Clearing and Collateral Management Solutions

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SWIFT BNL Forum 2012

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Clearing and Collateral Management Solutions

  1. 1. 06/09/2012 SWIFT Messaging Solutions • CCP Clearing for Cash Equities Markets • Bilateral Collateral Management • Triparty Collateral ManagementOur aim is to support clients with costs, risks and regulation -anchored by Industry standards & community Supporting the communication Provides an end to end requirements of CCPs & electronic messaging GCM/ICM/DCM for cash solution around collateral markets, processes Flow coverage from trade Cross asset & cross management to risk & segment solution, collateral management, Bilateral complementary with supports interoperability CCP Clearing Collateral downstream settlement Management processes Triparty SupportingLife-cycle of a Triparty Collateral toolstransaction: Matching to Management Underpinned by global ISOsettlement Standards & Value Added Services (ie Testing &Complies with Regulatory migration, training … )requirementsProvides real time instruction,status& position reportingImplemented by more than 150institutions globally Benelux forum Clearing & Collateral Mngt May 2012 2 1
  2. 2. 06/09/2012 Agenda • SWIFT CCP Clearing Solution • Messaging solution description & flows • Ongoing projects • SWIFT Collateral Management offering – Bilateral collateral management • Messaging solution description & flows – Triparty collateral management • Messaging solution description & flows Benelux forum Clearing & Collateral Mngt May 2012 3CCP Clearing Solution Benelux forum Clearing & Collateral Mngt May 2012 4 2
  3. 3. 06/09/2012 Changes in the Financial markets • Uncertainty in the financial markets, changing landscape of trading venues and CCPs, arise of new business models, interoperability discussions, structural changes in the clearing business…. Benelux forum Clearing & Collateral Mngt May 2012 5Key Challenges : Clearing member’s problem statements External challenges •Changing landscape • Fragmented infrastructures • Inter-operability • New CCPs (ex. Poland , Spain, CEE) •Heterogeneous practices and environment • Lack of global technical standards • Differing business practices (buying rules, buyer protection …) Internal challenges • More stringent risk monitoring and collateral management rules requiring real time information • Significant flow of information to manage (gross market executions, net settlement, collateral • Business expansion requiring time to market deliveries •In Europe : Poland, Hungary … •And Beyond : Brazil, Singapore, Australia … Source: SIBOS 2011 Clearing Session (BNP Paribas input) Managing Operational Complexity & Risk in a Changing Financial Benelux forum Clearing & Collateral Mngt May 2012 Landscape 6 3
  4. 4. 06/09/2012ISO 20022 Clearing ProjectStandards Working Group Participants • The Industry participants launch a working group in 2008 to standardize clearing space in Europe. Benelux forum Clearing & Collateral Mngt May 2012 7 New CCP Clearing Messaging Solution Clearing House 1 Trade management Non -Clearing Members 1 Position management Reports Clearing Non -Clearing House 2 Settlement management Rec Members 2 Clearing Risk & Collateral … Member Firm … management Statements Others ie Buy-in etc Non -Clearing Members n Clearing House n • New messaging solution based on ISO 20022 methodology • Servicing the communication and standardisation requirements of Clearing houses and GCM/ICM/DCM for cash markets (FI & equities) Benelux forum Clearing & Collateral Mngt May 2012 8 4
  5. 5. 06/09/2012 CCP Clearing Messaging Solution CCP Life Cycle Risk & InterestAssignment of trade Trade Position Settlement Collateral Others Processing to CCP Management Management Management Management SWIFT Messages Trade Position Settlement Risk & Collateral Others Interest Processing Management Management Management ManagementTrade Leg  Net Position  Settlement Obligation  Collateral Proposal  Default Fund Interest PaymentNotification  Margin Report Report  Collateral Proposal Contribution Statement Trade Leg  Margin Call Request  Securities Response ReportStatement  Margin Call Response Transaction Pending  Collateral Substitution  Buy-in Trade Leg Report Request NotificationNotification  Collateral Substitution  Buy-in ResponseCancellation  Bank To Customer Response  Buy-in Account Report  Collateral Substitution Confirmation  Bank To Customer Confirmation Statement  Collateral Management Cancellation Request  Collateral Management Cancellation Status  Collateral Valuation Report Benelux forum Clearing & Collateral Mngt 9 May 2012 What’s new in standardised clearing space EuroCCP EMCF LCH KDPW LCH.Clearnet CCP SA OTC derivatives Risk & collateral Q4 2012 management Cash market Live 2013 CCP CEE OSLO Clearing AT, CZ, HU, Estonia Live Q2 2012 Benelux forum Clearing & Collateral Mngt May 2012 10 5
  6. 6. 06/09/2012Bilateral Collateral Management Solution Benelux forum Clearing & Collateral Mngt May 2012 11 Bilateral Collateral Management Solution • Provides an end to end electronic messaging solution around collateral processes • Cross asset & cross segment solution, complementary with downstream settlement processes • Enables monitoring & mobilisation of collateral in the business chain • Development based on ISO 20022 methodology • Complementary to Clearing solution, addressing the communication needs of CCP to GCM and NCMs • Collateral management solution is ready for Piloting as of November 2011. Benelux forum Clearing & Collateral Mngt May 2012 12 6
  7. 7. 06/09/2012 Bilateral Collateral Management Messaging Solution Collateral Management Process Initiation of Margin Call Collateral Dispute Collateral Deal Interest Reporting underlying deal Initiation Negotiation Notification Substitution Closing Processing SWIFT Messages Margin Call Collateral Proposal Dispute Substitution Reconciliation Interest Processing  Interest Payment Margin Call  Collateral Proposal  Margin Call Dispute  Collateral Substitution  Collateral Request Request  Collateral Proposal Notification Request Valuation Report  Interest Payment Margin Call Response  Collateral Substitution Response Response Response  Interest Payment  Collateral Substitution Statement ConfirmationGeneric messages : Collateral Management Cancellation Request, Collateral Management Cancellation Status Benelux forum Clearing & Collateral Mngt 13 May 2012 Triparty Collateral Management Solution Benelux forum Clearing & Collateral Mngt May 2012 14 7
  8. 8. 06/09/2012 Triparty Collateral Management Messaging Solution Collateral Management Process Exposure and Margin Call Mathcing & Initiation of Collateral Deal Claim Initiation & Collateralisation Reporting underlying deal Mark-To- Closing Return Status Status Markets SWIFT Messages Margin Call & MTM & Collateral Status update Reporting Claim Status Valuation MT527:  MT527:  MT569: MT558: MT569: Triparty Collateral Triparty Collateral Triparty Collateral and Triparty Collateral Triparty Collateral Instruction Instruction Exposure Statement Status Advice and Exposure MT558: Statement Triparty Collateral Status Advice • Life-cycle of a Triparty transaction: From matching to settlement • Complies with Regulatory requirements ( US FED) • Provides real time instruction, status and collateral position reporting • Implemented by more than 150 institutions globally, facilitates single-window approachBenelux forum throughCollateral Mngt and SWIFTNetwork Clearing & Standards 15May 2012 Thank you Benelux forum Clearing & Collateral Mngt May 2012 16 8

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