Standards fundamentals


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Standards fundamentals

  1. 1. Standards FundamentalsSibos 2012Prof. Poppe29 October 2012
  2. 2. First there was…. Telex Fax Paper 2
  3. 3. What was wrong with it Ambiguous content Low potential for automation Risks for errors & misunderstanding High operating cost Labor intensive security Unstable connections 3
  4. 4. The Solution 1: A network 1977: Launch of the Swift Network 4
  5. 5. Solution 2: Standards MT 100, first Developed Message later 101, 200, 201, 202, 203, 205, 210, 900, 910, 950Payments Category Managed by SWIFT and SWIFT working groups 5
  6. 6. The MT 100 /103 becomes a defactostandard Used on other networks and applications Standard way of presenting a payment 6
  7. 7. Followed by other categories• MT0xx System Messages• MT1xx Customer Payments and Cheques• MT2xx Financial Institution Transfers• MT3xx Treasury Markets• MT4xx Collection and Cash Letters• MT5xx Securities Markets• MT6xx Treasury Markets - Metals and Syndications• MT7xx Documentary Credits and Guarantees• MT8xx Travellers Cheques• MT9xx Cash Management and Customer Status 7
  8. 8. This is what it looks likeNaming Convention MT 103 Single customer credit transfer MT 541 Receive (securities) against payment 1st digit is the category number = business area 1= Customer payments & cheques 3= Treasury markets - FX, money markets & derivatives 5= Securities markets 8
  9. 9. This is what it looks likeTag Based Senders reference :20:12345 :32A:120731EUR1958,57 Value date/currency/interbank settled amount 9
  10. 10. This is what it looks likeField OptionsThe field option defines HOW the data in the field is provided 10
  11. 11. This is what it looks likeStrong Format specificationC6: If field 23B contains one of the codes SPRI, SSTD or SPAY, field 54a maybe used with option A only (Error code(s): E05).C7: If field 55a is present, then both fields 53a and 54a must also bepresent (Error code(s): E06). 11
  12. 12. This is what it looks likeStrong Format specification 12
  13. 13. SWIFT MT messages: example Sender: OELBATWWAXXX Message type: 103 Receiver: ABNANL2AXXXX Full details of headers in UHB Block 4 is text block: – Fields appear in order given in UHB – Detailed content must conform precisely to UHB specification – UHB specification covers content of each field, and cross-field validation rules
  14. 14. MT Messages on the Swift NetworkValid messages are Acked ! Invalid messages are Nacked ! 14
  15. 15. MT Messages on the SWIFT NetworkDelivery Notification Non Delivery WarningBulk Retrieval Request Y Copy T Copy 15
  16. 16. MT Messages on the Swift NetworkEvery year a new MT release Big Bang 16
  17. 17. Then other financial institutions joined theSwift networkNeed for Securities messages: Category 5 Messages Published as an ISO 7775 standard Managed/maintained by Swift The standard needed to be enriched to cope with the complexity of securities…. 17
  18. 18. 1987,The answer: ISO 15022, The securities Industry StandardFields with QualifiersField 94a: Place Order M/O Qualifier R/N CR Options Qualifier Description 1 O CLEA N H Place of Clearing 2 O TRAD N B Place of TradeSame syntax as MTsFinancial Dictionary, Managed by Registration AuthorityOnly Cat 5 and Securities related messages in Cat3Open Standard. Can be used on other networks ….Developed and maintained by SWIFT and user community(maintenance working groups) 18
  19. 19. Clear marking of sequences 19
  20. 20. The next step, ISO20022 Early 90’s Internet standards became dominant, o.a XML New messages Model Driven Financial DictionaryISO Validated All categories Reverse engineering of ISO 15022 messages Open. Development by anybody Presentation title – dd month yyyy – Confidentiality: xxx 20
  21. 21. ISO 20022, A recipe to build standards Capture the basic foundations of the business Agree on how to use and/or exchange those concepts in a financial messaging context Underlying analysis in collaboration with industry 21
  22. 22. More than just messaging! A repository … ISO 20022 Repository Payment InstructedAmount Creditor PaymentDate Remittance Debtor CreditorAccount DebtorAccountBased on a Business model 22
  23. 23. More than just messaging! A repository … ISO 20022 Repository Payment InstructedAmount GUI CreditorFunctional PaymentDate Remittance layer Debtor CreditorAccount Data DebtorAccount layer GUI Functional layer Data layer 23
  24. 24. More than just messaging! A repository … ISO 20022 Repository PaymentBusiness model InstructedAmount CreditorDefinition ofpayment PaymentDate Remittance Debtor CreditorAccount DebtorAccount Message Information needed to communicate, eg, credit transfer instruction Technical Schema 24
  25. 25. More than just messaging! A repository … Reusable Message Components Data TypesFormal Model Formal Descriptions 25
  26. 26. This is what it looks like, the naming conventionMessage Identifier setr.010.001.03 Subscription Order Message Name Business area Variant # Version # Identification # Business area examples: Payments pain Payments clearing & pacs Cash management camt initiation settlement Securities setr Securities settlement sese Securities semt trade management Securities seev Reference data reda Foreign exchange fxtr events trade 26
  27. 27. MX Messages on the Swift Network MX messages vs. ISO Messages Validation per Service No Embedded Network related featuresBusiness Application Header Extension Mechanism Build in 27
  28. 28. Thank you 28