Securities at SWIFT Initiatives Priorities
5th March 2013
v04
Securities at SWIFT – Initiatives Priorities
Brett Lancaster
SWIFT
Juan Elias
SWIFT
Lou Piezzo
SWIFT
Securities at SWIFT – Context
Sell-Side Connectivity
96% penetration
by Market Cap
Buy-Side Connectivity
88% penetration by
AUM
Securities Firms
Connected 822
by BIC code
Agenda
4
5 Case Study
Latam
4 Case Study
Post Trade
3 Initiatives
Priorities
2 Vision
& Strategy
1 ‘New
Normal’ Drivers
In the ‘new normal’, clients are driven by … … cost management and ‘doing more with less’
5
Voice of the Customer
Regulation
Growth Costs
In the ‘new normal’, clients are driven by … … cost management and ‘doing more with less’
6
Voice of the Customer
Costs
• Internal demand to manage costs and ‘do more with less’
• Continued drive to improve STP rates and efficiency
• Drive for centralized architectures and standardization
Regulation
Growth
In the ‘new normal’, clients are driven by … … growth and/or the reach for new clients
7
Voice of the Customer
Costs
• Internal demand to manage costs and ‘do more with less’
• Continued drive to improve STP rates and efficiency
• Drive for centralized architectures and standardization
Regulation
Growth
• Drive for revenue growth and/or extended reach into new market segments in the face fierce global competitors
• Customer demand to create shareholder value
In the ‘new normal’, clients are driven by … … the swathe of new and sweeping regulation
8
Voice of the Customer
Costs
• Internal demand to manage costs and ‘do more with less’
• Continued drive to improve STP rates and efficiency
• Drive for centralized architectures and standardization
Growth
• Drive for revenue growth and/or extended reach into new market segments in the face fierce global competitors
• Customer demand to create shareholder value
Regulation
US Dodd-Frank Wall Street Reform Act: • Regulatory reporting • Centrally cleared derivatives • Increased collateral requirements • Demand for trade repositories CSA • Canadian Securities Administrators - NI
24‐101 for trade matching / settlement CPSS-IOSCO • Principles for Market Infrastructures to
ensure robustness and risk management
Agenda
9
5 Case Study
Latam
4 Case Study
Post Trade
3 Initiatives
Priorities
2 Vision
& Strategy
1 ‘New
Normal’ Drivers
Our vision is to become the backbone of the industry
2. ‘Grow the Core’ - Drive traffic
to allow cost reductions
1. Become the fabric of the
industry
3. ‘Expand the Core’
Offer innovative products &
services
4. Become the defacto partner for our clients,
working at C-level
… to become part of the fabric
10
Vision
2. ‘Grow the Core’ - Drive traffic
to allow cost reductions
1. Become the fabric of the
industry
3. ‘Expand the Core’
Offer innovative products &
services
4. Become the defacto partner for our clients,
working at C-level
11
Vision
Our vision is to become the backbone of the industry … to grow traffic to allow unit cost / TCO reduction
2. ‘Grow the Core’ - Drive traffic
to allow cost reductions
1. Become the fabric of the
industry
3. ‘Expand the Core’
Offer innovative products &
services
4. Become the defacto partner for our clients,
working at C-level
12
Vision
Our vision is to become the backbone of the industry … to offer value added services
2. ‘Grow the Core’ - Drive traffic
to allow cost reductions
1. Become the fabric of the
industry
3. ‘Expand the Core’
Offer innovative products &
services
4. Become the defacto partner , working at C-level
13
Vision
Our vision is to become the backbone of the industry … to ensure customer-centricity
Evolution not revolution Protect and grow the core and add value beyond messaging
14
Strategy
Strategy
Drive STP and improve operational efficiency to
reduce costs
Drive reach, and growth through new
segments and markets
Help firms meet
regulatory requirements
Protect and grow the core & add value beyond messaging
Anchored by global standards and Market Infrastructures
Agenda
15
5 Case Study
Latam
4 Case Study
Post Trade
3 Initiatives
Priorities
2 Vision
& Strategy
1 ‘New
Normal’ Drivers
Thou
ght L
eade
rshi
p
16
Services Messaging Market Infrastructures
DTCC
CPA – ISO 20022
Brazil - Anbima / Galgo
CDS
FRB US ISO20022
Indu
stry
C
omm
ittee
s E
xter
nal
Con
fere
nces
SWIF
T
Com
mun
ity
Eve
nts
Collateral Management
FinCEN Regulatory Reporting
Post Trade
FINTRAC Funds
Asset Services
Trade Repositories
Initiatives priorities
eStatements 3SKey
MyStandards / SDK
MI Resiliency
Accord Matching
SWIFTRef Reference
Data
Sanctions Screening
Sanctions Testing
Biz Intelligence
•IS
ITC
, IS
DA
, SIF
MA
, X9
Sec
uriti
es, C
FTC
S
tds
•X9
, BA
FT-IF
SA
, N
AC
HA
, AFP
, IP
FA
•IS
ITC
, AC
SD
A, I
SD
A,
SIF
MA
, FTF
, XS
P
•A
FP, N
AC
HA
, CP
A,
BA
FT-IF
SA
, FFI
EC
, E
uroF
in, T
expo
, AC
I, IP
UG
SO
FA, L
AR
C, S
ibos
, C
BF,
WC
BF,
Cor
p D
ay, S
tand
ards
Fo
rum
s
Post Trade Brazil - Anbima / Galgo
Securities - Current Securities - Planned
Agenda
17
5 Case Study
Latam
4 Case Study
Post Trade
3 Initiatives
Priorities
2 Vision
& Strategy
1 ‘New
Normal’ Drivers
What is Post-Trade?
18
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
Counterparty B
[3]
[1]
[2]
1. Trade by Front Office
Counterparty A executes
trade with Counterparty B
2. Post Trade by Back Office Exchange Confirmations Match Confirmations
3. Post Trade by Back Office
Settlement of trade obligation i.e. cash / stock move
Counterparty A
Back Office Back Office
Bank / Custodian
Bank / Custodian
Post-Trade Issues and Trends
19
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
Regulation
US and European regulatory push to move OTC derivatives trading and clearing onto electronic platforms
Shorten Settlement
Cycles
Preparation in Europe for T+2 settlement as required by the Central Securities Depositories Regulation; and preparation for the launch of TARGET2-Securities in 2015
Resources Costs & STP
Headcount reduction among large brokers and asset managers
Drive to reduce Post-Trade costs
Lack of STP costs the industry $12B annually 1
10% of transactions result in mismatches 2
15% of trades fail to settle on time 3
Cross border transaction involves up to 25 people, processes or systems
4
30% of trade failures are a direct result of inaccurate reference data
5
Source: Financial Information Services Division
Post-Trade Vision
20
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
Source: CB Tower Group
• Establish a truly global, multi-asset class, multi-product Post-Trade Service offering
• Help our members with the regulatory transformation of the Post-Trade ecosystem
• Remain connected to local and global client trends
SWIFT Post-Trade Solutions
21
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
Trade Confirmation / Allocation Matching Reporting Clearance Settlement
Existing Future
Local Match GETC
Industry Hub
Translation
Watch Reports
Lite2 Access
Accord for Securities
Accord for Treasury
Accord CSD Pre-Settle Matching
CLS TPS
Accord for Securities CCP Link
Project Concert Accord Platform Renewal
Trade Lifecycle
1
3
2
4
SWIFT Post-Trade Solutions 1) Global Electronic Trade Confirmation (GETC)
22
Global Custodian
Settlement Agent or
CSD
Investment Manager
Broker Dealer
Block Trade (MT513) Allocation (MT 514) Confirm (MT 515) Affirm (MT 517)
Settlement (MT 541 or 543 )
Settlement (MT 541 or 543 )
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
SWIFT Post-Trade Solutions 1) Global Electronic Trade Confirmation (GETC)
23
Addresses the non-automated market with Business Partner MOS (Amigos). Fixes a key STP gap for the community
• Live - 2 Investment Managers, 5 Broker-Dealers • Projected to grow to 10+ IM’s and 20 BDs by year end
Partners – MOS, Traiana, LSE, FiServe, Fidessa, Bloomberg, Broadridge, Salerio, Kofax, ITG, Smartstream
SWIFT to consider an alternative for Central Matching reusing the Platform Renewal – Project Concert
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
SWIFT Post-Trade Solutions 2a) Accord for Securities – Prime Broker to Executing Broker
24
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
Executing Broker
Prime Broker
Daily Trade Report
1. Automated pre-matching
4. Settlement OK
Custodian
Custodian
Agent Agent CSD (PSET)
2. Real time status updates + exception handling on GUI + full
reporting in MT 998
2. Real time status updates + exception handling on GUI + full reporting in MT 998
3 . Accord matching uses:
• Cross-reference table linking local codes to BICs
• Table with specific rounding tolerances, per PSET
SWIF
T S
olut
ion
SWIF
T R
oadm
ap
SWIFT Post-Trade Solutions 2b) Accord for Securities – Broker to Broker
25
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
Broker
Broker
Trade
X-Clear EuroCCP CCP
Confirmed Trade Chosen CCP
Alternative CCPs
MT518 Confirm
MT548 Status
SWIF
T S
olut
ion
SWIF
T R
oadm
ap
SWIFT Post-Trade Solutions 3) Accord for Treasury
26
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
Accord Subscriber or
non- Subscriber
Accord Subscriber
• 470 in 70 countries • Banks • Brokers • Custodians • Fund Managers • Corporates
Deal Confirmations: (MT 300, 305, 306, 320,
330, 340, 341, 360, 361, 362, 392, 600)
Copies of SWIFT
Confirmations
~~ or ~~ Copies of non-SWIFT data: fax, e-mail, e-FX portals, Broker feeds,
Reuters, etc
• Real-time Confirmation Matching Service • Real-time Reporting and Exception Handling • Availability of >99.97% last 5 years • >90K msgs/hour observed matching capacity • Common matching rules + user-defined rules • Financial Liability for Matching results • Integration available for various Back-Office Systems
SWIFT Post-Trade Roadmap Working with Partners
27
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
SWIFT Post-Trade Roadmap 4) “Concert” Accord Platform Renewal - New Features
28
Wha
t is
it?
Issu
es &
Tr
ends
Vi
sion
SW
IFT
Sol
utio
n SW
IFT
Roa
dmap
Rapid Implementation
of New Instruments
Project Concert
Flexible Integration
Options
Enhanced Exception
Management
Integration with e-mail
and csv File Upload
Customizable Matching
Rules
Modern GUI Accessed via Internet
Agenda
29
5 Case Study
Latam
4 Case Study
Post Trade
3 Initiatives
Priorities
2 Vision
& Strategy
1 ‘New
Normal’ Drivers
• Larger markets preparing for the future
• Medium Sized Players looking to be more competitive via partnerships and Regional Integration
• Recent crisis brought about creation of CCP’s and focus on collateral pools
• Smaller markets looking to “catch up”
Future Looks Bright
Latam Trends
30
Tren
ds
Prio
ritie
s A
NB
IMA
M
ILA
Catchup
Collateral
Partnerships
Latam Priorities Focus on Large MI’s and regional integration projects
31
Tren
ds
Prio
ritie
s A
NB
IMA
M
ILA
Other Mexico Chile Brazil
• ANBIMA/Galgo • CETIP Collateral
Management project
• Onboarding Broker Dealers and AM
• Support migration to ISO20022
• Supporting Intergloval Service Bureau
• Continue to onboard Broker Dealers
• Exploring participation in MILA
• Exploring our post trade offering
• Network and messaging for COMDER
• Providing Standards based consulting
• Exploring Participation in MILA
• Supporting DCV’s cross border needs
• Onboarding Broker Dealers and AM
• MILA = Latin American Integrated Market
• Creation of CSD’s in Uruguay
• Post Trade in Colombia
• Looking to onboard more CSD’s and CCP’s
Admin- istrator
Asset Controller
Placement Agent
Liability Controller
ANBIMA – Brazil’s Post-Trade Challenge
32
Tren
ds
Prio
ritie
s A
NB
IMA
M
ILA
Instruction / Allocation
Confirmation
ANBIMA Galgo
Local Asset Managers
Local Brokers Exchange
Local Custodians
Matching Matching Settlement
Execution
Confirmation
Funds Registration
Funds Administrator
Cash / Portfolio Custody positions & trades
ANBIMA / Galgo iMercado BM&F Project Merger?
Cash / Portfolio Custody positions & trades Proprietary Solutions
• SINACOR
• RTM Network
• MTA/MTB/CBLC Net
• STI ANBID
Phase 1
Phase 2a
Phase 2b
MILA - Mercado Integrado Latino Americano
33
Tren
ds
Prio
ritie
s A
NB
IMA
M
ILA
Mexico - Grupo BMV
• 138 listed companies • USD 460B Market
Capitalization
MILA Today
• 582 listed companies • USD 650B Market
Capitalization
MILA Tomorrow
• 720 listed companies • USD 1.1T Market
Capitalization
Brazil
Mexico
Colombia
Peru
Chile Brazil - BM&F Bovespa
• 364 listed Companies • USD 1.2T Market
Capitalization
Q&A
? 34
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35
Thank you
36
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