The use of ISO standards and the SWIFT messaging platform in payment systems. Steven Palstermans Head of Russia, CIS & Mongolia

Transcription

1 The use of ISO standards and the SWIFT messaging platform in payment systems. Steven Palstermans Head of Russia, CIS & Mongolia Central Bank of the Russian Federation, 27 June 2011

2 Agenda SWIFT in Payment Systems Areas covered by ISO Consultancy examples 2

3 SWIFT for HVPS Scope CSD Central bank High-value payment MI Govt Entities Payment processing Transaction input & validation Payment routing Clearing & Settlement Payment investigation Participants ACH (CSM) Direct Participants Risk management Cash optimisation Liquidity management Treasury reconciliation Reserve management Indirect Participants Low-value payment MI Payment reporting Operational Statistical Regulatory Participants Direct Participants Service administration Payment scheme management Member profile management Participant identification (Reference data) Corporates Consumers 3 3

4 SWIFT for High value payment market infrastructures Live system market Status North America Canada US (TCH) Central & Latin America Bahamas Barbados Chile Dominican Rep. ECCB El Salvador Guatemala Trinidad & Tobago Venezuela CMCA Western Europe Denmark Eurozone (EBA- EURO1/STEP1 &TARGET2) Norway Sweden Switzerland UK Middle East Bahrain Israel Jordan Kuwait Oman Palestine UAE (DIFC) Africa Angola Algeria Botswana Central African States (BEAC) Egypt Ghana Kenya Lesotho Mauritius Morocco Namibia Sierra Leone South Africa Swaziland Tanzania Tunisia Uganda Zambia Zimbabwe Comesa West African States (BCEAO) Central & Eastern Europe Albania Azerbaijan Bosnia & Herzegovina Bulgaria Croatia Hungary Romania Latvia Asia Pacific Australia Fiji Hong Kong New Zealand Philippines Singapore Sri Lanka Thailand Systems on Y Copy topology 4

5 SWIFT for High value payment market infrastructures Systems under implementation HVPMI Type of system Status CENTRAL BANK OF THE GAMBIA RTGS Implementation (Y-Copy) BANK INDONESIA RTGS Implementation (Y-Copy) BANQUE DU LIBAN RTGS Implementation (Y-Copy) BANK OF SIERRA LEONE RTGS Implementation (Y-Copy) BANCO CENTRAL DE HONDURAS RTGS Implementation (Y-Copy) BANQUE CENTRALE DE LA REPUBLIQUE DE GUINEE RTGS Implementation (Y-Copy) CENTRAL BANK OF LIBERIA RTGS Implementation (Y-Copy) BANCO CENTRAL DEL URUGUAY RTGS Implementation (Y-Copy) EAST AFRICAN COMMUNITY (EAC) Regional RTGS Implementation CENTRAL BANK OF RUSSIAN FEDERATION RTGS Implementation NARODOWY BANK POLSKI (NATIONAL BANK OF POLAND) RTGS Implementation (Y-Copy) BANCO CENTRAL DEL PARAGUAY - RTGS RTGS Implementation (Y-Copy) WEST AFRICAN MONETARY ZONE Regional RTGS Discussion 5

6 Central banks using SWIFT for Regulatory Live systems market Status Central & Eastern Europe Croatia Central & Latin America Ecuador Africa Ghana South Africa Tanzania Zimbabwe Systems using FINInform Copy topology 6

7 SWIFT for HVPS Typical topology 1 Payment Instruction SWIFTNet Authorisation request Authorisation response Final Payment Instruction received Sender notification and reporting (Optional) Bank A Y- Copy Bank B 6 6 Position and collateral management SWIFT Interface 7 Transaction input from ancillary systems Central Bank Central RTGS application 7 Ancillary systems 7

8 Standards MX, ISO compliant messages SWIFT supports the co-existence of the two main industry standards MT and MX. As stated, MT messages are the commonly used standard message today for HVPS. MX Messages have been created by SWIFT as a set of standards Covering payment initiation, inter-bank settlement and cash management ISO20022 compliant catering for high and low-value, single and multiple, and urgent and non-urgent payments. 8

9 Standards MX/XML in the context of an RTGS The two key categories of SWIFT MX messages to be used within the context of an RTGS willing to use ISO are : Payments Clearing & Settlement PACS messages, which are ISO20022 approved Cash Management CAMT messages which are ISO approved An industry group CGI(Common Global Implementation) is in the process of finalizing usage rules. 9

10 Inter-bank payment exchange Payment clearing and settlement transfer Serial model (V-Shape) InterAct (MX) for single transactions exchange using MX/ISO PACS Participant A Internal Payment system SWIFTNet InterAct V-topology Participant B Payment Infrastructure Payment processing Bank A Bank B Central web server FIN/InterAct transaction flow Copy model InterAct Copy (MX) for single transaction exchange using MX/ISO PACS Participant A Internal Payment system Payment message SWIFTNet Copy Payment message (settled) Participant B Settlement request Authorisation/ refusal Payment Infrastructure Payment processing Bank A Bank B Central web server FIN Copy transaction flow 10

11 Net settlement transfer Payment clearing and settlement transfer In one transaction FileAct (MT/MX) for multiple transactions exchange using MX/Pacs (e.g. Ancilliary system settlement ) InterAct (MX) for confirmation delivery Internal Payment system Ancillary system Payment Infrastructure SWIFTNet FileAct/InterAct Participant A,B,C Payment processing Bank A Bank B Central web server FIN/InterAct transaction flow In series InterAct (MX) to send settlement movement as a series of single transaction exchange using MX/ISO PACS Internal Payment system Ancillary system SWIFTNet InterAct V-topology Participant A,B,C Payment Infrastructure Payment processing Bank A Bank B Central web server FIN/InterAct transaction flow 11

12 Retail payment with immediate settlement in RTGS Payment clearing and settlement transfer Serial model (V-Shape) FileAct (MT/MX) for multiple transactions exchange using MX/Pacs Participant A Internal Payment system SWIFTNet FileAct Participant B Payment Infrastructure Payment processing Bank A Bank B Central web server FIN/InterAct transaction flow Copy model FileAct Copy (MT/MX) for multiple transactions exchange using MX/ISO PACS Participant A Internal Payment system Payment message SWIFTNet Copy Payment message (settled) Participant B Settlement request Authorisation/ refusal Payment Infrastructure Payment processing Bank A Bank B Central web server FIN Copy transaction flow 12

13 Liquidity & Cash management Browse information Browse, provides secure user-to-application browsing to access the market infrastructures to monitor & control functions Participant A Internal Payment system SWIFTNet Participant B Secure instructions InterAct, to support interactive monitoring & control functions with MX/CAMT message Payment Infrastructure (HVP & LVP) Payment processing Bank A InterAct real-time information exchange and control Bank B Browse online Info query Central web server 13

14 Report & directory management Report management SWIFTNet Interact (MX) to support the sending of balance report and statement messages on an individual basis Participant A Internal Payment system SWIFTNet Participant B FileAct for reporting InterAct for statements Large reports exchange FileAct is ideal for exchanges of Operational, statistical or regulatory reports Raw data Directories Contract information Payment Infrastructure (HVP & LVP) Payment processing Bank A Bank B Central web server 14

15 Report & directory management SWIFTNet Interact in a real-time mode will use MX/ISO CAMT messages. SWIFTNet Browse makes it possible to access the web-services of the HVPMI, allowing the participant to monitor and control service administration data (e.g. static data related to its profile) Participant A Internal Payment system FileAct for reporting SWIFTNet InterAct for Profile Mgt Browse online Info query Participant B SWIFTNet FileAct will allow the HVPMI to exchange large volumes of static data, such as the reference data needed by participants to secure a efficient STP. Payment Infrastructure (HVP & LVP) Payment processing Bank A Bank B Central web server 15

16 Integration Connectivity options Direct connection SWIFT software VPN Network partners Indirect connection Secure Internet or VPN SWIFT software Alliance Lite Service Bureau or Bank Secure Internet 16

17 SWIFT for Payment Systems on ISO SWIFT Services for Payment Systems Services Messaging Security Standards Integration Consulting Implementation Project Management Training Customer support FIN, InterAct FileAct, Browse Copy CUG PKI HSM RMA Delivery notification Multi-site MT messages MX (ISO20022) Market practices Alliance Interfaces Integration tools Alliance Connect Bronze/Silver/Gold SWIFT provide an E2E solution Including Coexistence MT/MX 17

18 Standards consulting services Advisory services Analysis/mapping Formal subsets Market practice & implementation rules End-user testing Training Examples of implementation services and tools 18

19 Standards Consulting Services Expertise right from the source We are a pool of 42 Standards experts more than half are possible consultants 12 distinct resources active since Jan We cover all of SWIFT Standards business areas We collaborate closely with Consulting Services, other SWIFT areas We have experience in most major economies and numerous emerging markets, with broad language skills We possess industry knowledge and project management skills through previous engagements, working groups and prior experience We have extensive technical expertise in Standards implementation 19

20 Case Study 1: JASDEC / ISO Large, strategic engagement Japan Securities Depository Center Inc. Objective: extend services to overseas investors ISO Current state ISO like proprietary messages Complex flows; many actors SWIFT role Enable transition to ISO Benefit to SWIFT Influence an entire market 20

21 JASDEC / Project Blueprint 2 Message flows, message scope, usage and a high-level mapping with ISO JP market landscape, JASDEC project and the main features of the future platform Use of collateral for DVP transactions Receive Deliver Securities transactions processing on the Japanese market PSMS Non-stock exchange Non-stock exchange Stock exchange transactions transactions (DVP) transactions (DVP) (non-dvp) Trading Clearing/Pre-settlement Settlement/registration Cash/collateral Mgt Depository Payment TSE TSE Clearing Clearing Member bank participant participant Member Member Depository Member Tokyo Stock JSCC BETS BoJ Exchange Broker/ Investors Depository dealers Depository Depository Member Depository Member Member Member Broker/ dealer Asset Manager PSMS BETS Payment Depository bank Member Depository Same as above Member BETS BoJ PSMS JDCC (HOKURI) JDCC BETS JDCC Receiver Deliverer Gross settlement. Securities to be received are held in JDCC account until cash is settled at BoJ (Receiver can still trade these securities) The bigger the Risk management (to cover liquidity risk) margin level is the more transactions Securities can settle real-time to be before 14:00. The received DM (receiver) can Securities also make advanced collat. payments to ensure Net cash additional position Cash collat. settlement. Receiver Cash settlement proprietary messages BoJ JDCC Receiver Deliverer Cash management Net settlement (deadline 14:00). In case the receiver cannot pay for the securities, JDCC pay on his behalf -> liquidity risk for JDCC 21

22 Gap analysis 1/2 1 Document flows and execute gap analysis between proprietary flows and ISO message standards 2 High level gap analysis 22

23 Gap analysis 2/2 3 Harmonisation analysis Analysis showing where harmonisation makes sense, by reducing the number of messages to gain efficiency (business processes) and save costs (less to implement). 4 High level mapping analysis Mapping proprietary fields to ISO elements; flagging ISO mandatory elements (including cross-rules); providing advice on way forward to close gaps (harmonisation, mapping to free text, use of extensions, etc) 23

24 Documenting the business model 1 Project boundary 2 Description of business process and sub processes 3 Use cases 4 Activity diagrams 24

25 Case Study 2: T2S 1. High level gap analysis - T2S requirements vs available MXs 2. Detailed gap analysis for flows where ISO MXs exist 3. Project Management support to Bundesbank, which is responsible amongst the 4CB for the messaging and registration areas in the T2S project 4. MX development support 25

26 TARGET2-Securities A multifaceted, long-term, SWIFT Standards consultancy relationship SWIFT Standards Pillar I Pillar II SCOPE OF ISO MESSAGES Existing standard New Standard WORK REQUIRED, BY Maintenance (Regular procedure involving BVGs, industry consultations, etc.) ---Development, by SWIFT Standards Business Areas ---S&R; Cash management; ---Queries; Securities Reference Data; S&R Audit Trail; Cash Management; Cash Account Management SWIFT Standards involvement Consultancy (limited - business) & Development Development 4CB Pillar III T2S-specific Developed in the course of T2S ---Development, by 4CB, with SWIFT Standards support --- Queries (various business areas); Party Reference Data, Securities Account Reference Data, Billing; Collateral Management Price Reports Consultancy (extensive - technical) Consultancy (extensive project management and business) 26

27 The Future: Services and Products Standards strategy aims to Formalize the content we already have to be re-used or re-purposed Create new Standards content cartridges to help with known implementation pain points Change Management Translation Enable (more) asset-based consulting Formalized Market Practice rules ISO Business Model Change Management documentation PoC exercises and prototyping work are ongoing 27

28 SWIFT 2015: TCO reduction strategy Standards has a significant part to play in TCO reduction Change Management Reusable Content Customization Market Practice Goal: Reduce industry TCO by 200 million EUR / year 28

29 In case of further questions Steven Palstermans Head of Russia, CIS & Mongolia SWIFT 8 Novinsky boulevard Moscow Russia T F M E W or Steven.palstermans@swift.com 29