISO 20022 messages run alongside ISO 15022. Rather than simply accepting that the complexities are too great to impose a rigid timetable,

David Campbell, Fiserv

“ One of our clients creates funds domiciled in Luxembourg that they distribute through a technology hub in the US to an Asian broker network. Automating that entire chain is something that they couldn’t really do in the ISO 15022 world.”David Campbell, Fiserv

“ Standards-based interoperability could be the answer to the industry-wide challenges of improving operational efficiency, while reducing risk and the cost of technology.”Irene Mermigidis, Clearstream

Irene Mermigidis, Clearstream

she believes SWIFT has a vital role in developing tools to make adoption as simple and painless as possible. “Without a time-defined migration the reduced total cost of ownership (TCO) that ISO 20022 can deliver will not be realised. But no one says migration has to start tomorrow”, she points out. “Migration can start once market participants have indicated that the migration supporting tools are available and the actual end-date can be set for an appropriate time after that,” she suggests.

Clearstream was an early adopter of ISO 20022-based SWIFT XML messages for funds in 2007 and Mermigidis says that the Standards Developer Kit (SDK) introduced last year is the result of “lessons learned” by Clearstream in trying to help their customers to benefit from a more effective approach to implementing and maintaining new messages.

ISO 20022 for funds has demonstrated that with the right tools the technology can be managed and have lower costs of implementation and maintenance for a firm, but Mermigidis says the benefits to the industry of wholesale adoption will be of a much higher magnitude because of the potential for a universal standard to

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accelerate momentum in interoperability between financial institutions. “Standards for many years have been the prerogative of technical groups and committees,” she asserts. “But standards-based interoperability could be the answer to the industry-wide challenges of improving operational efficiency, while reducing risk and the cost of technology.”

Lower processing costs for the industry will be a challenge, but can be achieved according to Mermigidis. In addition to supplying the tools for migration, SWIFT must also provide the arguments that will help senior managers appreciate the potential of ISO 20022, she says. “Traditionally, SWIFT has helped to define standards, but then it was up to each market participant to run its own implementation project,” explains Mermigidis. “In the future, we will need all the support tools that would make implementation a no-brainer from a technical and a management decision-making perspective.”

Limits to coexistenceIf the tools are not provided to win the technical, operational and business arguments and firms are left to chart their own timetable for migration, Mermigidis believes that extended coexistence could become permanent, a situation that would undermine the ability of ISO 20022 to facilitate greater market harmonisation. “A prolonged period of one-to-one mapping between ISO 15022 and ISO 20022 would limit our ability to innovate and improve while maintenance of two standards of different technology will increase cost,” she says. “One-to-one mapping can ease the migration, but we need to be in a position to benefit from the ISO 20022

methodology and the flexibility it offers in encompassing all business processes in financial services. A technical solution to map between coexistence standards introduces additional layers of processing to be maintained and controlled.”

Martine De Weirdt, SWIFT’s head of coexistence, acknowledges more work needs to be done to make the business case for ISO 20022 easier to grasp. But she suggests that talk of reduced STP rates, lower costs of development and maintenance for financial communication networks and greater interoperability are, though important in their own right, only elements of a much bigger picture. “ISO 20022 offers a new foundation for competition,” she states. “Standards are not competitive; they are there to support the business. And it’s at the business level that people must be convinced. Banks should be competing at the service level, not on standards.”

Having seen the impact of ISO 20022 on the ability of investment management firms to establish competitive advantage through more efficient funds distribution, Fiserv’s Campbell believes that appealing to competitive instincts will continue to be a key factor. “The business case for ISO 20022 will be made by members of the community using the standard to add value and deliver a better service. For investment managers, for example, the business case for migration could arise through the promise of a better or additional service offered by their custodian or broker counterparts,” he predicts.

“ Standards are not competitive; they are there to support the business. And it’s at the business level that people must be convinced. Banks should be competing at the service level, not on standards.”Martine De Weirdt, SWIFT

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SWIFT Standards in a changing worldThree major shifts in the role of message standards in the finance sector are driving change – and the need for a new strategy for SWIFT Standards.

SWIFT has played a leading role in the finance industry’s use and development of standards since it first started replacing telex messages in the 1970s. But as members of the SWIFT community ponder the progression from ISO 15022 to ISO 20022, it is clear that the role of the SWIFT Standards team is evolving too.

First, the nature of the work that SWIFT is required to do in the standards field is going “beyond messaging” says Jamie Shay, head of Standards, SWIFT. Where SWIFT once developed and maintained standards on behalf of the community, it is now being asked to undertake more work relating to the business processes around the standards. SWIFT’s approach to this challenge is to expand its frame of reference at the message syntax and business process management levels. The advantage of this approach is that a greater understanding of standards and the structures around them will support efforts aimed at achieving interoperability and therefore have knock-on benefits in terms of cost savings and operational efficiency.

Second, recent years have witnessed a growing focus on the importance of aligning messages closely to their uses in specific markets while maintaining their compliance with global standards frameworks. The need to balance local market practice with global considerations can be seen in the development of payment messages to support SEPA.

Global versus localThe Securities Market Practice Group (SMPG) – which operates national market groups coordinated by a global steering committee – has also worked to strengthen linkages between global standards and local market practice. “The key to this second challenge is synchronisation,” says Marc Delbaere, head of strategy and architecture, Standards, SWIFT. More than just effective project management, he believes SWIFT has a key role to play in ensuring that message standards, market practices and business processes are monitored and coordinated as much as possible. “This in turn,” he says, “will lower the cost of implementing standards.”

End-to-endThe third key development is the advent of the end-to-end approach to standards, as facilitated by ISO 20022, that facilitates feedback from standards usage into the development chain. Not only does this offer the opportunity to lower the cost of implementing standards, it should also help to make a stronger business case for investing in standards. Shay asserts the importance of standards initiatives adding value while also addressing cost issues. Placing emphasis on “consumability”, she observes that the era of weighty manuals is now being replaced by a set of smarter resources for implementing – and testing compliance with – standards, exemplified

by the recent SWIFT Standards Developer Kit (see page10).

“SWIFT Standards is recognised as a centre of competence for standards. But our experience and knowledge is now much broader. It is time to look beyond standards,” says Shay.

Don’t be a dummy!

SWIFT has created 10 simple questions on ISO 20022 as a first draft of an ‘ISO 20022 for dummies’ publication. The aim is to help members of the SWIFT community look beyond the technical message syntax issues to the wider strategic benefits of ISO 20022 as a universal message standard. The publication is in production now so keep your eyes open for an update!

Jamie Shay

“ SWIFT Standards is recognised as a centre of competence for standards. But our experience and knowledge is now much broader. It is time to look beyond standards.”

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You say potato, I say potahto

SWIFT has facilitated a global discussion on ISO 20022 via Standards Forum events held in Hong Kong, New York and London. But global discussions continue to have regional accents.“Distinctions in discourse between the New york and London Standards Forum events reflect the challenges of building consensus on the use of standards across the worldwide financial services industry,” says Keith Berrett, product manager, direct custody & clearing, Citi.

Although attendees of the London event, held on 4 February 2010, were drawn from across Europe, most shared the conviction that the case for ISO 20022 now needs to be argued in terms of benefits to revenue and service. “In London, the vast majority of attendees agreed that the biggest barrier to progress was the lack of a clear, well-understood and widely accepted business case,” says Berrett. “But in New york there was a greater diversity of views. Even relatively late in the day, some New york attendees were still questioning whether we even needed ISO 20022. The greater level of agreement in London was beneficial because it provided a clear point of attack to move the issue forward.”

Berrett suggests that this divergence can be traced, to some extent, to differences in the development of market infrastructures on opposite sides of the Atlantic. In short, whereas Europe is still building a unified securities infrastructure, the US is used to a more streamlined approach.

“In London, there was a greater acknowledgement that ISO 20022 is here on our doorstep and that ISO 15022 doesn’t do everything that we need it to,” Berrett explains. “This may be because

T2S was in the back of a lot of peoples’ minds at the London event.” TARGET2-Securities, the European Central Bank’s planned single system for securities settlement, which is scheduled to go live in 2013, will use ISO 20022 across all its processes. As such, ISO 20022 is already more tangible for many European securities markets participants compared with their US counterparts. Moreover, the more fundamental nature of the US debate may be a comment on the stability of the country’s post-trade environment. “While the US has the Depository Trust & Clearing Corporation as a dominant post-trade service provider, Europe is a cluster of markets without a single voice at the regulatory, central securities depository,

clearing house or market participant level,” says Berrett.

However, Berrett is not surprised that the topic of ISO 20022 migration should continue to stir passions and acknowledges that differences of opinion do not necessarily follow regional lines. “Within a multifaceted market participant such as Citi there is not a single view on the necessity or otherwise of ISO 20022,” he says.

Berrett’s own position is unambiguous. “The global community at large has to ask itself: does it really think ISO 15022 can do everything we need? Personally, I think we’re kidding ourselves if we think we can get by as we are. Something needs to change.”

“ The global community at large has to ask itself: does it really think ISO 15022 can do everything we need? Personally, I think we’re kidding ourselves if we think we can get by as we are.”Keith Berrett, Citi

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Defining roles in the standards ecosystemStandards Forum Newsletter spoke to Ingrid Versnel, head, payments and wealth management technology and operations, Royal Bank of Canada and chair of the Standards Committee of the SWIFT Board on standards development both within SWIFT and across the industry.

What is the engagement of the Board in SWIFT’s standards activity?The Standards Committee, which I chair, is a subgroup of the Board of Directors. The Board has a number of dedicated committees whose primary purpose is to create focus on a particular product or function. The Standards Committee is not technical; it is really about executive direction. How do we help provide direction to the executive team at SWIFT on the one hand and carry the message from SWIFT back to the community on the other?

I also chair the Standards Advisory Council (SAC), through which we tap into experts within the community to help provide more technical oversight. I am currently the only member of the Board of Directors on that body. For example, SWIFT is working on ways to reduce total cost of ownership for its community; the SAC is involved in reviewing how to reduce the cost of the annual standards release. They are a sounding board for the evolution of standards work done within SWIFT.

We have people on the council from across various geographies, but also, more importantly, from various disciplines. Some are in the securities business, some in payments and others represent asset management entities. They help the standards team within SWIFT understand the feedback that’s being provided by the community and also help anticipate where issues may arise in terms of unexpected consequences.

How do the broader debates about standards in the industry inform what SWIFT does?The Standards team within SWIFT has a mandate to understand what is happening

in the broader financial arena with respect to standards and whether that creates opportunities for SWIFT to assist. At the same time, if we identify a potential conflict, where there may be other groups working on similar issues, we look for ways to resolve it and prevent duplication of effort so we don’t end up with multiple standards. Groups like the SAC give SWIFT the opportunity to reach out to the community and tap into people who have roles and responsibilities in other standards setting organisations.

Does the Standards Forum play a similar role?The Standards Forum is about communication principally. It is not only to inform the community about what SWIFT is working on, but is the opportunity for SWIFT to listen to the needs and issues of the community. That could span a variety of topics including how SWIFT should interact with other bodies involved in creating standards. Furthermore, it is an opportunity for SWIFT and other global standards bodies to show the community how they are working together to help the financial community reduce cost and errors while increasing operational efficiency.

Is there any consensus about the approach to standards development across these various bodies?There is a sense that collaboration is extremely important for all groups. That’s not the same as consensus. I’m not sure that consensus is the ultimate goal. We need to recognise that there is not a single global community and therefore you cannot create a single global consensus. I’ve heard the financial services industry described as an ecosystem of communities. What we need to do is

find ways to allow the members of that ecosystem to live in harmony with each other and to interact efficiently when they need to.

Is there an area that you believe is a priority for collaboration?I don’t think there is a single item that we would all agree is the most pressing issue. That goes back to the ecosystem of communities. This is not a homogeneous environment. The financial services industry seeks to find ways to move information, transactions, data and value around the globe. As we seek to find ways to facilitate that process, there are varying needs within it. I think the single most important need is the understanding that the value created through standards for a single community cannot degrade value for the rest of the communities out there. We need to get to the point where we can create standards for specific communities, while making sure that they remain interoperable with the greater ecosystem.

“ I’ve heard the financial services industry described as an ecosystem of communities. What we need to do is find ways to allow the members of that ecosystem to live in harmony with each other .”Ingrid Versnel, RBC

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T2S: a test case for ISO 20022

SWIFT Standards has had a key role in the ECB’s project to build a single securities settlement system for Europe and has been required to expand its remit considerably as the challenges of building a suitable messaging framework for a new cross-border market infrastructure have unfolded.

Following the ECB and the Eurosystem’s decision to use ISO 20022 messages across all its processes, SWIFT Standards has worked on the implementation of messages in three groups: first, existing ISO 20022 standard message types that need adapting for use in T2S; second, new ISO 20022 message types designed by SWIFT Standards to meet the four central banks’ requirements, but which will also be used beyond T2S; and, third, T2S-specific messages developed by the central banks, but with SWIFT Standards providing technical and consultancy support. This support includes help to ensure that the messages designed by the central banks – for purposes such as securities account management, third-party reference data, and query/response messages relating to settlement instructions – can pass through the ISO 20022 registration process as smoothly as when they are submitted.

To fulfil this role, SWIFT Standards has provided training to the central banks (Deutsche Bundesbank, which has been given ultimate responsibility for delivering this part of the T2S infrastructure, as well as Banco de España, Banca d’Italia and Banque de France) on the appropriate methodology, procedures and tool set for developing ISO 20022 messages. SWIFT Standards also reviews the central banks’ business requirements for each set of new messages and provides ongoing advice on request.

The T2S project, due for completion and go live by 2013, will reach a significant milestone during March 2011 from a message standards perspective. The impending publication of the T2S user detailed functional specifications will contain details about message types across all three pillars, including T2S-specific messages. There is still a long way to go but, from a SWIFT Standards perspective, its expanded role in creating a new message infrastructure for T2S has already provided both an opportunity to demonstrate its consulting skills in support of a strategically significant project and a test case for the flexibility of ISO 20022.

For a real life example of an ISO 20022 implementation, look no further than the close cooperation between SWIFT Standards, the European Central Bank (ECB) and the four central banks responsible for building TARGET2-Securities (T2S).

Bringing automation to hedge fundsDespite its reputation for sophisticated portfolio management and trading, the hedge fund industry remains dependent on manual intervention for much of its post-trade processing. SWIFT aims to help change that.

SWIFT’s involvement in hedge fund messaging is a result of the industry’s recognition that it needs to address the risks inherent in its traditional processes. “Given the risk profile of the industry, the need for standardisation is all the greater,” says Koen Vierendeels, marketing manager fund services, SWIFT. “That’s why a number of hedge fund administrators came to us to ask if we could develop specific messages for hedge funds transactions.”

SWIFT has, however, long had a range of message standards designed for the securities industry, including specific messages for mutual funds? Why could hedge funds not use those? “I see two big reasons related to transactions that only occur in the hedge fund industry,” Vierendeels explains. The first is the use of ‘side pockets’, a type of account used in hedge funds to separate illiquid assets from other more liquid investments. Specific information is needed to process orders related to such accounts. Another is ‘equalisation’, an accounting process whereby players want to ensure that the fee paid to investment managers when they perform above expectations is appropriately spread across the different investors. “This involves a lot of detailed calculation,” says Vierendeels. “Administrators need to know when an investor has made an investment and when he has redeemed his investment and all the information for the treatment of equalisation has to be included in the confirmation messages.”

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Today, he says, such information is usually transmitted manually. “The hedge fund industry is mainly fax-based,” he points out. To rebuild trust with investors unnerved by the crisis, hedge funds are keen to show greater transparency to their end-investors. Using SWIFT for order processing helps to create visibility for investors on these transactions. “you get an audit trail, you get guaranteed delivery, and a clear standardised process,” Vierendeels comments.

SWIFT projectSWIFT launched its hedge fund messaging project in earnest in 2006. “We hired a consultant who helped us develop market practice for the hedge fund industry in collaboration with a global advisory group. The market practice recommendations produced through the SWIFT Hedge Funds Harmonization Pilot (SHARP) were finalised in 2008 and are in the process of being signed off by all market players. Agreement has now been reached with seven hedge fund users to begin testing the hedge fund messages resulting from the initiative.

“Messages are already available today for subscriptions, redemptions and status reports,” says Vierendeels. SWIFT has also developed a specific statement of holdings message for hedge funds. While the crisis has introduced some delay in the project, he expects the first users to begin deploying the messages in the second half of the year. “Once hedge fund players are comfortable with these, we will look at additional messages,” he comments.

“ Messages are already available today for subscriptions, redemptions and status reports. Once hedge fund players are comfortable with these, we will look at additional messages.”

Koen Vierendeels, SWIFT

Reverse engineering: mission accomplished

One of the barriers to efficiency in end-to-end global securities processing, identified by the Giovannini Report two and half years ago, is the fact that not all central securities depositories (CSDs) have implemented ISO 15022. “Many are using proprietary standards,” says Alexandre Kech, head of securities & alternative investment standards, SWIFT.

With the advent of ISO 20022, the attraction of implementing ISO 15022 messages began to diminish even though the functionality inherent in the message set was important to the securities industry as a whole. “We proposed to these CSDs that they should implement ISO 20022 versions of the ISO 15022 standards,” says Kech. “To that end, we agreed to reverse engineer the ISO 15022 settlement, reconciliation and corporate action messages into ISO 20022.”

That process has now been completed. “The industry wanted those ISO 20022 messages to be functionally 1-to-1 mappable to ISO 15022 – a kind of backwards compatibility and that’s what we did,“ says Kech. “We tried at the same time to solve some of the issues that existed in the 15022 messages,” he adds. “It would have been strange to import these into ISO 20022.” A dozen such

issues were identified by the Securities Market Practice Group (SMPG) and the standards maintenance group and were tackled during the first year of the reverse engineering work. The following year was dedicated to the modelling and creation of the messages. “The project involved some 50 messages in all,” says Kech.

The schemas and documentation have now been approved by ISO and published.

As far as implementation is concerned, a solution for corporate actions will be available on SWIFTNet as from November 2010. In line with customer demand, settlement and reconciliation will follow in 2011.

”We have built translation rules to help middleware providers build mapping tools between the standards and have published these in April,” says Kech. “We also wanted to make sure that in ISO 20022, there is a series of coexistence rules that establish how certain fields should be handled. There are some technical differences between the standards and we have therefore created an interoperability and coexistence framework.”

“ We have built translation rules to help middleware providers build mapping tools between the standards and these will be published soon.”Alexandre Kech, SWIFT

SWIFT Standards have completed the reverse engineering of ISO 15022 messages into ISO 20022.

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17 May 2010 Tokyo, Japan

Venue: Auditorium, Tokyo Bankers Association

1:00pm-5:00pm

(By invitation only)

The focus of this half-day conference will be on providing up-to-date standards information to the Japanese community, helping them to move forward with the implementation of ISO 20022. The agenda will include:

Sharing best practices around ISO 20022

Reporting on the ISO 20022 meetings held the week before in Tokyo

Updates on coexistence, interoperability, standards releases

ISO 20022 case study

More information: www.swiftcommunity.net/events/177/detail

19 May 2010Beijing, China

Venue: Xindadu Hotel

Full day

(By invitation only)

The focus of this day will be on education and information sharing regarding ISO 20022. The agenda will include:

A general introduction to ISO 20022 and its various committees and sub-committees; what ISO 20022 messages have been or are being developed and by which organisation; how the ISO 20022 registration process works; where is China participating

ISO 20022 registration and maintenance process in more detail and the importance for China of being actively involved

The ISO 20022 message portfolio (payments)

The Peoples Bank of China will participate in the event and will outline their stand on ISO 20022 adoption, share their experience with ISO 20022 methodology and the technical implementation of XML messages and discuss their next steps for ISO 20022 adoption.

More information: www.swiftcommunity.net/events/178/detail

25 – 29 October 2010Amsterdam, The Netherlands

Venue: Sibos, Amsterdam Rai

Sibos is the world’s premier financial services conference, exhibition and networking event.

Now in its seventh year, the Standards Forum at Sibos provides a unique opportunity to network, learn about new initiatives, share experiences and gain new insights into standardisation topics.

The Standards Forum runs throughout Sibos week and offers a comprehensive and interactive programme of activities taking place on a dedicated stand within the Sibos exhibition. The Standards Forum welcomes business people, standardisers, implementers, vendors and decision makers alike.

More information: www.sibos2010.com

www.swiftcommunity.net/ standardsforum

Questions or comments? standards.forum@swift.com

Standards Forum - Where business and standardisation meetupcoming events

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formalising third party practices and ultimately making them available to the community in a web- or machine-readable form,” says Moulson. This will involve capturing the practices and then publishing them.

“Part of our strategy going forward is to engage more with how standards are being used,” says Moulson. “We hope firstly to provide the information to our users in a way that is consistent so they don’t have to go to different sources; secondly where there are overlaps in the way a message is customised – for example, common use of a narrative field for a particular piece of information – it may suggest a need to refine the standard itself in a future release.“

Reducing the cost of standards implementation

Two SWIFT initiatives aim to help customers avoid duplication of effort and save time and money in the process.

Standards are, above all, practical. If they look good in theory, but cannot be easily implemented, they are unlikely to achieve de facto standard status. At the same time, once in use, they do not float above the market in a pure state, but are adapted to the needs of the institutions using them. Two initiatives aiming to ease the path of application address the challenges related to core implementation on the one hand and informal customisation on the other.

The first, launched at the Standards Forum in Hong Kong, is the Standards Developer Kit (SDK). One way of ensuring that a critical mass of users is drawn to implementing a particular standard is to ensure that barriers to entry are kept as low as possible. “The SDK is one attempt to do just that,” says Stephen Lindsay, head of standards automation, SWIFT. “For SWIFT customers, who are already connected to SWIFTNet, the principal barrier to entry for a new solution is the cost of implementation. The SDK aims to lower that cost by providing standards definitions in a machine-processable form.”

Prior to SDK, application developers would need to consult the documentation in the SWIFT User Handbook and, having read through the material, they would code accordingly. “That is not a one-off process,” Lindsay points out. With every annual standards release, existing implementations have to be reviewed.

“There has not up to now been any machine-readable documentation on the standards releases that developers could apply to their software coding,” says Lindsay. “If that information is machine-consumable, it would free up resources and reduce costs both for individual customers and across the community.”

Initial interest in the SDK is enthusiastic. “We have just begun marketing and have already signed up around 25 customers,” says Lindsay. For those interested, samples can be downloaded from the SDK community on swiftcommunity.net while SWIFT’s new information portal for developers on swift.com, the Developer Resource Centre, provides access to further information and online ordering.

Market practiceThe second initiative concerns the practical application of standards. Once standards are in regular use, there are often informal rules applied by individual institutions that govern their acceptance of specific message types. “There are different varieties of market practice, some more formal than others,” explains Adam Moulson, head of standards implementation, SWIFT. “Market practice groups, for example, get together and formally and carefully define market practice for their community. At the end of that process they produce documentation.” But there are other practices prevalent in the market that might not be tagged as ‘market practices’ and may even be specific to particular institutions. “These are less formalised customisations of messages that are nevertheless a reality for the people who have to implement them,” says Moulson.

There are a number of different sets of these individual rules. “We’ve now embarked on a proof of concept exercise aimed at

“ The SDK aims to lower the cost of implementation by providing standards definitions in a machine-processable form.” Stephen Lindsay, SWIFT

“ There are different varieties of market practice, some more formal than others.” Adam Moulson, SWIFT

Adam Moulson, SWIFT

Stephen Lindsay, SWIFT

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SunGard capitalizes on processable standards definitions Through the integration of the SWIFT Standards Developer Kit, SunGard can offer quality-certified message definitions and powerful XML tools, while helping to reduce development costs and time-to-market.

For the development of the latest release of their consolidated financial messaging solution, SunGard is pioneering the use of processable standards information provided in the SWIFT Standards Developer Kit (SDK). The integration of the SDK has already helped streamline the development process, and is expected to deliver continuing time-to-market and quality benefits.

DriversSunGard is an important provider of application software to the financial industry. Its portfolio includes payments and securities industry applications, and SWIFT messaging and connectivity products. Providing support for SWIFT and ISO standards in these products requires significant investment in terms of both initial development and the ongoing maintenance required to track the standards as they evolve.

For its most recent messaging product, Ambit Messaging Hub, SunGard has chosen to use processable standards definitions from the SWIFT Standards Developer Kit (SDK), instead of creating and maintaining its own proprietary definitions. Andrew Owens, R&D Director, Messaging at SunGard, explains the decision,

“The main advantage for SunGard comes with future standards changes. We will be able to take on changed message formats

much more rapidly and deliver these to our customers sooner. And because the definitions are certified by SWIFT, we will not be delivering an interpretation of the standard, but the standard itself to the benefit of our customers.”

The SDK is used in two critical areas of Ambit Messaging Hub: it provides definitions of MT messages for internal processing, as well as the source content to generate graphical user interfaces.

Processable Definitions

A modern application, Ambit Messaging Hub takes full advantage of the XML capabilities available in today’s technical platforms. Inside Ambit Messaging Hub, all messages, irrespective of their native syntax, are maintained in XML form, which allows powerful standard XML technologies to be used for transformation, enrichment, display, reporting and so on. Messages are converted to their native syntax only when they are delivered to an external system.

SunGard is one of the world’s leading software and IT services companies. SunGard serves more than 25,000 customers in more than 70 countries, including the world’s 25 largest financial services companies.

SunGard provides software and processing solutions for financial services, higher education and the public sector. SunGard also provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software.

Benefits Certified quality of message definitions

Ability to use powerful XML tools to process MT messages

Reduced development cost and time-to-market

Model-driven development enabled to generate a Graphical User Interface (GUI)

Case study

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SWIFT © 2009

Kurt Florus, Chief Architect for Messaging at SunGard adds,

The SDK MT/XML schema library provides comprehensive XML definitions for MT messages and guidance on converting between XML and the native MT syntax. Using the SDK allows SunGard to import the definitions used for the internal representation of MTs directly from SWIFT, the source of the standard, which guarantees that the definitions will be of high quality.

A further advantage is that, because the MT/XML schema library is updated and released by SWIFT simultaneously with the release of the annual MT standards update, the time between the standard being finalized and SunGard being able to ship definitions to its customers is significantly shortened. This is important, because the implementation window for MT standards releases is fixed, and end-users of products like Ambit Messaging Hub prefer to receive technical definitions as soon as possible to enable the development of integration with back-office systems.

Graphical User InterfaceAmbit Messaging Hub includes a Graphical User Interface (GUI) that allows users to view and work with messages. Ambit Messaging Hub takes a model-driven approach to GUI definition; the product includes tools that can generate

the necessary user-interface logic for a message given a formal message definition, such as an XML schema.

In addition to the MT/XML Schema Library, which defines MTs, the SDK also includes enriched schemas for ISO 20022 (MX) messages, which extend the standard schemas available from ISO to include full textual names and descriptions for every message element. Both MT and enriched MX schemas can be used as the source for the generation of GUI definitions. Kurt Florus,

“The enriched MX schemas allow us to generate automatically rich and detailed GUIs for ISO 20022. These message definitions can be large and highly complex; the model-driven approach that the SDK enables, provides very significant productivity advantages over more traditional techniques, which involve manually creating screen definitions from published documentation.”

The FutureThe first version of the SDK is already proving the value of processable standards definitions to partners such as SunGard. Future releases will build on these capabilities to add more processable content for such common requirements as testing and message validation. Andrew Owens continues,

“Further significant savings for SunGard can be achieved by extending the SDK to provide machine readable cross-field validation rules and smart test messages for MT. This would significantly lower costs of MT Standards changes to the point where SunGard could simply run a set of automated tests to check for accuracy and correct implementation. We estimate that extending the SDK in this way would reduce our MT related R&D costs by over 50%.”

Solution Overview – The Standards Developer KitThe machine-readable standards information used by SunGard will be available to SWIFT customers and partners during 2009, following the completion of a

pilot programme currently targeted for the third quarter of 2009. It is one component of SWIFT’s Standards Developer Kit, a coherent set of resources aimed at supporting all phases of standards implementation, from analysis, through to design, build, document and test. The Standards Developer Kit includes a machine-readable repository of message meta-data, which can be consumed in a variety of forms.

ConclusionAdam Moulson, Head of Implementation, SWIFT Standards, concludes, “As an early adopter of the SDK, SunGard has already realised significant benefits. But this is just the start. We look forward to working closely with SunGard and other partners to define the next advance in processable standards from SWIFT, enabling greater accuracy and faster time-to-market for the benefit of our mutual customers.”

About SWIFTSWIFT is a member-owned cooperative that provides the communications platform, products and services to connect over 8,500 banking organisations, securities institutions and corporate customers in more than 200 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.

For more information, please contact your SWIFT account manager or visit www.swift.com.

For more information about SunGard’s implementation of the SDK, please contact ambitinfo@sungard.com.

“Maintaining all messages, including MTs, in XML allows us to use standard tooling for MT-MX transformations. The XML tools available today make it easy to visualize, code, test and document transformations, but they depend on both sides of the transformation being XML.”