SWIFT for Investment Managers. End-to-end solutions for asset management and funds business processes

Transcription

1 End-to-end solutions for asset management and funds business processes

2 Table of contents Section Introduction Section SWIFT s value proposition for investment managers Section Business areas of an investment manager and SWIFT s solutions Section Initiatives and solutions Section Value added services: applications Section Standards and industry guidance Section Messaging Section Connectivity Section Service Section About SWIFT Appendix A. Details of standardised messaging B.What is in it for you? Calculating your business case for SWIFT C. Roadmap by Asset class and business function 177 D. Glossary Index

3 Asset Class Translation cycle Equities, FI Forex Money Markets Listed derivatives OTC derivatives Commodities Repos Syndicated Loans Cash Pre-trade / trade Post-trade / presettlement Trading (FIX and FIN) 27 Trade confirms Trade notification Trade Capture New! 66 Trade confirms Trade notification, Affirmation Trade confirms Trade notification, Affirmation Pre-settlement matching Trading (FIX and FIN) 27 Trade confirms Trade notification 29 Trade confirms Trade notification (FIN+FpML), Trade confirms Trade confirms Affirmation and and 67 Credit agreement (FpML) 33 Clearing & Settlement Settlement & Recon 39 and 42 Allocation processing as well as confirmation matching, SSI - New! Settlement & Recon CLS 3rd Party service Settlement & Recon Settlement & Recon (FIN+FpML) and and 67 Settlement & Recon 39 Settlement & Recon 39 Payments 50 Cash management Asset servicing & administration Portfolio Administration Collateral management Cash Reporting 52 Data distribution 44 Cash Settlement Cash Reporting Cash Settlement Cash Reporting Data distribution 44 Cash Reporting Cash Reporting Cash Reporting Cash Reporting Corporate Actions Corporate Actions (Corporate Actions) Proxy voting 47 Securities Financing Securities Financing New! 69 Transaction Regulatory Reporting Reporting Transaction Reporting Total Portfolio Valuation (TPV) - New! Collateral Management Collateral Management - New! Portfolio reconciliation - New! 59 Transaction Reporting Transaction Reporting 59 Securities Financing New! 69 Agent notices (FpML) Exception Management and Planned solutions Available solutions The numbers refer to the page number in this binder

4 1 Dear investment manager, You are at the forefront of every securities transaction. Multiple communication flows, many counterparties, a wide range of asset classes and continuously increasing volumes are putting a strain on your business environment and increasing operational risk. By using SWIFT you benefit from secure and resilient electronic messaging, gaining access to a single, low cost way of communicating with all your counterparties. You also participate in the creation of industry standards and market practices. Leveraging SWIFT enables you to automate your processing environment by supporting straight-through processing for internal and external communication. Automation with SWIFT enables you to achieve three key benefits: Gain competitive advantage Improve risk control Improve your bottom line In the following pages, you will find a description of how these benefits can be realised: the SWIFT value proposition for your institution. We know that every investment manager is different, so we will work with you to determine how SWIFT can best help you achieve these benefits. This book is designed to let you know why one of SWIFT s investment manager clients has said: SWIFT has really changed the business. Please contact us to discuss how your institution can best benefit from SWIFT. Yours faithfully, The SWIFT Markets team If you also manage hedge funds, a specific value proposition is available to complement this document.

5 Section 1 Introduction The scalability we get through SWIFT automation is huge. We would not have been able to support our growth and stay in this business without it. Investment Manager on SWIFT

6 3 1 Executive summary The SWIFT guide for Investment Managers (IMs) is designed to provide existing and potential users with an overview of our product and service offering. This guide focuses on IMs, highlighting their specific business needs and requirements, and offers suggestions of ways in which IMs can use SWIFT to gain operational efficiencies, improve STP and reduce risks and costs. 1.1 Investment Manager (IM) The term IM within this guide also applies to asset managers, fund managers, portfolio managers and hedge funds managers. 1.2 SWIFT SWIFT is an industry-owned co-operative supplying secure, standardised messaging services and connectivity to more than 8,700 financial institutions in 209 markets. Collectively, these institutions, active in payments, securities (equities, fixed income and derivatives), treasury (foreign exchange, money markets and derivatives) and trade services markets, exchange millions of messages valued in trillions of dollars every business day. SWIFT consistently delivers quantifiable value and proven technical excellence to its users through its comprehensive messaging standards, the security, reliability and availability of its messaging platform and its role in advancing STP. 1.3 SWIFT in the investment management market Over the course of our history, more and more securities institutions have joined SWIFT. Today, investment managers, broker/dealers, custodians, securities depositories, clearing organisations, exchanges, central counterparties, matching utilities, electronic trade confirmation providers, proxy voting service providers, distributors, transfer agents and fund administrators, rely on SWIFT to reduce the complexity, risk and cost of their domestic and international transactions. SWIFT facilitates standardised communications and processing at all levels of the lifecycle: for equities, fixed income, OTC and listed derivatives, FX and money markets, commodities, repos, syndicated loans and investment funds transactions. from trade order through to settlement and asset servicing, including payment, portfolio administration and cash management. SWIFT also facilitates standardised communication for securities financing and collateral management. For the purposes of this guide, an investment manager (IM) is defined as an institution responsible for making decisions to buy, hold or sell financial instruments. IMs include insurance companies, hedge fund managers and government institutions which also have this responsibility

7 4 SWIFT s support for asset management and investment funds processing lifecycles Payments, Cash Management, Asset Servicing... Collateral Management Payments Portfolio Administration Cash Management Asset Servicing Regulatory reporting Reconciliation Account Management Funds processing Asset Classes covered: equities, fixed income, forex, money markets, cash, listed derivatives, commodities, OTC derivatives, repos, syndicated loans Funds covered: investment, money market, hedge funds, alternative funds and pension funds. SWIFT messages, based on ISO standards, provide enhanced straight-through processing and risk management in a consistent, coherent and uniform way. New messages are being designed in XML for use on SWIFTNet, our advanced IP-based messaging platform. SWIFT s priority is to drive standards convergence of alternative messaging protocols, the ISO business models, and harmonise market practices to enhance STP at an industry level.

8 5 1.4 Investment managers needs and how SWIFT can help Introduction Gain competitive advantage Improve your bottom line Mitigate risk Investment managers are dealing with an expanding range of asset types, a growing number of counterparties and escalating transaction volumes. They are also carrying an increased risk and compliance burden. There is a need to deploy innovative investment strategies to compete but also to control operational risks and costs, and ensure scalability, perhaps through operational outsourcing. SWIFT can help investment managers meet these challenges by providing a single, low cost way of communicating across all counterparties - including broker/dealers, custodians and fund distributors - in an automated way, and supporting a large range of asset classes across the funds, equity, fixed income and alternative spaces. Leveraging SWIFT s services enables an investment manager to eliminate costly and error-prone manual processes and multiple communications protocols, and to increase international reach. As new regulation such as MiFID and Basel II impacts operating and investment practices, SWIFT s solutions for collateral and risk exposure management and standards for transaction reporting can help investment managers cope with regulatory and compliance demands in a cost-effective way.

9 6 By automating the operations processes, operations staff can focus on more challenging tasks. Job satisfaction increases and staff turnover drops. Investment Manager on SWIFT Operational efficiency Business drivers Market needs How SWIFT can help High straight through processing (STP) rates are expected, and scalable processing platforms are becoming crucial to support growth. The obligation to reduce costs must also be met. There is a need to reduce fax and other proprietary communications and to achieve high STP rates. This drives a need for scalable processing platforms to support growth. SWIFT offers standards for the entire lifecycle of a transaction to eliminate costs associated with supporting multiple formats and connections to clients, service providers and peers across products. Risk management and compliance Business drivers Market needs How SWIFT can help Risk management and compliance have become a critical part of your core business as regulation drives new operating and investment practices. To cope with a shift of business emphasis towards derivatives products, handle the additional burden of new regulations and reporting requirements, and make management of exposure across asset classes a priority. By providing a consistent industry solution for collateral and risk exposure management and standards for transaction reporting and regulatory compliance. New instruments and more counterparts Business drivers Market needs How SWIFT can help You are investing more widely in derivatives and exotic financial products. You are also interacting with an ever-more diverse community of counterparts, many of which you have not directly chosen to have business relationships with, but which have been acquired as counterparts as a result of investment mandates you have won. Your back office needs to become more flexible to handle new, more complex, asset classes. Time to market becomes a critical element in order to ensure you are supporting the competitive needs of your front office. SWIFT supports a broad range of asset classes across equity, fixed income and alternative investments and provides connectivity to a wide array of counterparties for standardised messaging.

10 7 Operational outsourcing Business drivers Market needs How SWIFT can help Focus on your specific areas of expertise and reduce your operational costs by outsourcing areas of the business that fall outside your core competencies to specialised providers. Accurate, timely and consistent reporting becomes crucial in order to maximise the benefits of the outsourcing. We can ensure consistency of communication connectivity and messaging standards to all counterparts. This enables maximum efficiency, reduced risk and optimum timeliness of information. Data management and reporting requirements Business drivers Market needs How SWIFT can help You are required to prove best execution in response to regulation imposing new levels of transparency on the market, so you need a solid strategy for managing the variety of data you handle, including client and counterparty data and market data. To prevent further proliferation of isolated databases and ensure a seamless integration of different data sources as a prerequisite for efficient risk management and operational efficiency. To improve consistency of data. Standardised messaging ensures the consistency in data management which can readily be provided directly to regulators.

11 8 1.5 The Value of SWIFT to Investment Managers SWIFT s portfolio allows industry players to automate their business processes and communications, thereby achieving STP. The true benefits of automation and STP to IMs are lower costs and lower risks. Through SWIFT, IMs are able to conduct their business in a value for money, secure, standardised and automated fashion. Provide solutions: Whether your business is payments, treasury, trade or securities; whether you work for a small local brokerage or a global multi-service bank; SWIFT enables you to automate and standardise your transactions end-to-end. Our solutions can help lower your costs, mitigate your risk and increase your service levels. Refer to section 3 New initiatives: SWIFT is continuously working with the industry to understand the need of its customers and enhance or develop new solutions accordingly. Refer to section 4 Provide applications: Whether provided by SWIFT or a third party, your SWIFT connection offers access to a wealth of applications. 1. Accord Enabling real-time matching and exception handling for foreign exchange, money market and derivative confirmations. 2. Affirmation application. 3. Industry applications Banking Market Infrastructures: In payments, more than 60 clearing systems, carrying from 500 to over 300,000 payments a day, rely on SWIFT for the secure messaging connectivity and common message standards essential to their smooth operation. Securities Market Infrastructures: Today, SWIFT is the messaging hub for many clearing and settlement systems in payments, securities, foreign exchange and derivatives. Refer to section 5 Facilitate standards and market practice: in co-operation with the securities, payments and treasury industries, facilitate the development of standards and practices used in the aforementioned messaging. Refer to section 6

12 9 Provide messaging: allowing IMs and their counterparties to automate the delivery and receipt of information required to conduct their business, ranging from equity trade execution and settlement through to foreign exchange and money movements. Refer to section 7 Provide connectivity: allowing IMs and their counterparties (e.g. Broker / Dealers, Custodians, Electronic Trade Confirmation Providers, Banks, (International) Central Securities Depositories, Transfer Agents, Fund Administrators and others) to communicate with each other over a single network. Refer to section 8 Provide services: Partner programme As a SWIFT customer, how can you be sure that you are buying a solution from a third-party supplier that is compliant with SWIFT? How do you choose a company to help you with your SWIFT-related integration, implementation and training and be certain that they have the expertise to perform the job? SWIFT s certification programmes and partnerships help you to answer these questions. Business Assessment programme The Business Assessment Programme provides dedicated teams of experienced consultants to analyse your business flows or your infrastructure, or both. Their recommendations help you reduce your total cost of ownership, lower your operational and reputational risk and identify opportunities for business growth. Industry initiatives SWIFT supports the community by contributing to various industry-wide initiatives that are key to investment managers. These include: Giovannini Barriers. In its 2003 report, the Giovannini Group, as advisor to the European Commission, published a report identifying 15 barriers to efficient EU cross-border clearing and settlement. The Giovannini Group, under the chairmanship of Dr. Alberto Giovannini, CEO of Unifortune SGR SpA, stated that SWIFT, through the Securities Market Practice Group (SMPG), should define a solution to eliminate Barrier 1, which cites national differences in information technology and interfaces used by clearing and settlement providers MiFID. The Markets in Financial Instruments Directive (MiFID or Directive 2004/39/EC) was implemented on 1 November MiFID gives investment firms an effective single passport, allowing them to operate throughout the EU on the basis of authorisation in their home Member State. MiFID s objective is to remove crossborder trading barriers and increase competition, leading to the creation of a single market in investment services throughout the EU. MiFID will have an impact on the trading of all asset classes including cash equities, fixed income and derivatives. The financial institutions that are directly impacted are investment managers (when providing portfolio management services collective investment schemes are out of scope), stock exchanges and broker/dealers. SWIFT analysed the impact of MiFID on the relevant ISO and ISO financial message standards that it supports. The resulting changes are now available for use. Refer to section 9

13 Section 2 SWIFT s value proposition for investment managers

14 11 2 SWIFT s value proposition for investment managers Gain competitive advantage By relieving operational burden, SWIFT allows investment managers to focus on their core business of performance. Because SWIFT s solutions for investment managers span multiple asset classes and provide reach to counterparts globally, SWIFT also enables investment managers to pursue innovative investment strategies, while effectively managing risk, in order to maximise gains. Improve risk control SWIFT enables investment managers to achieve higher rates of STP directly reducing operational risk. SWIFT also supports investment managers in improving operational processes around higher-risk instruments, and in achieving compliance with regulations i.e. meeting more stringent requirements through improvement of STP. Improve your bottom line SWIFT supports investment managers in improving STP. This empowers investment managers to maximise their profitability by reducing their operational costs. Gain competitive advantage Improve operational efficiency We started using SWIFT about a year ago. Efficiency-wise it has been unbelievable. Now we are able to reach about 90% straight through processing (STP) for outgoing messages. Investment manager using SWIFT Increase automation and STP SWIFT provides a single communication platform enabling seamless integration across your front, middle and back-office systems + Reduce risk and cost Automation via SWIFT leads to a reduction in manual processing, errors and failed trades. This reduces risk and cost + Improve operational control Automation enables you to focus on exception processing. Problems that do arise are identified and can be acted upon immediately. The result is an improvement in operational control. A benefit of automation is facilitated management of internal and external regulatory compliance = Increased operational efficiency

15 12 Gain competitive advantage Reduce cost and time to market Before we had SWIFT, we had proprietary terminals all over the place. Staff needed to be trained on all the different systems and data was rekeyed all day long. Now, we simply have one system. Investment manager using SWIFT Improve scalability By automating your business processing environment, through the use of message standards and a single method of communication, you will reduce the impact of volatility in transaction volumes. Automation provides you with a scalable processing environment. + Increase reusability SWIFT messages enable standardisation across all asset classes, even alternatives. With SWIFT you can communicate with all your counterparties (8,500 institutions in 209 markets) SWIFT s solutions can be reused as you expand your business focus into new and different areas. + Reduce cost and time New business expansion is easily undertaken in an automated environment. This is due to reduced costs and time needed to bring new business products to market. = Reduced cost and time to market

16 13 Gain competitive advantage Improve customer service If we were to report everything over fax, we would probably need twice as many people to do this. We have increased our traffic tenfold without really increasing the headcount. Investment manager using SWIFT Increase service monitoring An increase in the automation of your processing environment allows you to focus on exception processing. This provides you with the opportunity to increase the monitoring of the transactions you carry out on behalf of your clients. You will be able to improve your reporting on positions and activity to your clients. + Reduce errors and An automated environment reduces the risk of manual processing errors and you will discover errors that do occur much sooner. You will be in a better position to provide problem resolution to customers. Ultimately, the quantity and associated cost of errors and failed trades will be reduced. + Reduce cost and time With a higher level of service monitoring and a reduction in errors and failed trades, you will be better able to focus on your customers investment needs. = Improved customer service

17 14 Improve risk control Reduce processing risks Without SWIFT, we would certainly need to double the number of operations staff and maybe even more. Fluctuations in the business cycles would cause problems because we would have to pull in temporary staff. This would increase the risk and further reduce efficiency. Investment manager using SWIFT Reduce misinterpretation The use of standards to exchange information ensures that you talk to your counterparties in one language. This reduces the potential for misinterpreting information through translation issues and rekeying errors. + Assured communication By using SWIFT as a communication channel, you are assured of the identity of the sender of the information as all messages are authenticated. You are also assured that information you have sent to your counterparties has been safely received because delivery is guaranteed. + Reduce errors and failed trades Automating the exchange of information with your counterparties eliminates the possibility of rekeying errors and misinterpreting trade details. = Reduced processing risks This reduces the risk of errors and failed trades

18 15 Improve risk control Reduce operational uncertainties Security and reliability are the cornerstones of SWIFT. They will always remain SWIFT s key values. SWIFT Board Member Increase resilience With a resilient communication platform, you can conduct your business in the certainty that you will always be able to communicate with your counterparties, as and when required. + Increase control and compliance Automation, reach, trust of sender and guaranteed delivery mean that you are in control of your operational and processing environments. + Assured settlement Automating the communication flow with your counterparties eliminates errors and the risk of misinterpreting transaction details. You and your clients can be assured of the settlement of transactions. = Reduced operational uncertainties

19 16 Improve risk control Reduce capital requirements Operational risk is the risk resulting from inadequate or failed internal processes, people and systems or from external events. Basel II Increase security and resilience Conduct your business with certainty that you can communicate with your counterparties, as and when required. The SWIFT network is highly secure and trusted, and is used by major financial institutions in 209 markets around the world. + Reduce operational risk A controlled processing environment with the right level of security will contribute to reducing your operational risk. + Lower reserve requirements The Basel II framework will impact a significant number of financial institutions. For those affected, reducing your operational risk by using the most secure messaging infrastructure will enable you to lower your capital reserve requirements when using advanced measurement approaches. = Reduced capital requirements

20 17 Improve your bottom line Reduce processing costs The SWIFT model allows for better cost control and financial predictability over competitive networks. Investment manager using SWIFT Increase standardisation The use of message standards ensures that you talk to your counterparties in one language. Standardisation is the first logical step to take if you want to automate communication flows. + Simplify communication Using standardised electronic communication and a single communication channel, your flows will be greatly simplified, leading to efficiency gains and ultimately a reduction in overall processing costs. + Increase automation Increased automation allows you to focus on exception processing, and ultimately, spend more time servicing your customers. = Reduced processing costs

21 18 Improve your bottom line Reduce the cost of change Our transaction volumes can vary significantly from one day to the next. However, the effort involved in generating our SWIFT based settlement instructions sent to custodians is very limited, given the high levels of automation we have achieved in this area. Investment manager using SWIFT Increase standardisation You can communicate with your counterparties in one language, using standards that cover the entire business process chain, including orders, instructions, reporting, corporate events, payments, foreign exchange and treasury. Standardisation gives you the means to safeguard your operational efficiency in an ever-changing environment. + Increase reusability With one communication platform and one set of message standards you can talk to all of your counterparties (including brokers, custodians, exchanges and central securities depositories). These message standards are suitable for multiple asset classes including equities, fixed income, investment funds, money market instruments, foreign exchange, derivatives and financial payments. This significantly lowers the cost of making changes to your operational and processing environments. + Increase scalability With increased business from new or existing clients, your volumes will increase. An automated processing environment reduces the impact of an increase in volumes, providing you with scalability. New business can be easily absorbed into your existing environment with minimal increase in cost. = Reduced cost of change

22 19 Improve your bottom line Reduce business expansion cost SWIFT is definitely a scalable solution. We could double our volumes without noticing. Investment manager using SWIFT Increase reach SWIFT is used by more than 8,500 financial institutions (including investment managers, broker/dealers, custodians, banks, securities depositories, exchanges, fund administrators and market data providers), in 209 markets. This extensive reach enables you to communicate with your counterparties in a secure, low cost and automated way, 24 hours a day, 7 days a week. + Increase reusability You can reduce cost and complexity through automated communication with multiple counterparties across multiple asset classes by using one communication platform and one set of message standards. Reusing your operations and processing environment significantly lowers the cost of expanding your business. + Increase scalability Automation provides you with a scalable processing environment, meaning you can easily absorb new business into your existing environment. You can focus your attention on what really matters: growing your business and providing excellent customer service. = Reduced business expansion cost

23 Section 3 Business areas of an investment manager and SWIFT s solutions The cost of SWIFT is insignificant compared to the cost of other more manual messaging means. Investment Manager on SWIFT

24 21 3 Business areas of an investment manager and SWIFT s solutions 3.1 Overview IMs are typically involved from the very beginning of the traditional equities and fixed income transaction lifecycle (e.g. trading), through to settlement and custody related processes. Many of an IM s securities related business processes lead them to be involved in payment, foreign exchange, money market and derivative related functions. Additionally, IMs can also be involved in all aspects of investment funds distribution. Within this section the applicable SWIFT solutions for each business area are indicated in the SWIFT Solutions per business activity diagrams. The intention is to simply highlight what SWIFT solutions are available. This section also highlights (where applicable) the typical spaces (e.g. pre-trade / trade), players involved and flows between players for each of the business areas. Insurance

25 SWIFT solutions per business activities Within the investment management industry, there are nine main business activities covering pre-trade / trade to asset servicing, reporting and cash management. This chapter will provide a high level description of the SWIFT solutions per business activity: Pre-Trade / Trade Post-Trade / Pre-settlement Clearing and settlement Securities reporting Asset servicing Portfolio administration Payments and cash management Collateral Management Financing: securities lending and borrowing Regulatory reporting Pre-Trade /Trade IOI / Quotes Trade Trade execution, Pre-allocation FIN, FIX FIN, FIX FIN, FIX Equities, Fixed Income, Listed derivatives Equities, Fixed Income, Listed derivatives Equities, Fixed Income, Listed derivatives Post-Trade Pre-settement Trade Allocation FIN, FIX Trade affirmation, confirmation, notification and matching FIN, FIX, FpML Transaction reporting FIN, FIX, FpML Equities, Fixed Income, Listed derivatives FX, MM and FX options Syndicated Loans Commodities OTC Derivatives

26 23 Clearing and settlement Settlement instructions FIN Equities, Fixed income, Listed derivatives Settlement confirmation FIN Equities, Fixed income, Listed derivatives Securities reporting Statements of holdings FIN Equities, Fixed income, Listed derivatives Statements of pending settlements FIN Equities, Fixed income, Listed derivatives Statements of movements FIN Equities, Fixed income, Listed derivatives Asset servicing Data Distribution FIN Equities, Fixed Income, Listed derivatives Corporate Actions FIN Equities, Fixed Income, Listed derivatives Proxy Voting XML Equities, Fixed Income, Listed derivatives Cash management Payments initiation FIN, XML Cash Cash reporting FIN, FpML Cash Exceptions and investigation XML Cash

27 24 Collateral management Margin Calls FIN Response Bi-lateral and Third party FIN Administration FIN OTC Derivatives, Repos, Securities Lending and Exchange margin agreements OTC Derivatives, Repos, Securities Lending and Exchange margin agreements OTC Derivatives, Repos, Securities Lending and Exchange margin agreements Regulatory reporting Transaction report and status XML Equities, Fixed income, Listed and OTC derivatives, commodities Transaction report cancellation and status XML Equities, Fixed income, Listed and OTC derivatives, commodities

28 Asset Management The current SWIFT offering per transaction cycle and asset class: Regulators Institutional Investors/ Funds Investment Manager Banks 7 Investment Manager 3 Broker/ Dealer Data Distributors Custodian Securities Market Infrastructure

29 26 SWIFT offers different solutions depending on the asset class and the business function following the end to end transaction lifecycle. Investment managers can phase the implementation of these solutions by focusing on one specific area, depending on their business requirements and priorities. Transaction cycle Flow details Pairs Protocol Asset Class Page Pre-trade / trade Trade 1,2,3 FIN, FIX Equities Fixed Income, Page 27 Trade execution Listed derivatives Post-trade / pre- Trade affirmation 1, 2, 3, 4 FIN, FIX Equities Fixed Income, Page 29 settlement Trade confirmation 1, 2, 3, 4 Listed derivatives Trade notification Trade matching 1, 2, 3, 4 FIN, FIX options Page 31 1, 2, 3, 4 FIN, FIX Syndicated Loans Page 33 1, 2, 3, 4 FIN, FIX Commodities Page 36 1, 2, 3, 4 FIN, FpML OTC Derivatives Page 37 Clearing Settlement processing 5, 6 FIN Equities, Fixed Income, Page 39 & Settlement Listed derivatives SWIFT CLS Third Party Not FIN Equities, Fixed Income, Page 40 Service applicable Listed derivatives Securities Statements of holdings, 5, 6 FIN Equities Fixed Income, Page 42 reporting pending settlement Listed derivatives instructions and movements Asset servicing Data Distribution 6 FIN Equities Fixed Income, Page 44 & administration Listed derivatives Corporate actions 4 FIN Equities Fixed Income, Page 45 Listed derivatives Proxy Voting 4 XML Equities Fixed Income, Page 47 Listed derivatives Portfolio Collateral and exposure 4 FIN Equities Fixed Income, Page 49 Administration statement Listed derivatives Payments Payment Initiation 4,7 FIN, XML Cash Page 50 and Cash Cash reporting 4,7 XML Cash Page 52 management Exception management 4,7 XML Cash Page 55 Collateral Collateral management 4,7 FIN Page 57 management Regulatory 8 XML Equities Fixed Income, Page 59 reporting Listed and OTC derivatives SWIFT is also working on initiatives and solutions. Please refer to section 4: initiatives and solutions

30 Pre-Trade/Trade: Equities, Fixed Income, Listed derivatives These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Broker / Dealer) to instruct a buy or sale of a security, to provide the status of the trade, and to advise the execution of a trade between the two parties FIN messaging Order to buy or sell - MT 502 Trade status - MT 509 Investment Manager Client advice of execution - MT 513 Broker / Dealer FIX (4.4 and beyond) Indication of Interest Quote request Quote from sell-side Investment Manager New order (single or multi-leg) Execution report Broker / Dealer Asset classes: Equities and Fixed Income, Listed derivatives Industry challenges FIX is the de facto standard for trading in most countries. However, in emerging markets and some European countries, FIX has not yet been adopted. This is leading to a growing demand for translation engines to map the MT 502 to a FIX Order. Investment firms which execute transactions in any financial instruments admitted to trading on an EU/EEA regulated market must report details of their trade to a recognised reporting venue, (Chi-X, Boat, EuroNext Paris, Deutsche Borse, OMX, LSE). This needs to be done as close to real time as possible

31 28 Solution FIN messages or "FIX over SWIFT" service: Order Management System (OMS) / FIX Engine with Direct Connection FIX over SWIFT Customer UL NET Operating Centre FIX Engine VPN box SWIFT MV SIPN FIX Hub ULLINK SSL FIX over SWIFT architecture FIX allows users to exchange the full application (business) message set contained in the versions of the FIX protocol supported on the service. FIX protocol includes multiple application messages, but the main messages used are those detailed below (some of which are only available in later versions of FIX). Although primarily used for equities transactions, with the advent of FIX 4.4, fixed income trading and trading in other asset classes (e.g. FX, derivatives) is also now supported. The flows shown in this section represent the main use of each message, and are just some of the messages available. Full details explaining the use of each message can be found in the FIX Service Description. Benefits Connectivity to the ULLINK FIX Hub is as a VPN type service using Secure Socket Layer (SSL) protocol for encryption and authentication. This provides a single and secure communication channel from Trading to Settlement, at a high speed, and offers a channel for FIX messaging, enabling easy integration with a large community of counterparties, plus access to leading edge value-add trading services. ULLINK has an existing community of over 100 trading counterparty institutions that can be accessed via the FIX over SWIFT service. The SWIFT network allows you to reach emerging markets and any firm new to FIX can easily benefit from FIX by using the SWIFT single-window. There are about 165 senders of MT 502 messages with volumes of 2 million a year relating to Equities and Fixed Income.

32 Post/Trade, Pre-settlement: Trade confirmation: Equities, Fixed Income, Listed derivatives These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Broker / Dealer) or service provider (e.g. electronic trade confirmation provider) to provide early information about a deal, to instruct the allocation of a block trade, to confirm the details of a trade, and to affirm the details of a confirmed trade. FIN Trade allocation instruction - MT 514 Confirmation of purchase of sale - MT 515 Investment Manager Trade confirmation affirmation - MT 517 Broker / Dealer FIX (4.4 and beyond) Instruction to allocate previously sent order across accounts Acknowledge receipt of allocation instruction Investment Manager Allocation report Confirm booking of trade at account level Affirm confirmation of allocation Broker / Dealer Asset classes: Equities and Fixed Income, Listed derivatives Industry challenges In many markets a paper confirmation is required for legal and regulatory reasons. This generates much unnecessary manual work and in many cases risk as these faxes are not processed. Fixed Income has extremely high levels of issue diversity and - for all but a handful of ratebased instruments - a lack of liquidity and price continuity. The industry is going through major changes: a new market structure with the rise of electronic venues leading to fragmentation of liquidity; the shift from passive to active management; a proliferation of information and services; and a trend towards use of credit instruments and more complicated instrument types. Trading volumes continue to grow across all asset classes as electronic trading spreads across the world, and as increasing numbers of hedge funds appear. However, the middle office that processes these trades remains stuck with the use of legacy and

33 30 manual resources. Consultancy TABB Group in September 2007 reported that: "Some of the largest asset managers are now spending over $170 million per year on trade processing costs alone, based on as many as 40,000+ allocations a day. A middle office has the choice of using a central utility or of moving to an industry standard such as FIX, or continuing with non-stp processes such as proprietary protocols or fax. Solution The MT 515 is the first step in the settlement process, and is a widely supported message with more than 2,200 receivers, growing in adoption from 1,500 users in The entire SWIFT community is capable of receiving an MT 515. An MT 515 informs Investment Managers of broker settlement details, ensures the Settlement Instruction is correct and is a legally binding confirmation in many markets. It is also the point of inter-operability between FIX and SWIFT ISO messaging - a FIX Execution message can map into an MT 515. In the future there is the potential to combine the SWIFT network, the ULLINK FIX Hub and SWIFT's Accord central matching solution. When the block trade is executed to the satisfaction of the Instructing Party, the Instructing Party instructs the Executing Party about how the block is to be allocated among the different funds or clients (MT 514 for Equities and Fixed Income). The FIX over SWIFT service enables the SWIFT infrastructure to be used for FIX allocation messages. This service will become an STP conduit into future extensions of Accord that could support processing of these messages. Benefits Using standardised electronic messages ensures correct processing and reduces the risk of settlement failure. Using fax creates the risk that an investment manager can claim they never received the confirmation, and refuse a trade. SWIFT provides interoperability between different syntaxes like proprietary, ISO standards and FIX. Emerging markets can introduce a SWIFT infrastructure in phases starting with FIX and progressing through the transaction lifecycle to clearing and settlement. SWIFT s strategic partnership with ULLINK gives customers the benefit of leading edge FIX-based trading services for Best Execution and Algorithms, and access to a community of more than 100 investing entities.

34 Post/Trade, Pre-settlement: Trade confirmation: FX, MM and FX options These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Broker / Dealer) to confirm a treasury trade between the two parties Forex Foreign Exchange Confirmation - MT 300* Investment Manager Forex / Currency Option Allocation Instruction - MT 303 Advice / Instruction of a Third Party Deal - MT 304 Foreign Exchange Order - MT 380 Foreign Exchange Order confirmation - MT 381 Broker / Dealer Custodian Money markets: Loan Deposit, Call / Notice Confirm / notify details of a contract - MT 320 Investment Manager Call / Notice Loan / Deposit Confirmation - MT 330 Advice of Loan / Deposit Interest Payment - MT 350 Instruction to Settle a Third Party Loan / Deposit - MT 321 Broker / Dealer Custodian Forex Options Foreign Currency Option Confirmation - MT 305 Investment Manager Forex / Currency Option Allocation Instruction - MT 303 Foreign Currency Option Confirmation - MT 306 Broker / Dealer For the coverage of SWIFT s matching and affirmations applications, please refer to the section: Applications

35 32 Industry challenges Turnover in traditional foreign exchange instruments increased by an unprecedented 71% to $3.2 trillion in 2006/7 (This compares with $1.2 trillion in 2004 and $575 billion in 2001). All Treasury asset classes such as FX, FX options, Deposits, "call money", FRAs (resets for FRA), Interest Rate Swaps (single and cross currency) and Exotic FX Options need to be matched. Time pressure plus volumes of confirmations require automated solutions. Despite CLS, over 50% of Treasury trades are still exposed to some degree of settlement risk. The impact of mistakes can be considerable. The industry has become a highly competitive market with shrinking margins. There is a lack of cross-product standardisation and the high diversity of communication means with the buy- side negatively impacts scalability and profitability. The lack of a uniform solution for the give-up, confirmation and allocation processes makes manual interventions still a reality. Many financial institutions confirm their treasury trades by voice or fax, or even worse, not at all. This introduces significant operational risk and leads to increased costs because of manual interventions and operational inefficiencies. Solution The Treasury messages are specifically aimed at IMs, allowing them to instruct and confirm FX deals with Broker / Dealers and Custodians. Additionally, the MT 300 and the MT 304 messages can be used to confirm and advise FX trades requiring settlement through CLS (Continuous Linked Settlement (CLS ) Bank) (see settlement section). SWIFT has a range of MT messages supporting trade confirmations for FX (MT 300, 305, 306), and fixed term Loan/Deposit contracts (MT 320, 330). Accord (SWIFT s matching application) can match all of the above message types. Accord processed about 212Million MT 300 messages in SWIFT also has an Affirmations application allowing the affirmation/confirmation of FX trades with your broker even if they do not support MT 3xx messaging. Benefits The combination of standardised messaging and the Accord matching system increase automation (STP) to reduce operational costs and risk. Meet audit and regulatory requirements in regards to process control. Total outsourcing of matching process to SWIFT Matching result guaranteed identical between two users. Ultra-reliable, in terms of matching results and uptime of service. R&L policy: matching results are guaranteed, with financial backing Low Total Cost of Ownership through high operator efficiency, and eliminated internal operational tasks. Specialised system: Integrates broker-to- broker with IM-to-broker Broadest range of Treasury instruments of any matching engine Third Party CLS Service: automates routing to CLS Settlement Members Rich, efficient and easy to use interface, making it easy to find exceptions

36 Post Trade/Pre-settlement: Syndicated Loans Release 1.0 (FpML 4.4) Drawdown Notice Interest Payment Notice Investment Manager or Market Infrastructure (DTCC/EOC) Principal Repayment Notice On-Going Fee Payment Notice One-Off Fee payment Notice Loan Agent Release 2.0 (FpML 4.5) Rollover Notice Letter of Credit Issuance Notice Investment Manager or Market Infrastructure (DTCC/EOC) Letter of Credit Balance Notice Letter of Credit Amendment Notice Letter of Credit Termination Notice Pricing Change Notice Loan Agent

37 34 Industry challenges Today, the loan maintenance process is essentially manual and information is faxed among market participants, and often followed up with phone call confirmations. This results in millions of faxes going out into the market each month end/quarter end. Add to this the exponential growth in loan trading volume in the secondary market and agent banks find themselves swamped in recordkeeping requirements. All these factors lead to manual errors, backlogs of unsettled trades and cash breaks to primary and secondary investors. Current market pain points Electronic agent messaging Standard reference data Central loan reconciliation Automated confirmation, closing and settlement Sharing of key information Solution SWIFT s solution for Loans facilitates secure electronic communication for the exchange of FpML messages. The FpML messages have been created specifically for the loans market, with a primary focus on agent notices. The intention is to leverage SWIFT s services and enable the market to benefit from SWIFT s experience in FpML. SWIFT s Loans solution is complementary to offerings from both Depository Trust & Clearing Corporation (DTCC) and Euroclear in the loans market. FpML messages (XML syntax) are transported over SWIFTNet using InterAct store and forward messaging service. Custodian Fund Administrator Lenders SWIFT member Lenders Mail EOC and DTCC Loan Agent Lenders Alliance Lite EOC/DTCC webportal The Loans Closed User Group (CUG) Service Bureau Lenders

38 35 The first release, Loans 1.0 based on FpML 4.4, enables transport of agent notices between the agent banks and the lenders. The second release, based on FpML 4.5 and planned for March 2009, will include credit agreements, adjustments and rollover events. SWIFT will only implement FpML final recommendation/standards. Benefits Removal of dependencies on the exchange of manual (paper, and facsimile) notifications between market participants; reducing operational risk and providing a scalable solution for the loans market globally Leveraging your current SWIFT investments and benefiting from SWIFT s experience in FpML Managed implementation to assure smooth adaptation to new processes and message types Solid foundation for full, end-to-end automation of the loans market Reduced operating cost, error rates; improved business processes Industry scalability; well-positioned for continued product innovation Service strategy/definition in close collaboration with industry and CUG participants Delivery notification providing receipt of message by counterparty Future offering: FpML SWIFT is currently working with FpML to explore the development of standardised messaging for physical and non physical securities. (See section 4 on initiatives and solutions )

39 Post/Trade, Pre-settlement: Trade confirmation: Commodities These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Broker / Dealer) to confirm a trade between the two parties. Current offering (mainly for precious metals and base metals) Precious Metal Trade Confirmation MT 600 Precious Metal Option Confirmation MT 601 Metal Fixed Loan/Deposit Confirmation MT 620 Statement of Metal Contract MT 609 Broker / Dealer Metal Transfer/Delivery Order MT 604 (When IM is Metal Seller) Investment Manager Metal Notice to Receive MT 605 (When IM is Metal Buyer) Metal Debit Advice MT 606 (When IM is Metal Seller) Metal Credit Advice MT 607 (When IM is Metal Buyer) Statement of Metal Account MT 608 (When IM is Metal Buyer or Metal Seller) Custodian Industry challenges The relative lack of automation in commodities markets compared to financial securities also poses operational issues for the buy-side. There is little automation in this market and the market is growing fast. Many financial institutions confirm their commodity trades by voice or fax, or even worse, not at all. This introduces significant operational risk and leads to increased costs because of manual interventions and operational inefficiencies. Solution SWIFT has a range of MT messages supporting commodities (MT 600, 601, 620, 609) to confirm the trade with the Broker / Dealer. The MT 604, 605, 606, 607 and 608 are used with the custodian to order, notice or advise. SWIFT's reach in the securities industry with 400+ brokers and 500+ investment managers and securities infrastructures (e.g. CME) and location in over 200 countries. The range of MT messages supporting commodities are validated by SWIFT and some of them are to be matched by Accord in the future. SWIFT could act as carrier, validation and confirmation service for commodities (precious, base and liquid commodities). Benefits Increase automation (STP) to reduce operational costs and risk. Meet audit and regulatory requirements in regards to process control. Low Total Cost of Ownership through high operator efficiency, and eliminated internal operational tasks. Become scalable and absorb peaks

40 Post/Trade, Pre-settlement: OTC Derivatives FIN messaging (IRS: Interest Rate Swaps) Forward Rate Agreement Confirmation - MT 340 Forward Rate Agreement Settlement Confirmation - MT 341 Investment Manager Single Currency Interest Rate Derivative Confirmation - MT 360 Cross Currency Interest Rate Swap Confirmation - MT 361 Interest Rate Reset / Advice of Payment - MT 362 Broker / Dealer Single Currency Interest Rate Derivative Termination / Recouponing Confirmation - MT 364 FpML (any instrument recognised by ISDA: CDS, IRS, TRS) Request Trade Confirmation Modify Trade Confirmation Cancel Trade Confirmation Broker / Dealer Contract Created + Contract Cancelled Investment Manager Contract Novated + Contract Novated Cancelled Contract Increased + Contract Increased Cancelled Contract Partial Termination + Contract Partial Termination Cancelled Contract Full Termination + Contract Full Termination Cancelled Custodian

41 38 Industry Challenges The recent explosive growth in the OTC industry has exposed, but also created, numerous areas of processing inefficiency that increase risk and raise the cost of backoffice support. To help the financial community respond to the challenge, SWIFT and the International Swaps and Derivatives Association (ISDA) entered into an agreement in June 2006 to support FpML messaging services over SWIFTNet. FpML is the established syntax in this market space. It is widely recognised and promoted within the ISDA community as the standard of choice for communicating electronic information related to OTC derivative transactions. Many institutions within the ISDA community have implemented FpML internally. The two organisations agreed to create a solution called FpML to transport FpML messages using the SWIFTNet infrastructure. Transporting FpML over SWIFTNet is the first step in a phased approach that will include Matching of FpML in Accord. This will eventually lead to the matching of FpML confirmations on Accord. Solution 1. FIN mainly used for interest rate swaps. 2. FpML facilitates the exchange of FpML messages for OTC derivatives over SWIFTNet. The intention is to leverage services to provide a flexible, multi-lateral messaging solution for FpML messages. FpML-compliant messages (XML syntax) are transported over SWIFTNet using the InterAct store and forward messaging service. The first release, FpML 1.0, enabling transport of contract notification messages between buy-side and custodians, has been available for live traffic since October The second release, expected in March 2008, will expand the notification messages to include the cancellation of post-trade events. It also covers the confirmation messages between trading counterparties and will provide validation of all transported messages. Benefits ISDA and SWIFT working together to: Enable exchange of FpML messages for OTC derivatives over SWIFTNet Encourage adoption of FpML-based messages by all parties Increase automation for buy-side, sell-side and asset servicing Reduce risk and cost Meet regulatory requirements

42 Clearing and settlement: Securities Investment Managers use the settlement instruction and pre-advice across products (Equities, FX, FI, MM...) to communicate trades that they have carried out to custodians. The custodians can then book the trades to their recordkeeping systems, and settle the transaction in the marketplace. These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Custodian) or service provider (e.g. electronic trade confirmation provider) to provide settlement instructions, and confirmations of settlement. Intra-Position advice - MT 508 Intra-Position Instruction - MT 524 Receive Free Instruction - MT 540 Receive Against Payment Instruction - MT 541 Deliver Free Instruction - MT 542 Delivery Against Payment Instruction - MT 543 Investment Manager Receive Free Confirmation - MT 544 Receive Against Payment Confirmation - MT 545 Deliver Free Confirmation - MT 546 Custodian Deliver Against Payment Confirmation - MT 547 Settlement Status and Processing Advice - MT 548 Settlement Allegement - MT 578 Industry challenges Clearing and Settlement has been seen as a necessary cost in the past but as margins become tighter, it is increasingly being seen as a means to gain competitive advantage. The Giovannini Group was that group founded in 1996 to advise the European Commission identified 15 barriers as the source of the inefficiencies in EU clearing and settlement. SWIFT and SMPG were identified as responsible for the elimination of Barrier 1 to eliminate national differences in information technology and interfaces used by clearing and settlement providers by implementing an EU wide protocol. A protocol was published by SWIFT in March The barrier should be eliminated within 5 years of the publication of the protocol by SWIFT i.e. by March Timely settlement of trades Reconciliation and reporting of positions and holdings

43 40 Solution The SWIFT network offers Giovannini compliant service levels and supports compliant standards based on ISO and The replacement and extended set of messages currently being developed under ISO will also be compliant to the Giovannini protocol. The deadline for compliance across Europe is A comprehensive set of messaging standards which allow for automation of the trade settlement / clearing instruction and confirmation process. Benefits Clearing and settlement messaging continues to account for the highest volume of securities traffic and therefore this is a highly automated area in the trade lifecycle. These messages are used by more than 4,000 financial institutions worldwide Most of the clearing houses are connected to the SWIFT network Clearing and Settlement: Forex through SWIFT CLS Third Party Service Solution Overview Many CLS members currently offer third party services whereby they input and settle trades on behalf of their third-party customer(s) with CLS Bank. This requires third parties to communicate their foreign exchange transactions to their CLS settlement members. CLS members can use this SWIFT solution to obtain a real-time copy of an agreed subset of confirmation messages sent by their third-party customer. SWIFT provides a global comprehensive solution to support the communication flow between third parties (most of whom already use SWIFT) and their CLS members, resulting in the easiest and most cost-efficient way of settling FX trades on CLS. The service covers all FX-related instruments supported by CLS: FX transactions including NDFs and FX Option Premiums including NDOs (FX Option Premiums including NDOs intended to go live in 2009). SWIFT CLS Third Party Service User Counterparty 1 MT 300 OR 305 MT 300 OR FIN MT 398 envelope message (with copy of MT 300 or 305 sent) CLS THIRD PARTY SERVICE HUB MT 3 5 TRANSACTION INPUT NOTIFICATIONS CLS Member 4 MT 304 or GDI CLS Bank

44 41 As the third party exchanges an MT 300 or 305 (1) with its counterparty, a copy of that MT 300 or 305 will go to the CLS Third Party Service hub (2). The hub forwards the copy of the MT 300 or 305 to the CLS member servicing this specific third party using an MT 398 (3). The CLS member submits the information to CLS (4) via Gross Direct Input (GDI) or MT 304, and then receives the matching status from CLS (5). This model offers a proven methodology and a straightforward implementation for both the third party and the CLS member, including Nostro account reporting using FIN messages (6) which are actively used in the market. (3) Interact real time alternative is available Asset Classes covered: FX, NDF (Non-Deliverable Forwards), FX Option Premiums and NDO (Non-Deliverable Options). About CLS CLS is an industry initiative, represented by over 60 shareholders from the world s largest financial institutions, to reduce risks associated with cross-currency transactions. CLS Bank delivers continuous linked settlement services to ensure final and simultaneous settlement of cross-currency financial transactions. SWIFT provides the network components to connect CLS Bank with its members and third party CLS users. For CLS to achieve significant reduction in settlement exposures requires a critical mass of settlement value. CLS Members need to settle trades between themselves, and also trades with non-cls Members (e.g. third parties). CLS Members can offer services to third parties whereby they input and settle crosscurrency trades on behalf of their third party customer with the CLS Bank. Likewise, third parties will need to communicate their cross-currency trades to their CLS settlement Members. SWIFT provides a comprehensive solution to support this communication flow, using its existing messaging network. Operational Information CLS Members need to communicate with their third parties to provide operational information (status of the trade within the CLS Bank) and cash reporting (pre-funding and associated reporting) of trades. SWIFT provides messaging services for this operational information, including the MT9xx Cash Management messages, and the Cash Reporting service. Who is eligible as a third party? Financial institutions that are not CLS members Any other SWIFT-eligible institution involved in cross-currency trading Corporates Current usage? This service is currently offered by 24 CLS settlement members to more than 300 active users. Average volumes are close to 1 million transactions per month.

45 Securities reporting In the equities and fixed income markets, this space covers all activity surrounding the clearing and settlement of the executed trade. Information is typically exchanged between an Investment Manager and a custodian. For cross- border trades, Global Custodians and their local agents (e.g. Local Custodian) are also involved. Additionally, the Custodian (Global or Local) will exchange instructions and confirmations with the CSD (Central Securities Depository) in the market where the trade will settle. In place of a local CSD, the trade could settle in an ICSD (International CSD e.g. Euroclear, Clearstream). Securities reconciliation gathers information for reporting on the status of the pending settlement instruction, movements, and holdings for the specified account, at any given point or duration in time. Statement of holdings - MT 535 Report on the account activity - MT 536 Statements of pending transactions - MT 537 Statements of intra position advices - MT 538 Custodian Request for interim reporting on holdings/transactions - MT 549 Investment Manager Report on both the securities and cash activity - MT 575 Statements of open orders - MT 576 Broker / Dealer Note: Equivalent ISO messages are under development Industry challenges Clearing and Settlement has been seen as a necessary cost in the past but as margins become tighter, it is increasingly being seen as a means to gain competitive advantage. The Giovannini Group created in 1996 to advise the European Commission identified 15 barriers as the source of the inefficiencies in EU clearing and settlement. SWIFT and SMPG were identified as responsible for the elimination of Barrier 1 to eliminate national differences in information technology and interfaces used by clearing and settlement providers by implementing an EU wide protocol. A protocol was published by SWIFT in March The barrier should be eliminated within 5 years of the publication of the protocol by SWIFT i.e. by March Timely settlement of trades Reconciliation and reporting of positions and holdings

46 43 Solution The SWIFT network offers Giovannini compliant service levels and supports compliant standards based on ISO and The replacement and extended set of messages currently being developed under ISO will also be compliant to the Giovannini protocol. Deadline for compliance across Europe is A comprehensive set of messaging standards which allow for automation of the trade settlement / clearing instruction and confirmation process. ISO15022/20022 message standards Message validation, non-repudiation and guarantee of sender STP improvement facilitating cost and risk reductions Leverage of existing FIN architecture Benefits The clearing and settlement messaging continue to have the highest volume of the securities traffic Highly automated area in the trade lifecycle Used by more than 4,000 financial institutions worldwide STP improvement facilitating cost and risk reductions Most of the clearing houses are connected to the SWIFT Network Clearing and Settlement has been seen as a necessary cost in the past but as margins become tighter, it is increasingly being seen as a means to gain competitive advantage.

47 Asset servicing and administration: Data Distribution SWIFT s Data Distribution solution combines ISO securities messaging standards and SWIFT connectivity to enable you to standardise your communication flows from market data providers and market infrastructures. Data Providers and data distribution Investment Manager Data provider SWIFTNet Data provider 3 external data feeds in ISO send to SWIFT Alliance Gateway Data fed into data distribution platform for automatic scrubbing Scrubbed feed goes into corporate actions system Types of information Market Infrastructure (Stock exchange) and Data providers (such as custodians) can send over SWIFT: Corporate action announcements in ISO Reference data Securities pricing information New issue and prospectus documents Shareholders meeting information Trade volume information Index data The vital nature of the role played by data providers and the need for accurate and complete information have given rise to a plethora of connections and feeds going into firms. The desire to achieve the elusive golden copy corporate action announcement has meant that many institutions take the same information from multiple data providers to ensure coverage and completeness. Data Distributors live on SWIFT Australian Securities Exchange DTCC Interactive Data London Stock Exchange The central Depository (Pte) Ltd (Singapore) Telekurs Canadian Depository Fidelity ActionsXchange Globetax Data Services WM Datenservice Industry challenges Financial institutions are grappling with multiple data sources as they seek to ensure accuracy and completeness of vital reference and corporate actions data. To create the

48 45 elusive golden copy, firms must take in a range of data sources from data vendors and market infrastructures (MIs). If there are differences in format between the sources, a significant data cleansing exercise is required in order to create an accurate and complete record. This makes manipulating data from proprietary feeds into a standardised format and ensuring it is correct an expensive undertaking for firms - and the many connections required generate a large maintenance and system overhead. Solution SWIFT s Data Distribution solution addresses the problems associated with handling multiple data sources in disparate proprietary formats by enabling data providers and MIs to distribute market data via SWIFT to other SWIFT customers. Data providers can utilise SWIFT through a closed user group (CUG). MIs are typically already connected to SWIFT, and can also use the CUG. Data providers and MIs distribute ISO corporate action messages in FileAct or FIN. Where there is not yet an ISO standard available, such as in the case of reference data, data providers and MIs can use other industry standards or proprietary formats, ensuring that customers can still benefit by extracting further value from their existing investment in SWIFT connectivity. Benefits Feeds received in ISO 15022, enabling STP of corporate action events Central maintenance of data feeds via SWIFT Standards Releases Secure, reliable delivery, minimising risk and compliance concerns SWIFT Service Description defining mandatory roles and responsibilities Enabling flexibility in obtaining feeds from different providers Operations managed by existing dedicated SWIFT operational staff Manual data normalisation eliminated, creating a scalable processing model Faster and simpler resolution of any data issues Asset servicing and administration: Corporate Actions These messages are typically sent between a client (e.g. Investment Manager) and a financial institution (e.g. Custodian) to provide details of corporate actions affecting a particular account, and instructions on voluntary events. FIN Messaging Corporate Action Notification - MT 564 Corporate Action Instruction - MT 565 Corporate Confirmation - MT 566 Investment Manager Corporate Action Status & Processing Advice - MT 567 Corporate Action Narrative - MT 568 Custodian

49 46 Industry challenge Investment Managers (IMs) are responsible for making the decision on any optional corporate action announcement, on behalf of their underlying client, who they may or may not consult. The Investment Manager is likely to have accounts held with a number of different Custodian Banks, depending on their clients own preferred Custodian. The Banks will provide this information either over SWIFT, or through their own proprietary Custody workstations/services. The result is that for any particular corporate action announcement, an Investment Manager has to handle multiple announcements of the same event, from dozens (or even hundreds) of custodians. This presents a significant reconciliation and therefore risk, issue. With respect to corporate actions, the operational risk an asset manager is exposed to can be characterised by its responsibility to take the appropriate steps pursuant to a voluntary corporate actions offer in order to maximise the value to the portfolio. There may be a number of reasons why an investment manager fails to act appropriately with respect to a corporate action, most stemming from an operational error. Failing to respond to an election within the timeframe allotted by the custodian will jeopardize the asset manager s right to participate in an event. Forgoing the opportunity to tender shares at a premium to the current market price is a clear risk. Most errors are a result of a poor reconciliation of the position eligible for a corporate action, which will lead to bad entitlement calculation and potential market claims. Other operational errors include failing to pursue a claim for an entitlement on securities bought before the ex date, calculating the value of different options improperly, and not updating the accounting system accurately, which leads to a miscalculation of the net asset value of the portfolio. All of these scenarios expose the asset manager to financial risk. Solution ISO15022 standardised messaging Market practices Benefits Enables STP for corporate actions between counterparties SWIFT estimates that 75% of corporate actions can be automated Some corporate actions are too complex and will always require human intervention Market Practice is the key to end-to-end automation all parties playing by the same rules Industry research by Oxera, suggests that misinterpretation of corporate action information by trading brokers and fund managers have led to costs to the industry estimated to be in the region of EUR 1.6 billion EUR 8 billion per year globally. While figures are not available, the additional risks encountered by intermediaries, such as custodian banks, are of equivalent proportions, with one error related to one event capable of generating losses in the millions. An extension of the SWIFT offering, both in terms of reach and functional coverage, would have the potential to reduce costs associated with inefficiencies and lack of standardisation by a significant amount. A saving of 25% just related to the trading costs outlined above would represent an industry benefit in the region of EUR 0.4 EUR 2 billion per annum.

50 Asset servicing and administration: Proxy Voting These messages are typically sent between a client (e.g. Investment Manager) and a financial institution (e.g. Custodian) to provide details of proxy voting affecting a particular account, and instructions on voluntary events. Proxy Voting core activities 1 Notification Meeting Notification Meeting Cancellation Meeting Entitlement Notification INITIATOR INFORMATION PROVIDER 1 Issuer Registrar/Transfer agent Issuer agent Stock exchange CSD Market data provider Proxy agency 2 Voting Meeting Instruction Meeting Instruction Cancellation Request Meeting Instruction Status LOCAL MARKET INTERMEDIARY Prime broker Custodian Custodian CSD Proxy agency ICSD Registrar/Transfer agent Proxy agency 3 Results Meeting Vote Execution Confirmation Meeting Result Dissemination INVESTOR Broker Insurance company Pension funds Hedge funds Investment manager Proxy Voting flows: core activities Business flows Meeting announcement or modification meeting Cancellation of meeting or meeting notification Confirmation of entitlement Investment Manager Voting instruction Cancellation of Voting instruction Status on Voting instruction Confirmation of vote execution Custodian/ Proxy Agent Results of meeting

51 48 Industry challenges Investment managers are becoming increasingly aware of their role in corporate responsibility, not least through the ethical investment process. The customers whose assets they manage require them to act as a responsible shareholder and hence issue clear voting instructions. Investment managers need a fast, accurate way to send voting instructions and to get quick, reliable feedback on the final outcome of the vote. Investment Managers see increasing commercial advantage in becoming involved in corporate governance. However, the effort involved can be great hence the existence of proxy agents who can vote on behalf of the investment manager. Clients need confirmation that a vote/instruction was accepted at a shareholders' meeting and also need results, i.e. pass/fail per resolution. Each year more than 85,000 investor meetings are held, relating to more than USD 100 trillion in global assets. Proxy voting allows investors, through their asset servicers and agents, to vote in these meetings. But the proxy voting function has been characterised by non-standard, proprietary processes, with frequent manual intervention. This has resulted in a process that is laborious, and prone to errors which increase the costs and risks of proxy voting. Until now, industry processes have failed to provide a standardised end-to-end audit trail that could prove that a vote was received and processed with every intermediary, much less that the vote was actually lodged at the meeting. Solution SWIFT s Proxy Voting solution eases the frustration of all participants in the proxy voting process, by automating proxy voting information flows. Meeting notification, voting, confirmation and results dissemination messages are defined using ISO XMLbased standards. The solution enables issuers, investors and all intermediaries in the proxy voting chain, including custodians, exchanges, central securities depositories (CSDs) and proxy agencies, to communicate in a fully standardised way, with all the security and reliability of SWIFTNet. This facilitates straight-through processing for an activity that has historically been largely manual. Standards The eight ISO proxy voting message standards fully support the communication needs of core proxy voting activities. These XML messages offer a far more complete solution in this area than the ISO corporate action messages that have been deployed in the past for proxy voting. As compared to these earlier messages, the XML messages accommodate today s proxy voting complexity, and cover the complete lifecycle of messaging required to provide a full audit trail. The ISO messages also offer a global standards based alternative to proprietary messages, and are aligned with the recommended solution to eliminate Giovannini Barrier One Benefits Proxy Agencies are committed to SWIFT for intermediary traffic, and communicate to shareholders' (investors) via proprietary portal or ASP solutions. Compliance with the requirements of the EU Shareholders' Rights Directive. The use of direct SWIFT messaging to the sub-custodian or the custodian's nominee can improve deadlines significantly - these are otherwise compressed by the time needed by proxy agencies and custodians to manage exceptions and manual processing.

52 Portfolio Administration Investment managers need to provide reliable valuations to their clients. They also need to exchange collateral with counterparties based on mutually equivalent valuations. Third party collateral agents provide valuation services (e.g. Euroclear, DTCC, Clearstream, BNY, J.P.Morgan). Collateral and exposure statement - MT 506 Collateral and Exposure Statement Statement of collateral and exposure Collateral Taker Request cancellation of previously sent statement Re-send previously sent statement Collateral Giver Copy to third party Copy to third party Portfolio reconciliation is under development, see section 4 on initiatives and solutions Industry challenges Independent portfolio valuation, prominently the pricing of the underlying asset classes, is one of the major pain-points in the derivatives space. As experienced during the sub prime crisis, there has been an increased concern about the reliability of the product pricing and consequently about the correct valuation of the underlying trades. Any delay in accessing the pricing source or incorrect valuation of underlying products can lead to reasonable financial losses as well as reputational loss. Solution Valuations can be incorporated in the MT collateral and exposure statement. The TPV project (involving custodians, fund administrators and buy-sides) is looking at ISO messages, and there are also FpML based portfolio reconciliation messages (for use between trading partners). Benefits Accurate and timely valuation and pricing of the underlying transactions and collateral is essential. Getting daily prices for various CDOs and MBSs. in a standardised and timely manner will result in correct margin requirements and will positively impact the downstream process within financial institutions.

53 Payments and cash management Payments initiation During the course of carrying out their securities business, IMs will need to pay away and receive monies (e.g. with regards to settlement of trades, dividend income, etc.), and therefore can be both the ordering customer and the beneficiary customer in the diagram below. Payments are made through the IMs financial institution, either directly through a Bank, or indirectly through a Custodian. An IM may also be involved in the reconciliation of cash positions between its own records, and those of its Banks and / or Custodians. Customer payments Request for transfer - MT 101 Investment Manager Single customer credit transfer - MT 103 Financial Institution Financial Institution Transfers Financial Institution Transfer for its Own Account - MT 200 Multiple Financial Institution Transfer for its Own Account - MT 201 General Financial Institution Transfer - MT 202 Multiple General Financial Institution Transfer - MT 203 Investment Manager Financial Institution Transfer Execution - MT 205 Request for Financial Institution Transfer - MT 207 Notice to Receive - MT 210 Financial Institution XML (will be available in the future) PaymentStatusReport PaymentCancellationRequest Investment Manager CustomerPaymentReversal CustomerDirectDebitInitiation Financial Institution

54 51 Industry Challenges Financial institutions and regulators continue to seek better control of the risks associated with the explosive growth in the value of trading. Globally, risk managers are being asked to measure, monitor and reduce exposure. Solution A comprehensive set of messaging standards which allow for automation of the trade settlement / clearing instruction and confirmation process for Deliveries/Receipt against Payment Customer Payments: Category 1 messages deal with payments, or information about payments, in which the ordering party or the beneficiary, or both, are not financial institutions. Financial Institution Transfers: Category 2 messages deal with payments, or information about payments, in which all parties in the transaction are financial institutions. ISO message standards Message validation, non-repudiation and guarantee of sender STP improvement facilitating cost and risk reductions Leverage of existing FIN architecture New ISO messages also cover cash payments related to derivatives. The MT 103 is sent by, or on behalf of, the financial institution of the ordering customer, directly or through (a) correspondent(s), to the financial institution of the beneficiary customer. It is used to convey a funds transfer instruction in which the ordering customer or the beneficiary customer, or both, are non- financial institutions from the perspective of the Sender. In order to allow better reconciliation, the MT 103 supports full charges transparency and structured remittance information and an unambiguous indication of the interbank amount booked by the Sender/to be booked by the Receiver. The MT 103 gives the Sender the ability to identify in the message the level of service requested, i.e. what service is expected from the Receiver for a particular payment, e.g. SWIFTPay, Standard or Priority or any other bilaterally agreed service. The message also allows for the inclusion of regulatory information in countries where regulatory reporting is requested. The MT 202 is sent by or on behalf of the ordering institution directly, or through correspondent(s), to the financial institution of the beneficiary institution. It is known as the cover associated with the MT 103 Benefits The SWIFT network is primarily known for payments and used throughout the financial industry in over 200 countries. More than 60 clearing systems, some carrying over 300k payments a day, rely on SWIFT for the secure messaging connectivity and common message standards essential to their smooth operation. TARGET2 participants use the full set of messaging services: FIN, FIN Copy, InterAct, FileAct and Browse. They decided to use the matured and reliable SWIFT messaging services for the communication between the banking community and the Target2 SSP.

55 Cash Reporting Cash management and payment status details are exchanged using the Category 9 FIN messages or XML cash management messages. These messages are exchanged between financial institutions, either on behalf of themselves, other financial institutions, or customers. Intra Day, FIN Notification of debit to account - MT 900 Notification of credit to account - MT 910 Account Owner Balance Report - MT 941 Interim Transaction Report - MT 942 Account Servicer Intra Day, XML Get/Return Account Account Owner Get/Return Transaction BankToCustomer Account Report Account Servicer End of day, FIN Account Owner Customer Statement Message - MT 940 Statement of detailed entries booked to account - MT 950 Account Servicer End of day, XML Account Owner BankToCustomerStatement BankToCustomerAccountReport Account Servicer

56 53 Industry challenges The need for standardised solutions is driven by: centralisation of liquidity management and treasury functions growing volumes of cross-border payments increasing volumes of 'time-payments' (payment versus payment, delivery versus payment, real-time gross settlement systems) emergence of cross-border real-time payment settlement systems, in addition to existing domestic systems increasing regulatory pressure on managing credit risk. Solution 1. FIN messaging: SWIFT has a set of messages for end-of-day and intra-day cash statements. 2. Cash Reporting focuses on the need for financial institutions to obtain real-time account balance and transaction information from one or more service providers. Cash Reporting supports the treasury management and intraday reconciliation business processes. The granular real-time information provided in the MXs offers the following substantial benefits: Just-in-time transaction management: Customers can control reconciliation processes through use of selection criteria. For example, customers can set ranges to sort the transactions by type or date. Detailed transaction information: Customers can obtain detailed transaction information during reconciliation. This information includes transaction number, payment amount, and transaction description. Transaction tracking: Customers can track high-value and risky transactions. Multi-currency support: Customers can reconcile transactions in real-time across all currencies and time zones. Cash Reporting messages provide an industry-wide solution for the exchange of transactional and balance information between an account owner and its account servicing institution. Benefits Improved monitoring of global cash positions helps prevent accounts from inadvertently being overdrawn or funds being left in accounts overnight. The customer's ability to decide earlier in the day whether it must borrow funds, or whether to invest excess cash results in better intraday liquidity management. An investment manager can receive true end-to-end information in real-time from its cash correspondents for transactions and balances. This gives a consolidated and instantaneous view of all positions in all currencies.

57 54 From an IM s perspective, the benefits are: Liquidity Management Real-time provision of information relating to incoming and outgoing funds enhances the ability of an IM to manage its intraday liquidity position. Risk Management By integrating positions from multiple business areas, across multiple currencies, it is possible to present a complete overview of exposure in realtime. Shorter reconciliation cycles Improve error detection and resolution processes, enabling cost reductions linked to more efficient intraday reconciliation. End-to-end standardisation Improve end-to-end STP through interoperability and full automation across the entire life cycle of the payment transaction.

58 Exceptions and Investigations Case Assignment 1 2 Financial institution Notification Of Assignment B 3 Case Assignment Financial institution C 4 Case Assignment Financial institution D Notification Of Investigation 6 Notification Of Investigation 5 Resolution Of Investigation 9 Resolution Of Investigation 8 Resolution Of Investigation 7 Case assignment message There is one specific 'case assignment' message for each of the four business activities: RequestToCancelPayment RequestToModifyPayment Investment Manager UnableToApply ClaimNonReceipt Account Servicer Case management message AdditionalPaymentInformation ResolutionOfInvestigation NotificationOfCaseAssignment RejectCaseAssignment CancelCaseAssignment Investment Manager RequestForDuplicate Duplicate ProprietaryFormatInvestigation DebitAuthorisationResponse Account Servicer DebitAuthorisationRequest CaseStatusReportRequest CaseStatusReport

59 56 Industry challenges The industry still faces a lot of manual payments investigations handling (i.e. payment cancellation, modification, claim non receipt, unable to process payment). Follow-up is primarily done over the phone. The widespread use of free format combined with the lack of industry practice rules are the main blocking factors for further automation. The long turnaround times and the lack of transparency/control on ongoing investigations entails operational and financial risk. Moreover, the cost of dealing with enquiries varies according to the level of automation within each organisation. Their average staff-related cost per enquiry has fallen by 50 percent. Solution The solution is composed of three common components: SWIFT XML Standards, messaging services and applications. Exceptions and Investigations allows you to perfectly automate your enquiries process as it provides you with a very strict business and communication protocol. A clear definition of the actors, their roles, the communication flows and exchanged messages guarantee higher STP rates while a clear rulebook endorses industry practice and best usage. The solution results from the combination of ISO standards, a market practice rulebook, our InterAct messaging service and a close partnership with third-party application vendors. The message standards cover all automatable enquiries generated either before or after payment settlement, whether handled in a production, an investigations or a reconciliation department. They cater for four main types of enquiries: Request for cancellation Request for modification Unable to apply Beneficiary claims non-receipt The Exceptions and Investigations standards provide a strict business protocol. Actors, roles and communication flows between parties are clearly specified and adhered to, allowing smooth, predictable and streamlined enquiry management. These four Exceptions and Investigations enquiries are generically supported by the case management concept and workflow. In addition, rules such as the unique case ID and the nobypass are applied, thus ensuring straight-through processing of enquiries. For each type of enquiry, a specific workflow defines the set of messages to be exchanged between the parties involved in the original payment transaction. A total of 16 SWIFT XML standards messages have been developed to support the four main exceptions and investigations activities. Benefits Get transparency on your enquiries Support central accounting/treasury management Reduce your enquiry cost Allow better control of payables and receivables

60 Collateral Management These messages are typically sent between a collateral giver and a collateral taker to provide details of collateral instructions, claims, substitutions of specific securities used as collateral and reporting statements. Collateral is required to ensure and to maintain the exposure coverage on OTC Derivative, Repos, Securities Lending and Exchange margin agreements so that it remains balanced in line with market fluctuations. Resulting collateral messaging is conducted (1) with collateral giver/taker (2) with Triparty Agents. Collateral margining and maintenance results in settlement movements for cash/stock/bonds - covered elsewhere in other SWIFT messaging flows. Bi-lateral Margin Calls Collateral Claim return - MT 503 Claim new/additional - MT 503 Response Collateral proposal - MT 504 Collateral Status and Processing Advice (Response) - MT 507 Collateral Taker Collateral administration Collateral Substitution - MT 505 Collateral and Exposure Statement - MT 506 Collateral Giver Copy to third party Copy to third party

61 58 Tri-party Triparty Collateral Instruction MT 527 Collateral Taker/Giver Triparty Collateral Status and Processing MT 558 Triparty Collateral and Exposure Statement - MT 569 Tri party Agent Copy to third party Copy to third party Industry challenges Growth in the number of legal agreements covering OTC Derivatives, Repo, Lending & Borrowing transactions and exponential growth in the underlying trading portfolio sizes directly impact the required number of margin movements and coverage activities. This results in: a) Operational risk: Lack of standardisation could result in failure to claim/ respond margin requirements in a timely manner and at required frequency, b) Potential loss of trading: Due to short-comings of process management, insufficient exposure coverage can lead to blocking of trading lines c) Regulatory challenges: Operations are for the first time considered in Basel II and FSA is looking into the benefits of Collateral Management as credit mitigating factor. Solution SWIFT seeks to standardise processes with ISO messages. Adopting SWIFT messages can reduce the manual/human error rate, but also frees up FTE effort and time to focus on exception management. It also can help meet regulatory requirements, and reduce costs in the face of increased business growth. The settlement process is covered by the MT 54x. Benefits A comprehensive set of messaging standards which allow for automation of the margining and negotiation process. ISO15022 message standards Message validation, non-repudiation and guarantee of sender STP improvement facilitating cost and risk reductions Leverage existing FIN architecture Majority of target clients are already SWIFT users: leverage existing product and standards familiarity Possible extension of ISDA endorsement (based on joint work on FpML)

62 Regulatory reporting Transaction report and status TransactionReport TransactionReportStatus Intermediary (eg, reporting agent) Reporting institution or Direct reporting Regulator Transaction report cancellation and status TransactionReport TransactionReportCancellationRequest TransactionReportCancellationStatus Intermediary (eg, reporting agent) Reporting institution or Direct reporting Regulator Transaction reporting messaging suite, using the UNIFI (ISO 20022) methodology Transaction reporting flows There can be up to three participants in the process - investment firms (reporting entities) that provide the reports, regulators that receive and analyse the data, and intermediaries that, in some but not all cases, act as report collectors on behalf of regulators. As the diagram above indicates, there are three clear spaces in terms of messaging: between reporting entities and either intermediaries (such as exchanges) or directly to regulators between intermediaries and regulators inter-regulator report sharing. This is being carried out exclusively on the system developed by the Committee of European Securities Regulators (CESR).

63 60 Industry challenges The picture of transaction reporting in the EU and EEA markets post-mifid is a complicated one, with greater reporting obligations to more regulators than was the case previously. There is no uniform approach from individual market regulators about how they collect these reports, either in terms of message formats or message channels. MiFID also permits individual regulators to request additional data fields and to widen the scope of reporting according to local market practice or requirements. And this is only the first step. Although the solution meets the transaction reporting challenge of MiFID, the service is also focused on helping customers satisfy regulatory reporting requirements in markets worldwide. Solution SWIFT s Transaction Reporting solution enables reporting entities to meet their transaction reporting obligations, including those for MiFID (Markets in Financial Instruments Directive). Transaction Reporting combines standardised messaging with a standard platform, SWIFT s FileAct store and forward service. Benefits Using SWIFT for transaction reporting will provide certainty for firms in terms of security of delivery as well as consistency of data structuring for their reporting. reduced risk from structured data format and security of delivery reduced cost from re-use of existing SWIFT connection and non-proprietary data standards. The firm that operates without SWIFT will find the new regulatory requirements costly to deal with, as it struggles with the inefficiency of non-standard data formats and multiple connectivity mechanisms.

64 Funds End Investors (I)CSD Distributors Banks 8 Investment Manager 3 Concentrator 7 4 Transfer Agents 6 5 Trustee Fund Administrator Sub Advisor SWIFT enables fully automated transaction processing and reporting between many counterparties in the business cycle. The following diagrams illustrate how funds players can utilise the Funds message set, and highlights the Investment Manager s potential involvement with the flow reference number quoted in the diagram above: Note: It is recognised that an IM can play several of the roles depicted in the above diagram.

65 62 Transaction cycle Pairs Account management a a a a a 2. Order flows a a a a a 3. Transfers a a a a 4. Price report a a a a a 5. Cash forecast a a a 6. Statements a a a a a a a a a (holdings or transactions) a a a a 7. Commissions a a a a 8. FPP (Fund Processing Passport) a a a a a 9. Payments a 10. Settlement a a 11. Corporate Actions a a Funds flows Current release Account Opening Instruction Orders (Subscriptions, Redemptions, Switches) Transfers Price Report Cash forecast Statements of holdings or transactions Investment Manager Commissions FPP (Funds Processing Passport) Payments* Counterpart Settlement* Corporate Actions*

66 63 Commission management The functions involved in providing details of commissions (trailer or transaction related) to fund distributors. These messages are in scope for future release and will become available in the near future. Related flows: Payments, settlement and corporate actions For payments relating to investment funds transactions, the ISO payment messages (see Chapter ) on FIN can be used. For settlement, Delivery versus payment style messages have not yet been built in the Funds product as at publication. This is an area where market evolution will drive their production. The existing model, which fits the standard operational processes used in the global investment funds landscape, is to use a subscription or redemption message which is linked to a specific payment message through the use of reference numbers. For corporate actions and entitlement events of investment funds, the FIN based MT 56x ISO corporate action messages (see chap ). Payments, settlement and Corporate Action messages specifically for investment funds have not been designed in the new XML syntax. Industry challenges As an investment manager you put a great deal of effort into the search for distributors who are willing to encourage their customers to invest into your mutual funds range. In this fast growing business you are continually creating new products and unlocking new distribution channels across the globe to satisfy the diversity of investor needs. The challenge for the industry is to develop an infrastructure which can support the anticipated growth in business. Already today the resulting order flows are highly manual (e.g. 50% by fax in Europe, 90% by fax in Asia) and highly expensive. Directly related to this is a high error risk due to manual re- keying of activity throughout the transaction chain. Solution The Funds business solution enables you to communicate with your counterparties using open, non-proprietary message standards in XML syntax that comprehensively cover your flows. These XML based standards are recognised by industry leaders and market associations as the de-facto investment funds industry market standards and are part of the ISO XML standards. Benefits of the SWIFT solution Minimise risk, reduce costs Distributors, fund management companies and transfer agents that have implemented SWIFT in order to automate their fund distribution processes have reduced their operational cost of handling orders by 50% to 70%. By automating this also removes the risks associated with manual errors, lost faxes, or any doubts regarding the origin of an instruction. Improve customer service Automating order capture eliminates errors, allowing information to be transported, stored and reported in a timely and secure manner. Distributors that have implemented SWIFT

67 64 for order placement have been able to extend sales cut off times in their branches as the burden of manual handling is removed. Fund management companies and transfer agents also vastly improve their ability to meet the reporting needs of their distribution networks. Achieve scalability SWIFT s scalable and robust messaging platform can easily be deployed to support high volumes and a large number of counterparties. This removes the burden and high cost of developing and maintaining proprietary solutions for each counterparty. That scalability is critical in the funds industry where order volumes may spike at particular times in the year, or more regularly, just before the daily deadline. Automation nullifies the impact of these spikes. Access trading partners worldwide With over 8,400 financial institutions, including the majority of players in the funds community, SWIFT provides a single window allowing you to connect with your counterparties directly, or via a concentrator or market infrastructure, using consistent message standards. Transfer agents, custodian banks, broker- dealers, insurance companies and fund administrators are just some of the players actively using SWIFT today. In addition, other distribution channels, such as financial advisors can be reached directly through closed user groups or indirectly via concentrator platforms such as fund supermarkets. Implementing end-to-end automation SWIFT s global partnering program now provides access to accredited Enterprise Application Integration (EAI) providers, business application vendors, integration specialists and consultants specialising in the investment fund industry. This ensures that the leading fund accounting, transfer agency, order management systems and EAIs are SWIFT enabled, facilitating end-to- end straight-through processing across your existing systems.

68 Section 4 Initiatives and solutions

69 65 4 Initiatives and solutions SWIFT s services and products cover a wide range of business processes in the securities, investment funds, payments and treasury areas of the financial industry. Transaction cycle Equities Fixed FX, MM Listed Commodities OTC Repos Funds Income, derivatives Derivatives Pre-trade / Trade FPP (Funds trade capture Processing 4.2 Passport) 4.11 FX and securities post trade/pre-settlement: Allocation processing as well as confirmation matching and 4.4 SSIs Light connectivity Post-trade / Securities Securities Securities pre- pre- Pre- Presettlement settlement settlement settlement matching matching matching Clearing & Settlement Portfolio Administration TPV (Total Portfolio Valuation) 4.7 Commodities 4.10 Collateral management Financing: lending and borrowing Collateral management and portfolio reconciliation 4.8 Securities Financing 4.9 SWIFT is continually working with the securities industry to bring new products and services to our existing, as well as potentially new, users. The following initiatives are under way to increase our offering across new instruments and to cover more business functions throughout the transaction lifecycle: 4.1 Light connectivity Alliance Lite is the latest addition to our connectivity products suite. It complements our well known products in the Alliance family, but is fundamentally different. It is a SWIFT Internet-based service that provides direct, secure and low cost access to SWIFT messaging services. New customers do not have to install SWIFT specific connectivity products at their premises, but can access the Alliance Lite web-service using their standard Internet connection with a SWIFT-issued hardware security token. Alliance Lite will support both manual operations through a standard Internet browser with message data entry and business features, and integration with the back-office through a lightweight auto-client. It is positioned for low volume customers.

70 Trade capture As part of its intention to capture trades closer to the source, SWIFT has entered into a partnership with Bloomberg to jointly provide a front-to-back office multi-asset class product in full application service provider (ASP) mode. As part of the agreement, Bloomberg will provide its buy-side clients with direct securities settlement notification services, direct transfer agent access for mutual funds orders and FX messaging, all via SWIFT. In addition, any investment manager using Bloomberg s OMS will be able to benefit from matching and automatic nostro agents notifications services straight from the Bloomberg terminal through integration with Accord. The results of each of the processing steps will be retrieved and monitored on the Bloomberg terminal. The service will be rolled out in a series of phases during 2009 and Automating FX Allocations There is no current standard automated market practice used by investment managers for communicating the allocation to their counterparties. Executing brokers typically have to cope with a mixture of faxes, s, spreadsheets and phone conversations etc, all of which are manually intensive. The SWIFT FIN MT 303 is an FX allocation instruction that can be used by the investment manager to instruct its counterparty of the allocation details for a block FX deal. The MT 303 will be routed by the receiving bank to the relevant system, which can be enhanced to automatically generate the necessary allocated trades and feed them through to the FX back-office processing environment, thereby providing a straightthrough process for FX allocations. Through implementation of a standard process using the MT 303 and replacing faxes, s and other proprietary communication mechanisms, both the investment management and broker community can improve efficiency, cut costs and reduce risks. 4.4 FX and securities post-trade/pre-settlement As part of SWIFT s post-trade/pre-settlement programme, SWIFT is in the process of defining a solution to streamline, automate and standardise messaging flows between brokers and their buy-side clients. The buy-side clients in this context include investment managers, hedge fund managers and hybrids. The solution will cover all buy-side to broker flows as well as being cross-asset class (ie. FX and securities). These will include confirmations (and associated matching as appropriate), give-up notifications, allocations, payments, statements and custodian notifications sent by the buy-side to their Brokers. This initiative sits amongst a broader portfolio of initiatives to improve processing with the buy-side. Two key components of this solution offering are envisaged to be lighter connectivity for the buy-side (i.e. Alliance Lite supporting relevant message types) and more flexible commercial models to be supported for both brokers and their buy-side clients.

71 Securities Pre-settlement Matching: Accord The new Accord Securities Pre-Settlement Matching Solution will be launched in It initially supports two different market segments: 1. Prime Brokers SWIFT is working with six of the world s major prime brokers to develop and operate a centralised pre-settlement matching solution. The Accord service will be used to match details of trades originating from the global hedge fund community. These equities and fixed income trades are made between a hedge fund and an executing broker. The hedge fund manager sends the details to the prime broker who inputs them to Accord to match against the confirmations sent by the counterparty to the trade the executing broker. SWIFT and the prime brokers are working together to ensure the wider community of brokers worldwide takes advantage of the new solution. The executing broker sends trade and settlement details for each hedge fund allocation in an MT 515 message to Accord to be matched with an MT515 sent by the prime broker. The Accord solution reduces costs in the industry required to manage the numbers of exceptions, provides a single solution for the whole community and improves service to the hedge fund clients. 2. Broker to Broker The initial release also supports the confirmation matching of over-the-counter (OTC) trades for fixed income and equities made between the brokers themselves, that are not automatically cleared by an exchange or trading platform. The solution replaces those trade confirmations sent by fax, with electronic confirmations that can be automatically matched. The specification for Accord has taken these needs into account, so that the solution for prime brokers can also be used for broker-to-broker confirmations, with no impact on functionality or operations. Any type of institution that wants to confirm their trades automatically instead of using fax could potentially use this solution e.g. buy-side, corporates et cetera. Each trading entity can now send trade and settlement details of their OTC trades in an MT 515 message to Accord to be matched with an MT 515 sent by the counterparty to the trade. The Accord solution here again reduces costs in the industry required to manage the numbers of exceptions, reduces reliance on fax confirmations, removes risk of fraud with electronic confirmations, and opens up the possibility to reduce the trade cycle period. These two new securities services establish Accord as a multi-asset class matching service, and open up many new opportunities for SWIFT s community within the securities industry. 4.6 Standing Settlement Instructions (SSI) In order to progress the standardisation of market practice with regards to SSIs, SWIFT intends to produce a set of ISO messages for usage in 2009 to enable market participants to notify their counterparties of a change in their SSIs in a standardised manner. These messages will include all asset classes.

72 Total Portfolio Valuation Industry challenges Currently, staff spend hours reconciling and recalculating portfolio valuations. Cross timezone issues create significant delays. Nobody goes home until the NAV is done; failure is not an option. Solution SWIFT s Funds service exists and is designed to cater for all funds. The TPV message has significant use among funds players and effectively consolidates a number of existing Funds messages. Messages within the TPV suite of messages will include: Request for Statement or Report Total Portfolio Valuation Report Cancellation of Total Portfolio Valuation Report Accounting Statement of Holdings* Accounting Statement of Holdings Cancellation* Cash Account Management Report* Cash Account Management Report Cancellation General Ledger Report Cancellation of General Ledger Report * Asterisk denotes that an ISO message currently exists or is under final review The official release of this solution is scheduled for Q Collateral management and portfolio reconciliation SWIFT continues to follow a separate approach towards bilateral and triparty collateral management due to the distinct requirements of the underlying products and market segments. Next steps: Triparty Collateral Management SWIFT s Standards department is currently working on the reverse engineering of Triparty messages to ISO As part of the ongoing EU Securities Harmonisation efforts and Removal of Giovannini Barrier 1 study, Triparty collateral messages have been identified as core messages to be reverse engineered to ISO SWIFT Standards has created the initial version of the Business Validation Document. This document will be further discussed with the leading triparty agents and involved parties such as triparty system participants during September Timelines and deliverables are still in progress. Bilateral Collateral Management The differences in communication methods and the content of information exchange between margin requirements and dispute resolution has led SWIFT to focus on the collateral management process and portfolio reconciliation as two distinct projects.

73 69 1. Collateral management process: Due to the existing solution offering and the strength of the organisation, the market sees a role for SWIFT in the following areas: Priority 1: agree and process call This step contains the issuance of the margin calls to cover different types of exposure and the consecutive negotiation of the margin call (agreement/disagreement of the call amount, proposal of collateral and settlement instructions). All these communications are part of the so-called margin call workflow which are typically performed via non-standard exchanges. Priority 2: provide reporting This is indicated to be a secondary priority area due to the lack of content agreement in the market. Although market players indicate the importance of common reporting standards, there is also a strong trend towards providing flexible reporting solutions meeting clients needs. Our aim is to leverage the usage of the existing FIN messages as well as investigating the market appetite for an ISO based suite of messages. 2. Portfolio reconciliation: Lack of data standardisation next to the valuation discrepancies is one the main root causes of portfolio discrepancies. Within this scope, SWIFT has been approached to play a role as a standards organisation working together with other standards bodies such as ISDA, for FpML. As a messaging solution, we will continue to promote MT 506 Collateral & exposure statement message as well as actively participate in FpML portfolio reconciliation initiatives. 4.9 Securities Financing Our securities financing project will cover not only securities lending and borrowing activity but also repo and reverse repo. The project aims to cover trade confirmation and matching, and expand on the reporting and settlement aspect for these product lines moving closer to the source of the trade. At a high level, business activity will be evaluated according to three pillars: Discovery/Query Phase: On the pre-trade trade side SWIFT will collaborate to develop new messages together with FPL (FIX Protocol Limited). Trade confirmation and matching: SWIFT is at the early stages of investigating the market requirement for securities lending and borrowing trade confirmation and matching. The aim is to leverage the matching functionality of Accord. Settlement and reporting: there are ongoing initiatives to build MT 54x in ISO to cover specifically securities financing transactions. SWIFT is also at the early stages of market consultation on reporting requirements, fees and rebates, recalls and buy-ins.

74 Commodities SWIFT is currently actively contributing to the activities of the FpML Commodities Working Group where structures have already been finished for a Commodity Underlyer, Commodity Swaps (fix/float and float/float) and Commodity Options. The Group is currently looking at physically settled commodity trades. As SWIFT is already carrying FpML messages on the network. It is the intention to eventually do the same with commodity messages. The Category 6 MT messages were expanded in the 2008 Standards Release to now cover some base metals, and Standards is investigating possibility of expanding these to be used with other commodities as well Funds distribution The FPP ( Funds Processing Passport) is a standardised factsheet, containing all the operational information required to correctly initiate a subscription/redemption into an investment fund. The passports are created by the fund promoters and distributed via various channels, including data providers. SWIFT is analysing the creation of a single point of entry for collecting and/or distributing the FPP. These messages are in scope for future release and will become available in the near future.

75 Section 5 Value added services: Applications It was great to find a product on which we have to do no IT work. SWIFT develops an industry standard for matching, and all we do is plug it in. As it changes, we don t play a part in the development work; we just get a better solution. In a brokerage house, a software solution that is seamless to management is an absolute godsend. Dennis Sweeney, CoTreasurer Europe & Middle East, Newedge Group

76 71 5 Applications 5.1 SWIFT s Accord matching application Enabling real-time matching and exception handling for foreign exchange, money market and derivative confirmations SWIFT s Accord matching application is a fail-safe matching and exception handling solution for your foreign exchange, money market and OTC derivative confirmations also Equities and FI. Deployed on fault tolerant, duplicated hardware, and made accessible through SWIFT s secure IP network, Accord provides you with the combined benefits of both a central and an in-house system, whether or not your counterparty is also an Accord user. Accord is unique in that it allows you to have a single window on all your treasury and derivative deals, independent of: Settlement method: bi-laterally-netted, gross, CLS or SwapClear Financial instrument: Accord matches confirmations for foreign exchange, money market and derivative deals Counterparty: Accord does not require your counterparties to be Accord subscribers as well; it can handle all your confirmations sent and received over the SWIFT network. Accord can also process messages that were not exchanged via the SWIFT network like affirmations of brokers. How does it work? When a foreign exchange, money market or derivatives deal has been agreed, both parties confirm this deal by sending the appropriate SWIFT confirmation message. If either or both parties are Accord subscribers, SWIFT copies these messages to the central Accord matching service. Accord matches all confirmations in real-time. As confirmations, corrections and cancellations are received, Accord automatically updates the matching status in real-time. Reduce risk Reduction in operational risk is a key factor in the organisation of a foreign exchange, money market or derivatives back office. Increased regulatory scrutiny has also suggested not only that operational risk should be measured, and kept to a minimum, but also that specific amounts of regulatory capital be put aside to mitigate it. Accord subscribers significantly reduce operational risk through their reliance on a central matching system. Accord safeguards all confirmations, and maintains a historical trace of all matching results. When both parties to a deal are subscribers to Accord, there is 100% certainty that the matching results will be identical for both parties. Reduce cost By subscribing to Accord rather than using a local matching system, IMs can save on the resources normally required to keep a local matching system operational, maintain message standard changes, and provide the support it would require internally. A central matching solution also means that your usage of it is scaleable between a few hundred confirmations per month and several thousand per day.

77 72 The following instruments with their respective message types are currently matched in Accord: Message Types FX MM Derivatives EQ/FI Commodities MT 300 MT 305 MT 306 MT 320 MT 330 MT 340 MT 341 MT 360 MT 361 MT 362 MT 392 MT 515 Q MT 600 Planned The service will be extended to cover the matching of IRS (Accord currently already matches IRS in FIN format) and CDS.

78 SWIFT s Affirmations application Currently, many buy-side treasury market deals are either confirmed by or fax or not confirmed at all. The operational and settlement risk introduced by this manual process is unacceptable in today s market environment. SWIFT s Affirmations application shows the details of all your trades with all your counterparties on a single screen. Accepting or rejecting them is done by a simple mouse click. As a result, your exposure to risk from unconfirmed trades is eliminated. 1 Submitting party Affirming party 2 MT 3xx MT 300 or Affirmations process flow 6 Central hub 5 or How Affirmations works The above figure illustrates the Affirmations process flow. 1. The trade is executed between two institutions. In the context of the Affirmations service, we refer to the two sides as submitting party (submits the trade confirmation to the service) and affirming party (accepts or rejects the trade), either directly or via a broker. 2. The submitting party generates an MT 3xx confirmation and sends it to the central hub at SWIFT. To indicate that this confirmation is to be affirmed, you can use a code word in field 72 or the Affirmations GUI. 3. The affirming party views all trades in a user-friendly GUI running inside SWIFT s Alliance WebStation. 4. Specific buttons allow the user to accept or reject every transaction. At any stage, a chaser may also be sent to complement the acceptance or rejection. 5. All actions are recorded in the Affirmations database and can be reviewed at any time.

79 74 6. The submitting party can see the resulting status of his confirmations in the GUI in real time. Alternatively, a FIN message with the status of a trade can be sent for integration in back office systems. An API is available for even tighter integration. Benefits of Affirmations Minimise risk A reduction in the time during which there is uncertainty about a trade enables operational risk to be minimised. Faster error detection prevents delays in processing, allows better management of exposure and reduces settlement risk. Reduce operational costs and improve efficiency and STP Using Affirmations means less manual intervention, such as handling faxes. This reduces processing costs. Operational efficiency is improved, enabling higher rates of straightthrough processing (STP). No IT staff are required, as the Affirmations application is operated centrally by SWIFT. Archival and audit trail An integrated audit trail provides binding evidence of trades which are securely stored at SWIFT. The optional Long Term Archive (LTA) enables you to outsource your data storage to SWIFT. LTA stores all information related to a trade for a period of ten years from maturity date. User friendly search functionality provides easy access to archived data. Lower response time Trades appear in real time in the graphical user interface (GUI). You can agree or disagree within seconds. Chasers allow you to communicate instantaneously with counterparties. Multiple asset class coverage Affirmations supports multiple asset classes foreign exchange (FX), FX options, money market instruments and interest rate swaps. Affirmations caters for the following SWIFT message types: MT Foreign Exchange Confirmation MT Foreign Currency Option Confirmation (vanilla) MT Foreign Currency Option Confirmation (exotic) MT Fixed Loan/Deposit Confirmation MT Call/Notice Loan/Deposit Confirmation MT Forward Rate Agreement Confirmation MT FRA Settlement Confirmation MT Single Currency Interest Rate Swap Confirmation MT Cross Currency Interest Rate Swap Confirmation MT IRS Rate Reset Confirmation

80 Securities Market Infrastructures Today, SWIFT is the messaging hub for many clearing and settlement systems in payments, securities, foreign exchange and derivatives. Especially in clearing and settlement, SWIFT is an established force in the Securities Market Infrastructures space. Clearing and settlement infrastructures A Market Infrastructure is a system administered by a public organisation (for example, a central bank) or other public instrumentality, or a private and regulated association or entity, that provides services to the financial industry for trading, clearing and settlement, matching of financial transactions, and depository functions. A market infrastructure encompasses a set of business rules and obligations, admission rules, operating rules, business communication flows, and related communication channels. A Securities Market Infrastructure (SMI) is an institution (frequently operating effectively as a commercial monopoly ) providing utility services to participants in the securities markets. The mission of each Securities Market Infrastructure is to facilitate the efficient processing of securities transactions. For many of the leading Securities Market Infrastructure systems worldwide, SWIFT, ISO and ISO standards are central to their communications model. While the infrastructures themselves benefit from improved productivity and operational efficiencies, all participants gain from the reduction in risk and reduced costs for domestic and crossborder transactions. While most Securities Market Infrastructures use the FIN messaging service to exchange financial data securely, cost effectively and reliably, a range of Securities Market Infrastructures offer interactive or file transfer services using InterAct, FileAct and / or Browse. Securities Market Infrastructures can be divided into the following segments: Exchanges Matching Utilities Clearing Houses / Central Counterparties (CCPs) Central Securities Depositories (CSDs) Regulators / Financial Authorities Specific Securities Market Infrastructures and SWIFT solutions will be relevant for specific types of securities institutions Broker/Dealers Clearers Custodians Investment Managers Settlement Agents

81 Banking Market Infrastructures In payments, more than 60 clearing systems, carrying from 500 to over 300,000 payments a day, rely on SWIFT for the secure messaging connectivity and common message standards essential to their smooth operation. Financial institutions and regulators continue to seek better control of the risks associated with the explosive growth in the value of trading. Globally, risk managers are being asked to measure, monitor and reduce exposure. In response, industry associations and central banks have developed market infrastructures for clearing and settlement. Because they are multilateral, they need a trusted third party to provide secure, reliable and proven messaging solutions. SWIFT is increasingly used by financial institutions to fill that role. Additionally, SWIFT is now complementing its position in the wholesale, high value clearing market by extending its portfolio of messaging solutions to the low-value payments and ACH market. Proven reliability, availability and resilience make SWIFT a first choice when choosing a market infrastructure provider in both the high and low value payments clearing markets.

82 Section 6 Standards and industry guidance Without SWIFT we would certainly need to double the number of operations staff and maybe even more. Fluctuations in the business cycles would cause problems because you would have to pull in temps. This would increase the risk and further reduce efficiency. Investment Manager on SWIFT

83 77 6 Standards 6.1 Introduction Standards are a core element and foundation block of SWIFT and its offering to the industry. We are committed to the collaboration of efforts and convergence of standards, so that our community can benefit from cost savings, eliminate redundancies and seize the opportunity to expand into previously untapped markets. SWIFT offers a range of standards, in multiple syntaxes, which facilitate the link between front and back office operations of financial institutions. These standards lead to higher STP rates throughout the entire securities, payments and treasury transaction chains. In order to promote harmonisation and interoperability through common standards for the benefit of financial services industry, SWIFT works in close co-operation with other international standards setters and financial industry bodies. SWIFT Standards looks to develop business standards in support of transactions in financial markets for payments, securities, treasury and trade services. Standards are developed at SWIFT in response to community and regulatory business requirements in conjunction with the industry. 6.2 SWIFT Standards Industry Involvement International Organisation for Standardisation (ISO) ISO is the world s largest developer and publisher of international standards. ISO is a network of the national standards institutes of 157 countries, one member per country, with a Central Secretariat in Geneva, Switzerland, that co-ordinates the system. SWIFT is actively involved as a category A liaison organisation for ISO Technical Committee 68 (TC68), responsible for financial services standards and serves as registration authority for a number of ISO standards related to financial industry, including the ISO and ISO message standards as well as ISO 9362 (BIC) and ISO (MIC) The Giovannini Group The Giovannini Group is a group of financial market participants, under the chairmanship of Alberto Giovannini of Unifortune Asset Management, which advises the European Commission on financial market issues. The group has focused on identifying inefficiencies in EU financial markets and proposing solutions to improve market integration. The Group has issued four reports, the last of which focused on EU cross-border clearing and settlement arrangements. It highlighted the fragmented nature of the EU clearing and settlement infrastructure for cross-border transactions, and made several recommendations for the removal of barriers that would lead to the improvement of the current environment. The definition of formats and protocols (for standards in financial communications) should build on the work already accomplished by SWIFT and the Securities Market Practice Group with the aim of removing the difficulties caused by proprietary systems and free data fields. Giovannini

84 78 SWIFT continues to work with the Giovannini Group, the European Commission and the community to work towards the removal of barriers identified in the Giovannini reports Financial Products Markup Language (FpML) FpML is the standards arm of the International Association of Swaps and Derivatives (ISDA) which provides standardisation for the electronic processing and dealing of financial derivatives instruments. As a member of the FpML steering committee, SWIFT works closely with FpML and ISDA on enhancing and furthering the standardisation of OTC instruments within the FpML standard itself as well as actively working towards the development of ISO business models for the OTC business The Financial Information exchange Protocol (FIX) The FIX Protocol is a messaging standard developed for the electronic exchange of pretrade and trade messages between financial institutions, primarily investment managers, broker/dealers and exchanges. As a member of the FIX Global Technical Governance Board, SWIFT is an active member of the FIX protocol organisation and supports the advancement of the standard through participation in various working groups and committees. SWIFT and FPL have collaborated on the development of an ISO model for the pre-trade/trade business based on the FIX and ISO standards. Future efforts between SWIFT and FPL will focus on extending asset class coverage and transactions within the pre-trade/trade business model and additional models supporting post-trade activities for listed derivatives, fixed income and cash securities. 6.3 Market Practices Global Market Practice Groups Global market practice groups are focused on creating globally harmonised market practices in support of enhancing straight-through-processing (STP) within the financial services industry. SWIFT currently facilitates global market practice groups for the securities, payments and foreign exchange businesses Securities Market Practice Group (SMPG) The SMPG focuses on harmonising market practices for the securities industry with a concentration on settlement, reconciliation, corporate actions and investment funds. The group s efforts concentrate on the agreement and implementation of market practices using the ISO and ISO standards to enhance STP. The SMPG membership consists of representation from 35 markets consisting of investment managers, broker/dealers, custodians, central securities depositories and regulators. Membership to the SMPG is coordinated through localised National Market Practice Groups (NMPGs).

85 Payments Market Practice Group (PMPG) The PMPG works towards harmonising market practices for the payments industry in response to changing regulatory requirements and to further STP at the global level by reviewing local practices for lack of clarity, incorrect implementation of standards and differing interpretations of best practices and providing recommendation for harmonisation. The group concentrates on the agreement, recommendation and implementation of market practices using the ISO and ISO standards to enhance STP in the payments industry. The PMPG membership is an international organisation with representatives from the three geographical regions, EMEA, Americas and Asia-Pacific National Market Practice Groups (NMPGs) National market practice groups, similar to the global groups, are focused on creating harmonised market practices; however they concentrate on local domestic market harmonisation for a specific country or region. The NMPGs also serve as members to the global market practice groups. SWIFT participates in a number of the 35 local market practice groups globally.

86 Section 7 Messaging Without SWIFT we would certainly need to double the number of operations staff and maybe even more. Fluctuations in the business cycles would cause problems because you would have to pull in temps. This would increase the risk and further reduce efficiency. Investment Manager on SWIFT

87 81 7 Messaging SWIFT provides a range of messaging services for different needs as well as a set of related tools to help you get the most out of them. 7.1 Transaction exchange SWIFT offers secure, reliable and resilient, access-controlled store-and-forward messaging services to exchange structured messages. Value added processing includes message validation to ensure messages are formatted according to SWIFT message standards, delivery monitoring and prioritisation FIN FIN is SWIFT s core store-and-forward messaging service. It enables the exchange of individual structured financial messages in a secure and reliable way. FIN enables more than 8,700 financial institutions in more than 209 countries to exchange financial data securely, cost effectively and reliably. In 2007, FIN carried more than 3.5 billion messages. Benefits Messages Secure and reliable STP-oriented 30 years of experience FIN is a secure, reliable and resilient, accesscontrolled, structured store-and-forward messaging service. Value added processing includes message validation to ensure messages are formatted according to SWIFT message standards, delivery monitoring and prioritisation, message storage and retrieval. It is based on a distributed processing architecture with full, built-in redundancy to ensure maximum availability. FINCopy and FINInform are value-added features on FIN that enable the automatic duplication of selected messages to a third party FINInform FINInform is a value added feature of FIN that automatically duplicates messages based on predefined parameters. The flexibility of FINInform makes it an ideal solution to cater for your copying needs in multiple business scenarios. Benefits Automated message copy Flexibility Ease of implementation Security and reliability FINInform enables the duplication of predefined message types sent and/or received by service participants and simultaneous copy to a third party, for instance the head office of an institution, or a an outsourcing agent. FINInform is a simple, flexible and secure solution to cater for your intra or inter-institutional copying needs in multiple business scenarios for example, outsourcing, resilience and risk management.

88 FINCopy FINCopy is a value added feature of FIN that enables the sender of a message to trigger a copy to a third party for authorisation or further processing. FINCopy provides the ideal solution for the monitoring of bilateral financial transactions by a central institution. 7.2 Bulk data exchange SWIFT bulk data exchange services allow secure and reliable transfer of structured data, either formatted to specified standards or free format, for immediate or deferred delivery FileAct FileAct allows secure and reliable transfer of files and is typically used to exchange batches of structured financial messages and large reports. Benefits File transfer Secure and reliable Flexible Low cost FileAct supports tailored solutions for market infrastructure communities, closed user groups and financial institutions. FileAct is particularly suitable for bulk payments, New Global Note certificates and associated documents, securities value-added information and reporting, and for other purposes, such as central bank reporting and intra-institution reporting. FileAct is also recommended as replacement for the IFT service. 7.3 Interactive services SWIFT offers interactive services that are well suited to mission and time-critical systems. It allows for either an application to application or a person to application mode, that requires execution in seconds InterAct InterAct is SWIFT s interactive messaging service supporting the exchange of messages between two parties. InterAct is well suited to mission- and time-critical applications such as Continuous Linked Settlement (CLS), SWIFT s Accord service or real-time gross settlement systems Key features Messages Secure and reliable STP oriented XML-based Designed to complement FileAct and FIN, InterAct can support tailored solutions for market infrastructures, closed user groups and financial institutions. With InterAct, institutions and communities can exchange messages in an automated and interactive way an application sends a request message to another application and receives an immediate response message. (RTGS).

89 83 Messaging InterAct messaging features include: Interactive exchange of messages in synchronous or asynchronous mode Standard XML message envelopes Trusted time and time-stamping Support of multiple services Support of closed user groups XML syntax validation Store and forward mode Security access control access control management data integrity and authentication data confidentiality non-repudiation of message emission Browse Browse in a secure, reliable environment: Browse combines the user friendliness of web technology with the security features offered by SWIFTNet. Key features Browsing Secure and reliable Internet standard protocol Easy integration in existing web servers Cost effective communication service Browse is based on the "https" internet standard protocol. Designed to complement FileAct and InterAct, Browse offers customers the capability to browse remote web servers using Alliance WebStation. For communications of a more sensitive nature, the browsing capability provides direct access to the secure messaging features of InterAct and FileAct, offering authentication, encryption and nonrepudiation. Such communication may, for example, include a request for more details or initiation of transaction based on the browsed data. 7.4 Directories SWIFT publishes a number of reference data directories that are indispensable for improving straight-through processing. Bank and business identifiers BIC and BEI: Identifying your financial institution with the Bank Identifier Code (BIC). Identifying your corporation with the Business Entity Identifier (BEI).

90 84 Directories BIC Directory Lists the BICs issued under ISO 9362 to the financial institutions and corporates that need to be identified in FIN payments traffic. BICPlus IBAN Directory A comprehensive database that combines the BICs and their details with the national clearing codes of some 60 countries. SEPA Routing Directory This directory tells you which beneficiary bank is SEPA adherent and ready to process your payments, and how you can reach it. Services Directory A look-up tool with a file extraction facility that shows all participants in services and SWIFT solutions implemented on SWIFTNet. Countries, Currencies, Holidays Directory Contains country specific payment processing information. IBAN Registry SWIFT registers new IBAN formats under the ISO standard. SWIFT publishes all registered IBAN formats (one per country) in the free downloadable ISO IBAN Registry document. BIC Database Plus The BIC Database Plus is a directory that will cease to exist in November 2008 and that cannot be ordered anymore. BIC Enquiry Tool The BIC Enquiry Tool is a downloadable software tool that allows you to look-up data in the downloaded directory files. Directory Downloads If you are subscribed to a downloadable version of a directory then you can download the data from this page. BIC Online Professional Access the online look-up tool for consulting the complete BIC Directory, and the BIC history, on your internet browser (requires subscription). The content is updated daily to reflect the urgent BIC (de)activations. It is an ideal tool for message preparation and repair. Data Registration Services Register a new or modify a BIC or BEI under ISO Register a new IBAN format under ISO Change your institution s data published in SWIFT s directories.

91 Business intelligence Data-driven decision making made easier The Watch portfolio of online reporting and analytical products puts critical business intelligence about your financial institution and SWIFT to work for you by giving you monthly updates of your traffic flows, market shares, messaging costs and total SWIFT expenses. Watch Analyser Watch Analyser gives you direct, easy access to business intelligence about the global financial industry. You can analyse your own total cost of ownership in SWIFT and performance over SWIFT, and access key data about SWIFT across markets and countries. This means easy, instant access to critical data that helps you to understand your own business better. Watch Reports For users who do not require Analyser s on-demand availability and breadth of analytical power, the Watch Reports provide convenient subscriptions to the most common analyses that financial institutions require. With Watch Reports, you don t have to search for the information you need. Now you get the latest updates each month on how your business is doing. 7.6 Simulation Testing and Qualification Services (STaQS) The Simulation Testing and Qualification Service application is a messaging testing platform that enables customers to test MX and MT industry standards in the scope of SWIFT s solutions and FIN. STaQS test results are accessed using the STaQS interface. Benefits: Improve compliance with industry market practice Deal with local variations in various world markets Improve counterparty automation Reduce manual steps and exception processing Benchmark progress for corporate actions improvement projects

92 Section 8 Connectivity Before we had SWIFT, we had proprietary terminals all over the place. Staff needed to be trained on all these different systems and data was re-keyed all day long. Now, we simply have one system. Investment Manager on SWIFT

93 87 8 Connectivity 8.1 Who can connect to SWIFT? The following table highlights the wide variety of financial industry players who can currently connect to SWIFT. Some players can connect directly to SWIFT (e.g. IMs, Banks, Custodians, etc.). Others, such as Corporates (e.g. corporate customers of Banks), are able to connect to SWIFT indirectly via such services as an MA-CUG (member administered closed user group). This allows SWIFT Members to establish their own closed user group. Financial Industry Players Connect to Connect to SWIFT Directly SWIFT Indirectly Investment Manager Broker / Dealer Hedge Fund Central Counterparty (CCP) Exchange Virtual Matching Utility Electronic Trade Confirmation Provider Custodian [International] Central Securities Depository Market Data Provider Regulators Corporates Insurance Companies Distributor Investors Intermediary Fund Administrator Transfer Agent / Registrar Portfolio / Fund Manager Concentrator / Hub Custodian / Trustee Bank Clearing Systems RTGS (Real Time Gross Settlement) Systems Treasury Counterparties Market Infrastructures (e.g. CLS)

94 Is my institution eligible to join? You can join SWIFT if your institution is in one of the following categories: 1. Full member: If you are a bank, eligible broker-dealer or a regulated investment management institution, then you can join SWIFT as a full member. 2. Submember: If you are owned and controlled by a parent institution that is already a member, then you can join SWIFT as a submember. 3. Participant: If you are one of many different types of institutions that play a role in the financial industry, then you can join SWIFT as a participant. Examples include money brokers, securities exchanges and market data providers. 4. Corporate: As a corporation, you can also join SWIFT and communicate with your financial counterparties over the SWIFT network. Different models exist for privately held and publicly traded companies. 8.3 Categories of SWIFT User (until September 2009) There are three categories of SWIFT users: A.1.1 Shareholder (Member) An eligible organisation holding a share in S.W.I.F.T. SCRL, including banks, eligible securities broker-dealers and regulated investment management institutions. Details about the SWIFT membership criteria can be found in the SWIFT By-laws. A.1.2 Non-Shareholders A Non-Shareholding Members A Non-Shareholding Member is an organisation which complies with the eligibility criteria of a Shareholder (Member) which has either chosen not to or is prevented from becoming a Shareholder. A Sub-Member An organisation more than 50 percent directly or 100 percent indirectly owned by a Shareholder and which meets the criteria set forth in the first paragraph of Article 8 of the Articles of Association. A Sub-Member must fall under full management control of the Shareholder. A Participants Categories of Participants currently accepted by SWIFT are: Brokers and Dealers in Securities and Related Financial Instruments Central Depositories and Clearing Institutions Corporates Financial Market Regulators Fund Administrators Investment Management Institutions Money Brokers Non-Shareholding Financial Institutions Participants in a Member Administered Closed User Group Payment System Participants Recognised Exchanges for Securities and Related Financial Instruments Registrar and Transfer Agents

95 89 Representative Offices Securities Electronic Trade Confirmation (ETC) Service Providers Securities Market Data Providers Securities Market Infrastructures System Participants Securities Proxy Voting Agencies Subsidiary Providers of Custody and Nominee Services Trading Institutions Travellers Cheque Issuers Treasury Counterparties Treasury ETC Service Providers Trust or Fiduciary Services Companies Note: Access to SWIFT services and products is limited depending on the type of Participant. SWIFT s Legal Definition of an IM SWIFT recognises three types of IMs: Traditional IM (e.g. investment manager, asset manager, fund manager, etc.) Insurance Company Government Institution Traditional IM The following conditions need to be fulfilled to be recognised as a Traditional IM: i. Are primarily engaged in the management of Asset portfolios (which must be composed, at least in part, of securities); and ii. Are authorised by a competent regulatory authority to conduct such primary business activity; and iii. Are subject to relevant regulations applied by such competent regulatory authority. iv. In countries where conditions ii) and iii) do not apply, are sponsored as an Investment Manager by at least two-thirds of the S.W.I.F.T. SCRL shares held by the Members in the country of origin of the applicant and either (a) by a minimum of ten Members, or (b) by one percent of the total S.W.I.F.T. SCRL shares. Either i), ii) and iii), or i) and iv) must apply. The support referred to in iv) (a) and (b) may be provided by a combination of Members from and / or outside the country of origin of the applicant. Investment Management Institutions (including Insurance Companies and Government Institutions) Investment Management Institutions are institutions which: a. are engaged in the management of asset portfolios (which must be composed, at least in part, of securities), in connection with their primary business activity, which is either the provision of investment management services to other persons or the underwriting of insurance or both; and b. are authorised by a competent regulatory authority to conduct such primary business activity; and c. are subject to relevant regulations applied by such competent regulatory authority;

96 90 d. in countries where conditions b) and c) do not apply, are sponsored as Investment Management Institutions by at least two-thirds of the S.W.I.F.T. SCRL shares held by the members in the country of origin of the applicant and either (i) by a minimum of ten members; or (ii) by one percent of the total S.W.I.F.T. SCRL shares. An agency, department, or institution of a national, regional, or state government or public international organisation (public authority) qualifies as an Investment Management Institution if (i) primarily engaged in the management of asset portfolios (which must be composed, at least in part, of securities) on behalf of and for the account of such public authority and (ii) sponsored according to sub-paragraph d) above). 1. Either a), b), and c), or a) and d) must apply. The support referred to in d) (i) and (ii) may be provided by a combination of members from and/or outside the country of origin of the applicant. 2. Investment Management Institutions, except Insurance Companies, and Government Institutions fulfilling the criteria as per Brokers and Dealers in Securities and Related Financial Instruments, and Investment Management Institutions must become either a shareholder or a non-shareholding member. Insurance Company The following conditions need to be fulfilled to be recognised as an Insurance Company: i. Are engaged in the management of Asset portfolios (which must be composed, at least in part, of securities), in connection with their primary business activity, which is either the provision of investment management services to other persons or the underwriting of insurance or both; and ii. As above under Traditional IMs. iii. As above under Traditional IMs. iv. As above under Traditional IMs. Either i), ii) and iii), or i) and iv) must apply. The support referred to in iv) (a) and (b) may be provided by a combination of Members from and / or outside the country of origin of the applicant.

97 91 Government Institutions The following conditions need to be fulfilled to be recognised as a Government Institution: i. An agency, department or institution of a national, regional or state government or public international organisation ( public authority ) qualifies as an investment manager if primarily engaged in the management of Asset portfolios (which must be composed, at least in part, of securities) on behalf of and for the account of such public authority; and ii. As above under Traditional IMs. iii. As above under Traditional IMs. iv. As above under Traditional IMs. Either i), ii) and iii), or i) and iv) must apply. The support referred to in iv) (a) and (b) may be provided by a combination of Members from and / or outside the country of origin of the applicant SWIFT s Legal Definition of a Fund Administrator Fund Administrators A Fund Administrator is an organisation which has one or more of the following activities: a. maintains the official ownership record of all fund units, b. provides administration of orders subscribing to and redeeming from investment funds, c. executes, administers payments, money transfers on behalf of the fund, d. calculates Net Asset Value, generates statements, legal reporting and reconciliations on behalf of the fund. For the purpose of this definition, a fund includes investment fund, hedge fund, mutual fund, unit trust, Sicav, and collective investment vehicles. Where the applicant is a regulated entity, it must follow the local laws and regulations as identified by the Board with the assistance of the National Member Group. Where the applicant is not a regulated entity, or where no regulations exist in the country of the applicant, the BRM 092 Sponsorship Rule applies (see below). BRM 092 Sponsorship Rule Unless otherwise specified, the BRM (Board Report to Members) 092 Sponsorship Rule applies to all categories of participants. If and only if no relevant regulatory environment is in effect in the nation of the applicant, the Board may accept the application of a participant if it is supported by: a. at least 2/3 of the shares held by the members of the nation of the applicant, if there are any, and b. at least 10 members, and c. at least one percent of the total shares issued to the membership.

98 92 The support referred to in b) and c) above may be provided by a combination of members from and outside the nation of the applicant. Should licensing or authorisation be subsequently required in the nation of the participant, the participant will have to follow these requirements to be allowed continued usage of the SWIFT system SWIFT Categories and IMs The following diagram outlines the different categories an IM can join SWIFT under, depending on the specific circumstances of the IM. Traditional IM Insurance Company / Government Institution Choose to become a shareholder of SWIFT SCRL Choose not to become a shareholder or is prevented from becoming a shareholder or entitlement of less than 5 shares More than 50% directly or 100% indirectly owned by a shareholder, with full management control or Meet eligibility criteria as a submember and No shares in the capital of the SWIFT SCRL Are in the same business as Shareholder Shareholder Member Non-shareholder Member Sub-member Participant Note: Traditional IMIs can, depending on their specific circumstances, join SWIFT under any of the above categories. Insurance Companies and Government Institutions can join SWIFT under the Participant category. 8.4 Categories of SWIFT User (from September 2009) The following list of user eligibility criteria will, at the time of implementation, fully supersede the SWIFT user categories as listed above in section 8.3 Users will be categorised in three distinct groups.

99 93 Group 1 - Supervised Financial Institution A Supervised Financial Institution is: an entity that engages in payment, securities, banking, financial, insurance, or investment services or activities, and that, for such purposes is (i) licensed by or (ii) authorised by or (iii) registered with a Financial Market Regulator, and is subject to supervision by a Financial Market Regulator as per BRM 199, or an International, supranational, intergovernmental or national governmental body or institution that as a main activity engages in payment, securities, banking, financial, insurance, or investment services or activities (including central banks) The Supervised Financial Institution will be entitled to use the services of SWIFT, as defined by the Board of Directors. Group 2 - Non-Supervised Entity Active in the Financial Industry A Non-Supervised Entity active in the financial industry, is an entity which: as a main activity, engages in payment, securities, banking, financial, insurance, or investment services or activities to Supervised Financial Institutions and/or to third parties unrelated to the Non-Supervised Entity, or as a main activity, engages in services to Supervised Financial Institutions and/or to third parties unrelated to the Non-Supervised Entity, which services support financial transaction processing by means of communicating and processing information and which services require the sending of messages in the Non-Supervised Entity s own name; and is not subject, for such purposes, to supervision by a Financial Market Regulator; and is a duly incorporated, validly existing and duly organised legal entity, and is in good standing financially and with respect to compliance with applicable laws and regulations, and is subject to regular audits in accordance Group 3 - Closed User Groups and Corporate Entities Group 3 is composed of the following currently existing SWIFT user categories: Corporate, Financial Market Regulator, Payment System Participant, Securities Market Data Provider, Securities Market Infrastructure System Participant, Service Participant within Member-Administered Closed User Group and Treasury Counterparty. 8.5 SWIFT Pricing and Fees Financial institutions joining SWIFT incur fees based upon the way in which they connect to and use SWIFT. As a co-operative, SWIFT aims to continuously lower average message prices. SWIFT pricing is value based, allowing users to pay only for the products and services they use. Pricing is also loyalty based; the more an institution uses SWIFT, the lower the per unit cost (e.g. per message costs decrease as an institutions traffic invoice increases).

100 94 Co-operative based Prices decrease as cost effectiveness increases 1991 average message price 2002 Value based The right solution for the right need at the right price FileAct Browse InterAct FIN Loyalty based The more you use SWIFT, the lower your unit prices low SWIFT usage high SWIFT s lowering of prices has been a continuing story, but in 2007 SWIFT took the bold step of introducing cuts upfront, as well as giving a rebate at year end. SWIFT also reduced prices cumulatively by 25 percent in 2007, with a combination of reduced prices and a rebate on all messaging traffic. We also announced a further 5 percent price reduction from January The various fees can be broken down into three categories: joining and connecting to SWIFT using SWIFT services and Business Solutions other SWIFT services Joining and connecting to SWIFT New to SWIFT? Use the steps below to learn how to join SWIFT, connect to the SWIFT network and become fully operational. Step 1: Joining SWIFT To use SWIFT, you must first join the SWIFT user community. Find out what the criteria are and whether your institution is eligible to join. Step 2: Connect to SWIFT Once you are a member of the SWIFT community, you need to select and implement your infrastructure to connect to SWIFT. Find out what your options are. Step 3: Go live When you have implemented and tested your infrastructure to connect to SWIFT, you are ready to go live. Find out what you need to do to confirm your readiness to SWIFT.

101 95 Institutions incur a variety of fees dependent on their status and type of connectivity to SWIFT: Up-to-date fees for all of the above can be obtained by contacting your SWIFT sales representative. Fee Shareholding and Registering with SWIFT Comment Shareholder fee BIC and BEI registration Connected SWIFT destination (connected 8-character BIC) connected 8-character Publication in the BIC Directory SWIFT User Handbook SWIFTNet Link Annual recurring fee One-time and recurring fees Licence extensions Extra software copy SWIFTNet Link alternative routing Security Products Fee Multi-Vendor Secure IP Network Connectivity fee SWIFT Interfaces One-time and recurring fees related to the registration and maintenance of Security Officers, PKI certificates Recurring fees dependent on the type of connectivity (managed or dial-up), the bandwidth and the country where the connection is implemented Dependent on whether institution uses SWIFT or 3rd party vendor interfaces One-time and software maintenance recurring fees dependent on volume of transferred traffic Using SWIFT Services and Business Solutions For FIN and messaging and for some of the new business solutions, fees are based on the volume and size of transferred messages or files and are typically charged to the sender of the message (except when otherwise specified or agreed with SWIFT). Note: some business solutions are charged based on a flat service fee. Outlined below is the methodology by which SWIFT Users are charged for their service usage. For the specific charges applicable to each business solution, please contact your SWIFT sales representative.

102 96 The price per message is typically defined according to the following criteria: The institution s Global Tier determined by the institution s overall financial contribution related to usage of SWIFT. The more the institution uses SWIFT, the better the tier in terms of price per message. The route used by the transfer, either domestic, international or intra-institution. The domestic route is defined by the country of the sender and the receiver. Intra-institution traffic is the traffic transmitted between destinations that are part of the same financial institution. International inter-institution traffic is all other communication. The optional value-added features selected for the transfer of message or file (e.g. priority, delivery notification, etc). The size of the transferred message. Up-to-date fees for all of the above can be obtained by contacting your SWIFT sales representative Other SWIFT Services SWIFT delivers Directory, Documentation and Training services to its community. Up-todate fees for these services can be obtained by contacting your SWIFT sales representative 8.6 SWIFT Connectivity Solutions To be able to connect to SWIFTNet, users require: a network connection to SWIFT s secure IP network (SIPN) SWIFTNet Link an interface SWIFT users can choose to manage their own technical connectivity (Direct Connectivity) or they can outsource their connectivity either to a Service Bureau or by the use of a shared connection (Indirect Connectivity).

103 97 Private Shared Shared Shared infrastructure connection infrastructure 1 infrastructure 2 Application Application Application Application Middleware Middleware Middleware Middleware Messaging Messaging Messaging Messaging Communication Communication Communication Communication Network Network Network Network Business application EAI - integration software; translation Interface software; manual versus automation Communications software Network connection; Hardware Security Module Outsourced Private Infrastructure Access Kit or Entry Kit 1. SWIFT Messaging software (SAA): Allowing back-office integration or SWIFT Messaging software (SAE): allowing manual entry 2. SWIFT Communication software (SAG,SNL) 3. Network connection Shared connection Access Kit In addition to 3rd party vendor interface of your choice SWIFTNet Link Kit In addition to 3rd party vendor interface and communication Software of your choice Shared Infrastructure 1 or 2 Remote Kit SWIFT Messaging software (SAE) with Manual entry of messages Essentials Kit Whether a SWIFT user chooses to connect directly or indirectly is an internal business decision specific to each organisation. It is SWIFT s goal to ensure that all of its users have choice in this respect. Some of the points to consider when deciding whether to connect to SWIFT directly or indirectly are as follows: Are you a global, regional or domestic institution? Are you planning on expanding your physical presence in the future? Do you have multiple business lines, or are you focused in one area? Are you planning on expanding your business lines in the future? Are your volumes high, or do you anticipate your volumes increasing in the future?

104 Direct Connectivity To be able to use SWIFTNet services, you require a network connection to SWIFT s secure IP network (SIPN), SWIFTNet Link and an interface. Secure IP network is SWIFT s highly secure and extremely reliable network. Full redundancy, advanced recovery mechanisms and first class operations and customer support services ensure continuous network availability for SWIFT services. SWIFTNet Link guarantees interoperability between our customers. SWIFTNet Link is our unique underlying software module that encapsulates transport, service management and security technologies. Interface The Alliance product family includes interface products for both SWIFTNet and FIN. Alliance WebStation and Alliance Gateway are our SWIFTNet interface products. Alliance Access and Entry are our FIN-specific interfaces. In addition to SWIFT s own interface products, third party interfaces are also available from SWIFT s service partners. Alliance Lite is the latest addition to our connectivity products suite. It complements our well known products in the Alliance family, but is fundamentally different. It is a SWIFT Internet-based service that provides a direct, secure and low cost access to SWIFT messaging services. New customers do not have to install SWIFT specific connectivity products at their premises, but can access the Alliance Lite web-service using their standard Internet connection with a SWIFT-issued hardware security token. Alliance Lite will support both manual operations through a standard Internet browser with message data entry and business features and integration with the back-office through a lightweight auto-client. It is positioned for new low volume customers, initially corporates and small financial institutions. Alliance Lite complements our well known connectivity products in the Alliance family, but is fundamentally different. It is an Internet-based service that provides a direct, secure and low cost access to SWIFT. You do not have to install SWIFT-specific connectivity products at your premises. Instead, you can access Alliance Lite using a standard Internet connection with a SWIFT-issued hardware security token. Alliance Lite is designed for new low volume customers typically exchanging less than 200 files and messages a day. The first release will cater to the requirements of low volume corporates and financial institutions. It will support FileAct and a limited number of MT over FIN focusing on multibank payments initiation, cash reporting and foreign exchange transactions. Alliance Lite will support both manual operations through a browser with message data entry and business features as well as integration with the back-office through a lightweight AutoClient.

105 Indirect Connectivity For users that prefer to outsource their connectivity to a third-party, SWIFT operates an indirect connectivity programme to register and maintain high standards of resiliency and security.two indirect connectivity options are available: Outsourcing day-to-day operations to a third-party called a service bureau Or connecting via a member concentrator which in addition to technical outsourcing provides additional business services like taking care of the SWIFT administration and invoicing. Only member-concentrators and service bureaus registered under the indirect connectivity programme are able to connect SWIFT users. The programme sets out the operational requirements covering resiliency and security that all indirect connectivity providers are required to meet. To help users identify the best providers of indirect connectivity, SWIFT is launching a labelling programme for indirect connectivity providers that meet even higher operational standards. Two labels are available and will be awarded from 2009: The operational assurance label SWIFTReady Connectivity - Best Practice label. SWIFT can provide a variety of connectivity options depending on each individual customer s needs and requirements, ranging from fully resilient and redundant permanent connections down to dial-up connections, either directly or indirectly. For detailed information on how you can connect to SWIFT, please contact your regional account manager Interfaces Connectivity for new customers A choice of connectivity products in line with your requirements In connectivity for new customers Low-volume customers (up to 1000 messages per day) Designed for firms with volume requirements below 1,000 messages/files a day, our connectivity portfolio is tailored to best fit your unique needs. Kits Pre-packaged, one-stop shop products that contain everything you need to get started with SWIFT and exchange up to 1,000 messages/files per day Alliance Lite Lite New customers who plan to exchange less than 200 messages/files per day can benefit from a light connectivity model based on a standard browser and internet connection. Medium and high-volume customers (more than 1000 messages per day) There s no such thing as a generic connectivity solution for customers with average traffic volume exceeding 1,000 messages/files

106 100 SWIFT s Services for Investment Managers Connectivity for high-volume customers Highly resilient and scalable connectivity products for customers with traffic volumes above 40,000 messages or files per day In connectivity for high-volume customers Network connectivity The high-end connectivity options offer full resilience and scalability to ensure your business is connected 24 x 7. Read more about the products available to connect to SWIFTNet and hook up directly to SWIFT s secure IP network. See also the direct connectivity page. The Alliance Access messaging interface has been scaled up and can process up to 1,000,000 messages per day. A range of adaptors and integration facilities are available to integrate your middleware and back-office applications. Messenger and WebStation are available if you choose to enable your operators to directly manage SWIFT business from the messaging interface. The Alliance Gateway communications interface allows you to connect multiple messaging interfaces and helps you with traffic routing. The SWIFTNet Link is required as a lower level protocol stack. Connectivity for medium-volume customers Connectivity products for customers who typically exchange between 1,000 and 40,000 messages or files per day In connectivity for medium-volume customers Network connectivity We offer a range of connectivity options that combine throughput and resilience. Read more about the products available to connect to SWIFTNet and hook up directly to SWIFT s secure IP network. See also the direct connectivity page. The Alliance Access messaging interface is the key product in this space and allows you to connect your in-house applications. It is complemented by Messenger to manually manage your messages and WebStation to access FileAct and Browse based services. The Alliance Gateway communications interface allows you to connect multiple messaging interfaces and helps you with traffic routing. The SWIFTNet Link is required as a lower level protocol stack. Connectivity for low-volume customers Connectivity products for customers who typically exchange less than 1,000 messages or files per day In connectivity for low-volume customers Network connectivity Functionality and ease of use, find out more about our product line: Alliance Access/Entry Alliance Starter Set Light network connectivity options to ease the access and reduce the cost. Discover our range of connectivity options: Direct connectivity Indirect connectivity

107 Section 9 Service Our transaction volumes can vary significantly from one day to the next. However, the effort involved in generating our SWIFT based settlement instructions that are sent to custodians is very limited given the high levels of automation that we have achieved in this area we therefore barely notice the volume of settlement instructions sent from day-to-day. Investment Manager on SWIFT

108 101 9 Service 9.1 Business Assessment Programme The Business Assessment Programme provides dedicated teams of experienced consultants to analyse your business flows or your infrastructure, or both. Their recommendations help you reduce your total cost of ownership, lower your operational and reputational risk and identify opportunities for business growth. How can we help you? Over the past ten years, SWIFT has reviewed the business processes and infrastructure of over a hundred financial institutions. Based on our findings, we see that a series of key challenges reoccur time and time again: a lack of processing scalability due to excessive manual processing no end-to-end view on the operational processing environment non-optimal use of the existing infrastructure The Business Assessment Programme can help you to: support your key business drivers by - extending your messaging capabilities - leveraging your existing SWIFTNet investment - setting up a scalable infrastructure across all entities of your organisation. evaluate how to reduce your operational costs by - optimising your operational efficiency (straight-through processing) - reducing operational and reputational risk - rationalising internal proprietary systems, infrastructure and communication channels Benefits: Optimise operational efficiency Lower operational and reputational risk Extend and enhance services to your customers Improve the scalability of your infrastructure Reduce infrastructure spend 9.2 SWIFT Partner Programme As a SWIFT customer, how can you be sure that you are buying a solution from a thirdparty supplier that is compliant with SWIFT? How do you choose a company to help you with your SWIFT-related integration, implementation and training and be certain that they have the expertise to perform the job? SWIFT s certification programmes and partnerships help you to answer these questions.

109 102 SWIFT implemented a new partnership model in 2008, as described below. The Partner Programme team s objectives are to: Facilitate SWIFTNet implementation for members Increase STP and reduce total cost of ownership to members Value Based Partner Segmentation All companies registered with SWIFT Partner Management are classified into one of three categories: SWIFT registered vendors - given access to information and invited to selected events SWIFT solution providers - recognised for their solution capabilities and receive labels / certificates SWIFT partners - selected based on mutual need and fit, strategic importance of jointly delivered value, close commercial working relationship with joint target initiatives. In addition to the three relationship types, SWIFT also establishes alliances with thought leaders, relationships with analysts, and co-operation with some consultants amongst others SWIFT Registered Vendors This relationship type is the entry-level into SWIFT s overall partner framework. Its main purpose is to address the needs of companies who want to obtain information, documents, test tools and development products from SWIFT SWIFT Solution Providers The relationship model A vendor enters the SWIFT solution provider relationship model at the moment they have successfully passed SWIFTReady certification for one or more of their solution components. Whereby they become a provider of a SWIFTReady solution component (application, service, connectivity). When SWIFT customers are interested in these solutions, SWIFT co-operates with the solution provider as needed. Customer solution components Today SWIFT runs certification programmes for three customer solution components: SWIFTReady applications financial applications and middleware SWIFTReady services training, implementation, integration, migration, system care, support SWIFTReady connectivity SWIFTReady service bureau All SWIFTReady certifications (and the associated labels) are granted on a yearly basis and are subject to annual renewal by meeting the pre-defined criteria.

110 SWIFT Partners The relationship model This relationship model is used when SWIFT and the partner agree on a joint customer value proposition and a close commercial and marketing relationship SWIFTReady Certification of Solution Components SWIFTReady certification programmes validate and recognise the various solution provider and partner capabilities (solutions) available 2008 to customers. These industry-recognised labels are the most important reference tool for customers. Many customers use it as a key requirement in their RFI and RFP processes. SWIFTReady certification programmes are classified into three categories: SWIFTReady certification of financial applications and EAI solutions SWIFTReady certification of services (and expertise to deliver such services) SWIFTReady certification of SWIFT connectivity solutions SWIFTReady Applications SWIFTReady certification of applications is based on the existing scheme that is wellestablished and well known. SWIFTReady applications are financial applications, supporting FIN or XML-based solutions such as securities settlement, cash reporting, E&I and TSU. SWIFTReady certification involves two stages of validation: Functionality compliance with a published list of functional criteria and/or expertise (depending on the certification programme). Successful validation results in a SWIFT Conformance Statement Quality positive references from live users of the solution (measured through customer questionnaire and interview feedback). Successful feedback results in issuance of the SWIFT certified solution label SWIFTReady Services and Expertise The new SWIFTReady certification of services is structured into two areas of competency/expertise: SWIFTNet infrastructure (functional) SWIFTAlliance Access, Gateway, Integrator SWIFT Solutions (business) Cash Reporting, E&I, TSU, Corporate Access, Bulk Payments for SEPA, Funds The types of services that can be offered to customers include: implementation services integration services training services migration and upgrade services system care services 2008

111 SWIFTReady Connectivity To date, two connectivity solutions fall into this category: service bureaux and SWIFT interface products. Currently SWIFT validates these solutions through different validation processes before they can be made commercially available to customers. It is SWIFT s intention to further harmonise and extend the certification related to these solutions, so they can be an integral component of the official SWIFT Partner Management certification programme. A more stringent and formal, but still optional, certification of service bureaux will provide a benefit to customers when evaluating their connectivity options to SWIFT. The SWIFT certification aims to offer additional guarantees to customers with respect to functionality and service levels Promotion of SWIFT Solution Providers and SWIFT Partners Listing A list of all certified providers, identifying the SWIFTReady certifications granted, will be available on swift.com. This will provide a holistic view of each SWIFT partner / SWIFT solution provider, where the customer is able to see the view of the SWIFT certified components of the solutions or the joint value propositions offered by these companies. Customers will also be able to search a supplier by the specific certification type. For example, they can look up a supplier who has a SWIFTReady application for E&I, as well as solution experts for E&I, and technical experts for solutions integration and SAG. The securities business applications are obviously highly relevant for the investment management community. The types of business applications identified as key for this industry are: In the pre-trade/trade space: FIX engines and order management systems In the post-trade/pre-settlement space: FIX engines, order management systems, ETC providers and reconciliation applications In the clearing and settlement space: back office platforms and reconciliation applications In the custody space: corporate actions processing The investment funds distribution vendor landscape is slightly different as niche players have been developing very focused business applications catering for the specific needs of distribution, fund accounting and transfer agency. Partner Solutions has identified the following application types as highly relevant for the mutual funds industry (in addition to the ones relevant for the investment management industry generically): Distribution platforms Transfer agency applications Fund accounting systems Portfolio management applications The middleware or EAI stack is the main component involved in the gathering of the business flows and the construction of the messages. This application category is spanning multiple spaces (also for funds distribution) and serves as the concentrator and transformer of business flows beyond the interface.

112 105 The market infrastructure service providers are traditionally seen as technical infrastructure providers. Nevertheless, these are highly relevant for the investment management community, and Partner Solutions carefully monitors the evolution within this partner segment. The consultancy and integration services stack would intervene at all stages in an implementation process (architecture, business analysis, testing). For details on SWIFT s current range of Partners, please contact your SWIFT Sales Representative, or go to SWIFT Training Almost 30 years ago, the SWIFT Training department was created to support the SWIFT members and help them to get the most out of their SWIFT connection. Our mission is to help you increase your knowledge on the SWIFT infrastructure and the different message types in order to improve your automation and service levels and decrease your operational costs. SWIFT certified training experts will teach you everything you need to know about the new training solutions available to manage the different SWIFT Alliance interfaces and expand your knowledge on SWIFT s solutions available in the banking and securities markets. Read along to discover the benefits and find out what our customers think about SWIFT Training. Increase your operational performance and reduce your costs Help to increase your operational performance, drive your costs down, and reduce the risk of errors by learning how to use SWIFT s products and services accurately and effectively. A worldwide SWIFT Training network With a worldwide network of experienced instructors, we can save you time and money by providing courses in your area. A wide range of training solutions to suit all your requirements From classroom courses to our e-learning tools, you can be sure that we have a highvalue training solution that s right for your particular business need. Tailored training As part of our On-site service, we also provide training solutions tailored to your specific needs that are delivered on your premises. Training that s up-to-date Feel confident that your SWIFT instructor provides you with the correct and latest information. Multiple languages With up to 15 languages covered, feel comfortable in following the training programmes in your own language. Quality that you can trust We design, develop and deliver our training programmes ourselves so that you can be assured that we provide the level of quality that you have come to expect from SWIFT.

113 Section 10 About SWIFT If we were to report everything over fax, we would probably need twice as many people to do this. We have increased our traffic by tenfold without really increasing the headcount. Investment Manager on SWIFT

114 About SWIFT 10.1 Community Inspired SWIFT is a community-inspired co-operative, founded by and for the financial services industry. We work globally in 209 countries with more than 8,700 organisations including banks, market infrastructures, securities institutions, corporations, network providers, business partners and technology companies to ensure the financial world can carry out its business operations with certainty. Of the top 100 investment managers by assets under management, 72 are connected to SWIFT. Our role is two-fold. We provide the platform, products and services that allow our customers to connect and exchange financial information securely and reliably. We also act as the catalyst that brings the financial community together to work collaboratively to shape market practice, define standards and consider solutions to issues of mutual concern and interest History and Evolution In 1973, banks communicated via telex - not very secure, minimum standards and little if any automation. So 239 banks from 15 countries formed a co-operative to automate the telex. They called it SWIFT. Their vision was to possibly harness emerging computer technology and manoeuvre around the telecommunications monopolies to send standardised financial messages between themselves, securely and reliably. They hoped one day that the daily messages would grow to 300,000 each day. Today we demonstrate the success of their vision and courage. SWIFT has more than 8,700 members and participants in 209 countries, and daily message volumes regularly exceed 15 million. The table below provides some of the highlights of SWIFT s history over the past 35 years. Year Users Countries Messages Highlights SWIFT is established million First live message million The first Sibos is held in Brussels , million Introduction of message text standards for certain interbank securities transactions , million Broker/dealers, exchanges, central depositories and clearing institutions allowed to join SWIFT , million Securities traffic (the new Category 5 messages) represents 2% of total message traffic

115 108 Year Users Countries Messages Highlights , million IMs become eligible to join SWIFT , million Bank of England selects SWIFT as one of two network providers for CREST (UK central securities depository) , million Electronic Trade Confirmation providers become eligible to join SWIFT , million SWIFT announces the Next Generation programme, based on a new, highly secure, extremely reliable IP network , million The SWIFT Board transforms the Securities Board Task Force into the Securities Steering Council (IMs are invited to join the Council) ISO approves the new draft securities message standard ISO Proxy Voting agencies become eligible to join SWIFT , billion Securities traffic represents 21% of total message traffic , billion Insurance companies and government institutions carrying out an IM role become eligible to join SWIFT , billion Fund Administrators are eligible to join SWIFT , billion Migration from ISO 7775 securities message standard to the new ISO standard is completed SWIFT develops a new XML message based solution for investment funds SWIFT launches the FIX service , billion Community migrates to SWIFTNet IP platform , billion FIN securities traffic peak of 4 million messages on 1 December Dismantling our X.25 network , billion Corporates become eligible to join SWIFT FpML on SWIFTNet Banks start SEPA testing SWIFTNet Phase 2 kicks off Giovannini Barrier 1

116 109 Year Users Countries Messages Highlights , billion Regulators become eligible to join SWIFT Q , >3.2 billion 10.3 Sibos ISibos is the world s premier financial services forum, attracting the industry s leading figures and firms. Sibos draws over 8,000 participants from the financial industry, and some 200 application and middleware vendors, system integrators and consultants. It takes place annually, typically a week in September or October, at a different venue around the world. Sibos brings to the fore issues that are challenging the financial services industry, now and in the future new technologies, new processes, new client expectations, new and unexpected alliances and ever-growing pressures for greater efficiency and security. One of the key advantages of Sibos is the ample opportunity attendees have to network. Sibos delegates cover the range of financial markets and IT, making them the ideal audience for focused marketing activities. IMs, broker-dealers, custodians, treasury specialists, banks, and operations professionals, all see Sibos as an excellent investment in time. The securities industry has taken an increasingly high profile role at Sibos. In recent years we have seen a rising number of IMs represented at Sibos, not only in terms of attendance, but also in terms of participation on various panel discussions and as keynote speakers.

117 Appendix

118 111 A. Details of standardised messaging A.1. FIN Standards Category 1 Customer Payments & Cheques Customer payments are made using the Category 1 messages. These deal with payments, or information about payments, in which the ordering party or the beneficiary, or both, are not financial institutions. MT MT Name Purpose 101 Request for Transfer Requests to debit a customer s account held at another institution 101 / 102+ Multiple Customer Credit Transfer Conveys multiple payment instructions between financial institutions 103 / 103+ Single Customer Credit Transfer Instructs a funds transfer 103 REMIT 104 Direct Debit and Request for Conveys direct debit instructions and Debit Transfer Message requests for direct debits between financial institutions 105 EDIFACT Envelope An envelope which conveys a 2k EDIFACT message 107 General Direct Message To order the debit of a debtor s account and to collect payment from this account 110 Advice of Cheque(s) Advises or confirms the issuance of a cheque to the drawee bank 111 Request for Stop Payment of Requests the drawee bank to stop a Cheque payment of a cheque 112 Status of a Request for Stop Indicates action(s) taken in attempting Payment of a Cheque to stop payment of a cheque Messages most used by investment managers: Request for transfer - MT 101 Investment Manager Single customer credit transfer - MT 103 Financial Institution

119 112 MT 101 Request for Transfer This message is sent by a financial institution on behalf of a non-financial institution account owner, i.e. the ordering customer / instructing party, and is subsequently received by the receiving financial institution and processed by the receiving financial institution or the account servicing financial institution. It is used to move funds from the ordering customer s account(s) serviced at the receiving financial institution or at the account servicing institution, or from an account(s) owned by the ordering customer whom the instructing customer has explicit authority to debit, e.g. a subsidiary account. The MT 101 can be used to order the movement of funds: between ordering customer accounts, or in favour of a third party, either domestically or internationally. MT 103 Single Customer Credit Transfer This message type is sent by or on behalf of the financial institution of the ordering customer, directly or through (a) correspondent(s), to the financial institution of the beneficiary customer. It is used to convey a funds transfer instruction in which either the ordering customer, the beneficiary customer, or both, are non-financial institutions from the perspective of the Sender. Category 2 Financial Institution Transfers Financial institution transfers are made using the Category 2 messages. These deal with payments, or information about payments, in which all parties in the transaction are financial institutions. The flows shown in this section represent the main use of each message. MT MT Name Purpose 200 Financial Institution Transfer for Requests the movement of the Sender s its Own Account funds to its account at another financial institution 201 Multiple Financial Institution Multiple of the MT 200 Transfer for its Own Account 202 General Financial Institution Requests the moment of funds between Transfer financial institutions 203 Multiple General Financial Multiple of the MT 202 Institution Transfer 204 Financial Markets Direct Claims funds from SWIFT member banks Debit Message 205 Financial Institution Transfer Futher transmits a transfer request domestically Execution

120 113 MT MT Name Purpose 207 Request for Financial Requests to debit an ordering financial Institution Transfer institution s account held at the receiving financial institution or the account servicing financial institution 210 Notice to Receive Notifies the Receiver that it will receive funds for the Sender s account 256 Advice of Non-Payment of Cheques Informs the Sender of one or more nonpayments of one or more truncated cheques. It may also be used to specify dishonoured items that result in reversing a previous payment settlement Messages most used by investment managers: Financial Institution Transfer for its Own Account - MT 200 Multiple Financial Institution Transfer for its Own Account - MT 201 General Financial Institution Transfer - MT 202 Investment Manager Multiple General Financial Institution Transfer - MT 203 Financial Institution Transfer Execution - MT 205 Request for Financial Institution Transfer - MT 207 Financial Institution Notice to Receive - MT 210 MT 200 Financial Institution Transfer for its Own Account This message type is sent by an account owner to one of its account servicing institutions. It is used to request the movement of funds from an account that the Receiver services for the Sender to an account that the Sender has, in the same currency, with another financial institution. MT 201 Multiple Financial Institution Transfer for its Own Account This multiple message type is sent by an account owner to one of its account servicing institutions. It is used to request the movement of funds from an account that the Receiver services for the Sender to several accounts that the Sender has, in the same currency, with other financial institutions.

121 114 MT 202 General Financial Institution Transfer This message is sent by or on behalf of the ordering institution directly, or through correspondent(s), to the financial institution of the beneficiary institution. It is used to order the movement of funds to the beneficiary institution. This message may also be sent to a financial institution servicing multiple accounts for the Sender to transfer funds between these accounts. In addition it can be sent to a financial institution to debit an account of the Sender, serviced by the Receiver, and to credit an account, owned by the Sender at a specified institution. MT 203 Multiple General Financial Institution Transfer This multiple message is sent by or on behalf of the ordering institution directly, or through correspondent(s), to the financial institution(s) of several beneficiary institution(s). The message contains several transactions. It is used to order the movement of funds to each beneficiary institution. This message may also contain order(s) for the movement of the Sender s own funds in favour of itself. This is the case when the Receiver services multiple accounts for the Sender and the funds are to be transferred between these accounts. In addition, it can also be sent to a financial institution to debit an account of the Sender serviced by the Receiver and to credit an account owned by the Sender at a specified institution. MT 205 Financial Institution Transfer Execution This message is sent by the Receiver of a category 2 transfer message, i.e. MT 200, 201, 202, 203 or 205, directly or through correspondent(s), to another financial institution located in the same country as the Sender. It is used to further transmit a funds transfer instruction domestically. MT 207 Financial Institution Transfer This message is used to move funds from the ordering financial institution s account, serviced at the receiving financial institution or at the account servicing institution, or from an account(s) owned by the ordering institution for which the initiating institution has explicit authority to debit, eg, a subsidiary account. MT 210 Notice to Receive This message type is sent by an account owner to one of its account servicing institutions. It is an advance notice to the account servicing institution that it will receive funds to be credited to the Sender s account.

122 115 Category 3 Treasury Markets - Foreign Exchange, Money Markets and Derivatives MT MT Name Purpose 300 Foreign Exchange Confirmation Confirms information agreed to in the buying/selling of two currencies 303 Forex/Currency Option Allocation Instructs the allocation of a block Instruction trade (forex or currency option) 304 Advice/Instruction of a Third Party Advises of or instructs settlement of a Deal third party foreign exchange deal 305 Foreign Currency Option Confirms information agreed to in the Confirmation buying and selling of vanilla options on currencies 306 Foreign Currency Option Confirms information agreed to in the Confirmation buying and selling of exotic options on currencies 307 Advice/Instruction of a Third Advises of or instructs settlement of a Party FX Deal third party foreign exchange deal 320 Fixed Loan/Deposit Confirmation Confirms the terms of a contract relative to a fixed loan/deposit transaction 321 Instruction to Settle a Third Party Advises the trade details and instructs the Loan/Deposit the settlement of a fixed term loan/ deposit done with a third party financial institution 330 Call/Notice Confirms the terms of a contract relative to Loan/Deposit Confirmation to a call/notice loan/deposit transaction 340 Forward Rate Agreement Confirms the details of a forward rate agreement Confirmation 341 Forward Rate Agreement Confirms the settlement details of a forward Settlement Confirmation rate agreement 350 Advice of Loan/Deposit Advises of a loan/deposit interest payment Interest Payment 360 Single Currency Interest Rate Confirms the details of a single currency Derivative Confirmation interest rate derivative swap, cap, collar or floor 361 Cross Currency Interest Rate Confirms the details of a cross currency Swap Confirmation interest rate swap transaction 362 Interest Rate Reset/Advice Confirms or advises the reset rates of the floating of Payment interest rate(s) in a single or cross-currency interest rate derivative transaction and/or the payment of interest at the end of an interest period

123 116 MT MT Name Purpose 364 Single Currency Interest Rate Confirms the details of the partial or Derivative Termination/ full termination or recouponing of Recouponing Confirmation a single currency interest rate swap, cap, collar or floor 365 Cross Currency Interest Rate Confirms the details of the partial or Swap Termination/ full termination or recouponing of Recouponing Confirmation a cross currency interest rate swap 380 Foreign Exchange Order Orders to purchase or sell a specific amount of a certain currency 381 Foreign Exchange Order Confirms the execution of an FX Order Confirmation previously sent Category 3 - Post-trade/Pre-settlement: Foreign Exchange MT 300 Foreign Exchange Confirmation - This message is exchanged by or on behalf of the institutions who have agreed to a foreign exchange contract. This message may also be sent by a money broker to the two parties for which the broker arranged the deal. The message is also used when confirming deals settling through CLS. Confirm details of a new contract Confirm an exercised foreign currency option Investment Manager or CLS Confirm an amendment to a previously sent confirmation Cancel a previously sent confirmation Broker / Dealer or CLS MT 303 Forex / Currency Option Allocation Instruction - This message is sent by an instructing party (e.g. IM) to an executing broker to instruct the allocation of either a block foreign exchange trade or a block currency option. The MT 303 contains both the terms of the block trade and the individual allocations. The executing party will reply by sending separate MT 300 Foreign Exchange Confirmations confirming each individual allocation. Instruct the allocation of a deal Cancel / amend block trade and set of allocations Investment Manager Amend a number of individual allocations Broker / Dealer

124 117 MT 304 Advice / Instruction of a Third Party Deal - This message is sent by an IM to a custodian bank as an advice of / instruction to settle a third party foreign exchange deal. It is also used for deals settling through CLS. Advice / instruction to settle third party FX deal Amend a previously sent advice / instruction Investment Manager Cancel a previously sent advice / instruction Custodian or CLS MT 307 Advice / Instruction of a Third Party FX Deal - This message is sent by an IM to a custodian bank as an advice of / instruction to settle a third party foreign exchange deal. It is a newer, ISO version of the MT 304 message. Advice of details of a new deal Instruction to settle a deal Investment Manager Cancel a previously sent advice / instruction Custodian MT 380 Foreign Exchange Order - This message type is sent by an IM to a custodian bank as an order to purchase or sell a specific amount of a certain currency. Order to buy / sell specific amount of foreign currency Investment Manager Copy an order sent by other means ( e.g. fax ) Custodian

125 118 MT 381 Foreign Exchange Order Confirmation - This message type is sent by a custodian bank to an IM to confirm the execution of a FX Order previously sent by the fund manager. Confirm execution of foreign exchange order Cancel a previously sent confirmation Investment Manager Copy an order sent by other means ( e.g. fax ) Custodian Category 3 - Post-trade/Pre-settlement: Money markets MT 320 Fixed Loan / Deposit Confirmation - This message is exchanged to confirm a fixed term loan / deposit contract. This message is exchanged by or on behalf of the institutions who have agreed to a fixed term loan / deposit contract. A money broker may also send this message to the two parties for which he arranged the deal. It is typically followed by the MT 321 message (see below). Confirm / notify details of a contract Amend a previously agreed contract Cancel a previously sent confirmation Investment Manager Confirm / notify a rolled over / renewed contract Confirm / notify the maturity of a contract Broker / Dealer MT 321 Instruction to Settle a Third Party Loan / Deposit - This message is sent by an IM to the fund s custodian to advise the trade details and instruct the settlement of a fixed term loan / deposit done with a third party financial institution. It typically follows the MT 320 message (see above). Notify / instruct to settle a new contract Notify of a rollover / renovation of a contract Investment Manager Notify the maturity of a contract Cancel a previously sent instruction Custodian

126 119 MT 330 Call / Notice Loan / Deposit Confirmation - This message is exchanged to confirm a call / notice loan / deposit contract. It is sent by or on behalf of the institutions that have agreed to a call / notice loan / deposit contract. Confirm / notify details of a contract Amend / cancel a previously agreed contract Increase / decrease in account balnace of a contract Investment Manager Notify changes in interest rate / period of notice Notify the closing of a contract (final redemption) Broker / Dealer MT 350 Advice of Loan / Deposit Interest Payment - It is used to inform that an interest amount has been paid to the account of the beneficiary with the receiving agent mentioned in the message. It is sent by or on behalf of the institution who has borrowed cash from another institution. Notification of interest payment Amend a previously sent advice Investment Manager Cancel a previously sent advice Broker / Dealer Category 3 - Post-trade/Pre-settlement: OTC Derivatives MT 303 Forex / Currency Option Allocation Instruction - This message is sent by an instructing party (e.g. IM) to an executing broker to instruct the allocation of either a block foreign exchange trade or a block currency option. The MT 303 contains both the terms of the block trade and the individual allocations. The executing party will reply by sending separate MT 300 Foreign Exchange Confirmations confirming each individual allocation. Instruct the allocation of a deal Cancel / amend block trade and set of allocations Investment Manager Amend a number of individual allocations Broker / Dealer

127 120 MT 305 Foreign Currency Option Confirmation - This message type is exchanged between the financial institutions that have agreed to a foreign currency option contract. It is used to confirm the details of: a new contract between the parties an amendment to a previously agreed contract the cancellation of a confirmation the surrender of an option by the buyer (holder) to the seller (grantor) for compensation. Confirm details of a new contract Surrender of an option for compensation Investment Manager Confirm an amendment to a previously sent confirmation Cancel a previously sent confirmation Broker / Dealer MT 306 Foreign Currency Option Confirmation - This message is exchanged to confirm a foreign currency option contract. The confirmed transaction is covered by an ICOM (International Currency Option Master from the British Bankers Association), ISDA (International Swaps and Derivatives Association), Deutsche Rahmenvertrag, IFEMA, FEOMA or AFB (Association Française de Banques) Master Agreement. These agreements are either signed or under negotiation. The message also caters for deals that are not covered by the above agreements. The message is used to confirm / notify the details of: a new contract between the parties, an amendment to a previously agreed contract, the cancellation of a confirmation, a trigger event: knock-in / knock-out of an option, hitting of a trigger level, the close out of an option. This message is exchanged by or on behalf of the institutions who have agreed to a foreign currency option contract. A money broker may also send this message to the two parties for which he arranged the deal. Confirm / notify details of a contract Amend a previously agreed contract Investment Manager Cancel a previously sent confirmation Trigger event: knock-in, knock-out, hitting trigger level Close out an option Broker / Dealer

128 121 MT 340 Forward Rate Agreement Confirmation - This message is exchanged by or on behalf of the institutions or corporates, who have agreed to a forward rate agreement (FRA). The confirmed transaction is covered by an ISDA, Deutscher Rahmenvertrag für Finanztermingeschäfte, FRABBA (British Bankers Association) or AFB Master Agreement. These agreements are either signed or under negotiation. A money broker may also send this message to the two parties for which he arranged the deal. The message is used to confirm / notify the details of: a new contract between the parties an amendment to a previously agreed contract the cancellation of a confirmation. Confirm / notify details of a new contract Amend a previously agreed contract Investment Manager Cancel a previously sent confirmation Broker / Dealer MT 341 Forward Rate Agreement Settlement Confirmation - This message is exchanged by or on behalf of the institutions that have agreed to a forward rate agreement (FRA). It is used to confirm the settlement details of the forward rate agreement when the settlement rate has been fixed on the fixing date. Confirm settlement details of a new contract Amend a previously agreed settlement message Investment Manager Cancel a previously sent settlement message Broker / Dealer MT 360 Single Currency Interest Rate Derivative Confirmation - This message is exchanged by or on behalf of the institutions, which have agreed to a single currency interest rate swap, a cap, a collar or a floor. The confirmed transaction is covered by a BBAIRS (British Bankers Association Interest Rate Swap), ISDA, Deutscher Rahmenvertrag für Finanztermingeschäfte or AFB Master Agreement. The message also covers deals which are not part of the above agreements, in which case, the two parties must have another bilateral agreement in place. It may also be sent by a money broker to the two parties for which the broker arranged the deal. The MT 360 is used to confirm the details of a new transaction between the parties.

129 122 Confirm details of a new transaction Investment Manager Amend a previously sent confirmation Cancel a previously sent confirmation Broker / Dealer MT 361 Cross Currency Interest Rate Swap Confirmation - This message is exchanged by or on behalf of the institutions who have agreed to a cross currency interest rate swap covered by a BBAIRS, Deutscher Rahmenvertrag für Finanztermingeschäfte or an ISDA Master Agreement. The message also covers deals which are not part of the above agreements, in which case, the two parties must have another bilateral agreement in place, except under AFB Master (until the AFB does define the interbank confirmation for cross currency swaps, the MT 361 cannot be used to confirm such transactions). This message may also be sent by a money broker to the two parties for which the broker arranged the deal. The message is used to confirm the details of a new transaction between the parties. Confirm details of a new transaction Amend a previously sent confirmation Investment Manager Cancel a previously sent confirmation Broker / Dealer MT 362 Interest Rate Reset / Advice of Payment - This message is exchanged by or on behalf of the financial institutions, who have agreed to a single or cross currency interest rate derivative transaction, including caps, collars and floors. This message may be used to: advise the details of the determination of the floating interest rate(s) advise the details of the payment of interest at the end of an interest period Advise details of the determination of floating rate interest Advise details of payment of interest at end of interest period Investment Manager Cancel / amend a previously sent reset / advice Broker / Dealer

130 123 MT 364 Single Currency Interest Rate Derivative Termination / Recouponing Confirmation - This message is exchanged by or on behalf of the institutions who have agreed to the termination, partial termination or recouponing of a single currency interest rate swap, a cap, a collar or a floor. The terminated / recouponed transaction is covered by a BBAIRS, ISDA or AFB or another bilateral agreement. This message may be used to: confirm the details of the partial or full termination of an existing transaction confirm the details of the recouponing of an existing transaction Confirm details of partial / full termination of transaction Confirm details of recouponing of transaction Investment Manager Cancel / amend a previously sent termination / recouponing Broker / Dealer MT 365 Cross Currency Interest Rate Swap Termination / Recouponing Confirmation - This message is exchanged by or on behalf of the institutions who have agreed to the termination, partial termination or recouponing of a cross currency interest rate swap. The terminated / recouponed transaction is covered by a BBAIRS, ISDA or another bilateral agreement. The message may be used to: confirm the details of the partial or full termination of an existing transaction confirm the details of the recouponing of an existing transaction Confirm details of partial / full termination of transaction Confirm details of recouponing of transaction Investment Manager Cancel / amend a previously sent termination / recouponing Broker / Dealer

131 124 Category 5 Securities Markets MT MT Name Purpose 500 Instruction to Register Instructs the registration, deregistration or reregistration of a financial instrument at the registration provider 501 Confirmation of Registration or Confirms the registration, deregistration or Modification reregistration of a beneficial owner or shareholder with the registration provider 502 Order to Buy or Sell Instructs the purchase or sale of a given quantity of a specified financial instrument under specified conditions 503 Collateral Claim Requests new or additional collateral, or the return or recall of collateral 504 Collateral Proposal Proposes new or additional collateral 505 Collateral Substitution Proposes or requests the substitution of collateral held 506 Collateral and Exposure Statement Provides the details of the valuation of both the collateral and the exposure 507 Collateral Status and Processing Advises the status of a collateral claim, a Advice collateral proposal, or a proposal/request for collateral substitution 508 Intra-Position Advice Reports on the movement of securities within the holding 509 Trade Status Message Provides information on the status of a previously executed trade 510 Registration Status and Advises the status of a registration Processing Advice instruction or modification 513 Client Advice of Execution Provides brief and early information about a securities deal, e.g. a block trade that is to be allocated before final confirmation 514 Trade Allocation Instruction Instructs the allocation of a block trade 515 Client Confirmation of Purchase Provides a detailed accounting of financial or sale instruments purchased or sold by the Sender on behalf of the Receiver or its client. It may also convey the payment details of the purchase or sale. It may also be sent by, or via, an ETC service provider 516 Securities Loan Confirmation Confirms the details of a securities loan, including collateral arrangements. It may also confirm the details of a partial recall or return of securities previously out on loan 517 Trade Confirmation Affirmation Positively affirms the details of a previously received confirmation/contract note 518 Market-Side Securities Trade Confirms the details of a trade and where Confirmation necessary, its settlement to a trading counterparty

132 125 MT MT Name Purpose 519 Modification of Client Details instructs the modification of client details at the registration provider 524 Intra-Position Instruction Instructs the movement of securities within the holding 526 General Securities Lending/ Requests the borrowing of securities or notifies Borrowing Message the return or recall of securities previously out on loan. It may also be used to list securities available for lending 527 Triparty Collateral Instruction Performs a specific action on a collateral management transaction 530 Transaction Processing Command Requests the modification of a processing indicator or other non-matching information 535 Statement of Holdings Reports at a specified time, the quantity and identification of securities and other holdings which the account servicer holds for the account owner 536 Statement of Transactions Provides details of increases and decreases of holdings which occurred during a specified period 537 Statement of Pending Transaction Provides details of pending increases and decreases in securities within the holding during a specified period 538 Statement of Intra-Position Advices Provides details of increases and decreases in securities within the holding during a specified period 540 Receive Free Instructs a receipt of financial instruments free of payment. It may also be used to request a cancellation or pre-advise an instruction 541 Receive Against Payment Instructs a receipt of financial instruments against payment. It may also be used to request a cancellationor pre-advise an instruction 542 Deliver Free Instructs a delivery of financial instruments free of payment. It may also be used to request a cancellation or pre-advise an instruction 543 Deliver Against Payment Instructs a delivery of financial instruments against payment. It may also be used to request a cancellation or pre-advise an instruction 544 Receive Free Confirmation Confirms a receipt of financial instruments free of payment. It may also be used to cancel or reverse a confirmation 545 Receive Against Payment Confirms a receipt of financial instruments against Confirmation payment. It may also be used to cancel or reverse a confirmation

133 126 MT MT Name Purpose 546 Deliver Free Confirmation Confirms a delivery of financial instruments free of payment. It may also be used to cancel or reverse a confirmation 547 Deliver Against Payment Confirms a delivery of financial instruments against Confirmation payment. It may also be used to cancel or reverse a confirmation 548 Settlement Status and Advises the status of a settlement instruction Processing Advice or replies to a cancellation request 549 Request for Settlement/ Requests a statement or a status message Status Advice 558 Triparty Collateral Status and Provides validation results and status advice and Processing Advice re collateral instructions and proposed collateral movements 559 Paying Agent s Claim Claims reimbursement of income or redemption proceeds, or a combination of both 564 Corporate Action Notification Provides an account owner with details of a corporate action event and the choices available to the account owner. It also provides the account owner with details on the impact a corporate action event will have on a safekeeping or cash account, e.g. entitlement calculation 565 Corporate Action Instruction Instructs the custodian on the investment decision made by an account owner relative to a corporate action event 566 Corporate Action Confirmation Confirms to the account owner that securities and/or cash have been credited/debited to an account as a result of a corporate action event 567 Corporate Action Status and Indicates the status, or change in status, of a Processing Advice corporate action-related transaction previously instructed by, or executed on behalf of, the account owner 568 Corporate Action Narrative Provides complex instructions or narrative details relating to a corporate action event 569 Triparty Collateral and Exposure Provides the details of the valuation of both the Statement collateral and the exposure 574 IRS 1441 NRA-IRS Provides owner or pooled income information Beneficial Owners List for a period of time arranged between the intermediary and the withholding agent 574 IRS 1441 NRA-Form W8-BEN Certifies the foreign status of a beneficial owner for United States tax withholding 575 Report of Combined Activity Reports on all securities and cash activity for a given combination of safekeeping and cash accounts

134 127 MT MT Name Purpose 576 Statement of Open Orders Provides details of orders to buy or to sell financial instruments, as at a specified date, which have been accepted by the Sender, but which have not yet been executed 577 Statement of Numbers Provides certificates numbers of securities 578 Statement Allegement Advises the account owner that a counterparty has alleged a settlement instruction on the? account owner s account 579 Certificate Numbers Replaces or supplements the certificate numbers field in a primary message, e.g. MT Collateral Adjustment Message Claims or notifies a change in the amount of collateral held against securities out on loan or for other reasons 586 Statement of Settlement Provides details of pending settlement allegements Allegements Category 5 - Pre-trade / Trade: FIN These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Broker / Dealer) to instruct a buy or sale of a security, to provide the status of the trade, and to confirm the trade between the two parties. MT 502 Order to Buy or Sell - To instruct the purchase or sale of a given quantity of a particular financial instrument. Order to buy or sell Request cancellation of previous order Investment Manager Replace previously sent order Duplicate an order Broker / Dealer MT 509 Trade Status - To indicate the status of a particular trade. Advise status of Trade Cancel previously sent advise of status Investment Manager Reject previously received message Broker / Dealer

135 128 MT 513 Client Advice of Execution - To provide brief and early information to the Instructing Party about a deal executed at its instruction. This advice of execution applies to a deal that cannot yet be fully confirmed (e.g. a block trade which is to be allocated). Advice of execution Resend and advice previously sent Investment Manager Cancel previously sent advice of execution Broker / Dealer Category 5 - Post-trade / Pre-settlement MT 514 Trade Order Allocation - To instruct the allocation of a block trade. Each message can only contain one allocation. Settlement details are optional and can be provided where standing instructions do not apply, or are not available. Instruct allocation of block trade Request cancellation of previous allocation instruction Investment Manager Provide pre-allocation details linked to an order Duplicate an allocation previouslt sent Broker / Dealer MT 515 Client Confirmation of Purchase or Sale - To confirm the details of a purchase or sale. It is also used to provide details on the payment side of the transaction. Where legally accepted, this message serves as a binding electronic contract note. Confirm details of purchase or sale Request cancellation of previous client confirmation Investment Manager Duplicate a confirmation previously sent Executing Party

136 129 MT 517 Trade Confirmation Affirmation - To positively affirm the details of a previously received confirmation or contract note. The trade confirmation details that are affirmed bind the Sender and Receiver. Positive affirmation of previously received confirmation Investment Manager Executing Party Confirmation This is sent by the executing party to the IM to confirm the booking of a trade at the individual account level. Confirm booking of trade at account level Cancel previously sent confirm Investment Manager Replace previously sent confirm Executing Party Confirmation Ack This is sent by the IM to the executing party to affirm or reject the confirmation message. Affirm confirmation of allocation Investment Manager Reject previously sent affirm Broker / Dealer Allocation Instruction This is sent by the IM to the executing party, and follows up New Order before or after the trade is filled. It is used to indicate how a trade is allocated into specific accounts. Acknowledge receipt of allocation instruction Investment Manager Report errors in allocation instruction Broker / Dealer

137 130 Category 5 - Clearing and Settlement These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Custodian) or service provider (e.g. electronic trade confirmation provider) to provide settlement instructions, and confirmations of settlement. MT 508 Intra-Position Advice - To confirm the increase or decrease in the number of securities of a certain status within a holding (e.g. movements from one sub-balance to another sub-balance within the same account). Intra-position advice Intra-position confirmation Investment Manager Request cancellation of previously sent advice Duplicate an advice previously sent Custodian MT 524 Intra-Position Instruction - To instruct the movement of securities within the holding (e.g. re-registration of securities from one sub-balance to another sub-balance). Instruct intra-position movement of securities Request cancellation of previously sent instruction Investment Manager Duplicate an instruction previously sent Custodian MT 540 Receive Free Instruction - To instruct the receipt of financial instruments, free of payment, from a specified party. Instruct receipt of securities free of payments Pre-advise of a forthcoming instruction Investment Manager Request cancellation of previously sent instruction Duplicate an instruction previously sent Custodian

138 131 MT 541 Receive Against Payment Instruction - To instruct the receipt of financial instruments, against payment, from a specified party. Instruct receipt of securities against payments Pre-advise of a forthcoming instruction Investment Manager Request cancellation of previously sent instruction Duplicate an instruction previously sent Custodian MT 542 Deliver Free Instruction - To instruct a delivery of financial instruments, free of payment, to a specified party. Instruct receipt of securities free of payments Pre-advise of a forthcoming instruction Investment Manager Request cancellation of previously sent instruction Duplicate an instruction previously sent Custodian MT 543 Delivery Against Payment Instruction - To instruct a delivery of financial instruments, against payment, to a specified party. Instruct receipt of securities «against payments» Pre-advise of a forthcoming instruction Investment Manager Request cancellation of previously sent instruction Duplicate an instruction previously sent Custodian MT 544 Receive Free Confirmation - To confirm a receipt of financial instruments, free of payment, from a specified party. Instruct receipt of securities «against payments» Pre-advise of a forthcoming instruction Investment Manager Request cancellation of previously sent instruction Duplicate an instruction previously sent Custodian

139 132 MT 545 Receive Against Payment Confirmation - To confirm the receipt of financial instruments against payment from a specified party. Confirm a receipt of securities «against payments» Pre-confirm a receipt of securities «against payments» Confirm partial settlement Investment Manager Request cancellation of previously sent confirmation Duplicate a confirmation previously sent Custodian MT 546 Deliver Free Confirmation - To confirm a delivery of financial instruments, free of payment, from a specified party. Confirm a delivery of securities «free of payments» Pre-confirm a delivery of securities «free of payments» Confirm partial settlement Investment Manager Request cancellation of previously sent confirmation Duplicate a confirmation previously sent Custodian MT 547 Deliver Against Payment Confirmation - To confirm a delivery of financial instruments against payment to a specified party. Confirm a delivery of securities «against payments» Pre-confirm a delivery of securities «against payments» Confirm partial settlement Investment Manager Request cancellation of previously sent confirmation Duplicate a confirmation previously sent Custodian

140 133 MT 548 Settlement Status and Processing Advice - To advise the status of a settlement instruction, or as a reply to a cancellation request previously sent by the Account Owner. Advice status of a previously received instruction Report on future settlement or forward transaction Investment Manager Request cancellation of previously sent advice Duplicate a statement previously sent Custodian MT 578 Settlement Allegement - To advise the Account Owner that a Counterparty has alleged a settlement instruction against the Account Owner s account with the Account Servicer, and that the Account Servicer could not find the corresponding instruction from the Account Owner. Settlement allegement Request cancellation of a previously sent allegement Investment Manager Duplicate a settlement allegement previously sent Custodian Category 5 - Securities Reporting These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Custodian) to provide details of activity and holdings in an account. MT 535 Statement of Holdings - To report on the quantity and identification of securities and other holdings which the Account Servicer holds for the Account Owner at a specified moment in time. Statement of holdings Request cancellation of a previously sent statement Investment Manager Duplicate a statement previously sent Custodian MT 536 Statement of Transactions - To provide the details of any increases and / or decreases of holdings, which may have occurred over a specified period of time, for all, or a selected quantity of securities in the requested safekeeping account which the Account Servicer holds for the Account Owner.

141 134 Statement of transactions Investment Manager Request cancellation of a previously sent statement Duplicate a statement previously sent Custodian MT 537 Statement of Pending Transactions - To provide the Account Owner with the details of pending increases and / or decreases in the quantity of holdings, at a specified moment in time. The message may contain details for all, or a selected quantity of securities for a specified safekeeping account. It may also give all, or a selected number of reasons why the transaction is pending. Statement of pending transactions Request cancellation of a previously sent statement Investment Manager Duplicate a statement previously sent Custodian MT 538 Statement of Intra-Position Advices - To provide the Account Owner with the details of any intra-position transfers (movement of securities within a holding) for a specified period of time, for all, or selected securities in a specified safekeeping account. Statement of intra-position advices Request cancellation of a previously sent statement Investment Manager Duplicate a statement previously sent Custodian

142 135 MT 549 Request for Statement / Status Advice - To request a statement or status messages (e.g. MT 509, 535, 536, 537, 538, 575, 576, 584, 586, 589). The request for a statement / status advice can be used as a query message to gather information for one account, at a given date or period of time. Request for statement / status advice Investment Manager Custodian MT 575 Report of Combined Activity - To report on all securities and cash activity for a given combination of safekeeping and cash accounts. This message is intended to provide a summary of all cash and securities activity for a given safekeeping account linked to one (or multiple) cash accounts, or for a given cash account linked to multiple safekeeping accounts. Statement of combined activity Request cancellation of a previously sent statement Investment Manager Duplicate a statement previously sent Custodian MT 576 Statement of Open Orders - To identify orders which have not yet been fully executed. Send a statement Request cancellation of a previously sent statement Investment Manager Duplicate a statement previously sent Broker / Dealer

143 136 MT 586 Statement of Settlement Allegements - To provide the details of pending settlement allegements, for all or selected securities in a specified safekeeping account, for a given point in time. Statement of pending settlement allegements Request cancellation of a previously sent statement Investment Manager Duplicate a statement previously sent Custodian Category 5 - Corporate Actions / Entitlements These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Custodian) to provide details of corporate actions affecting a particular account, and instructions on voluntary events. Corporate Action Notification - MT 564 Corporate Action Instruction - MT 565 Investment Manager Corporate Confirmation - MT 566 Corporate Action Status & Processing Advice - MT 567 Corporate Action Narrative - MT 568 Custodian MT 564 Corporate Action Notification - To provide an Account Owner with the details of a corporate action event. It may also include possible elections or choices available to the Account Owner. The MT 564 can initially be sent as a preliminary advice, and subsequently replaced by another MT 564 with complete or confirmed information. The message will also be used to provide the Account Owner with a calculation of the impact a corporate action event will have on a safekeeping, or cash, account. Preliminary notification Replace a previously sent notification Investment Manager Request cancellation of previous notification Withdrawal of offer or event Replace a previously sent notification with entitlement Custodian Reminder of deadline Duplicate of notification previously sent

144 137 MT 565 Corporate Action Instruction - To provide the Account Servicer with instructions on how the Account Owner wishes to proceed with a corporate action event. Instructions include investment decisions regarding the exercise of rights issues, the election of stock, or cash, when the option is available, and decisions on the conversion or tendering of securities. Corporate Action Instruction Request cancellation of previous instruction Investment Manager Replace a previously sent instruction Duplicate of instruction previously sent Custodian MT 566 Corporate Confirmation - To confirm to the Account Owner that securities and / or cash have been credited / debited to an account, as the result of a corporate action event. Corporate Action confirmation Reverse a previously sent confirmation Investment Manager Duplicate a confirmation previously sent Custodian MT 567 Corporate Action Status & Processing Advice - To advise the status, or a change in status, of a corporate-action-related transaction previously instructed by, or executed on behalf of, the Account Owner. Advise status of corporate action Investment Manager Duplicate an advice previously sent Custodian MT 568 Corporate Action Narrative - To provide complex instructions or narrative details relating to a corporate action event. Corporate action narrative Cancel a previously Corporate action narrative Investment Manager Duplicate a previously Corporate action narrative Custodian

145 138 Category 5 - Collateral Management - Bi-lateral Margin Calls Collateral Claim return - MT 503 Claim new/additional - MT 503 Response Collateral proposal - MT 504 Collateral Taker Collateral Status and Processing Advice (Response) - MT 507 Collateral adminstration Collateral Substitution - MT 505 Collateral Giver Collateral and Exposure Statement - MT 506 Copy to third party Copy to third party MT 503 Collateral Claim - This message is sent either by the collateral taker to the collateral giver, or vice versa by the collateral giver to the collateral taker. When sent by the taker, it is used to request new collateral at the initiation of an exposure, and / or request additional collateral. When sent by the giver, it is used to request the return of collateral, and / or recall the collateral upon the termination of an underlying exposure. MT 504 Collateral Proposal - This message is sent by the collateral giver to the collateral taker to propose new collateral at the initiation of an exposure, and / or propose additional collateral at variation of exposure. MT 505 Collateral Substitution - This message is sent by the collateral giver to the collateral taker to propose the substitution of collateral held. This message is also sent by the collateral taker to the collateral giver to request the substitution of collateral held. MT 506 Collateral And Exposure Statement - This message is sent either by the collateral giver to the collateral taker, or by the collateral taker to the collateral giver. It is used to provide the details of the valuation of both the collateral and the exposure. MT 507 Collateral Status and Processing Advice - This message is sent by the Receiver of a collateral claim, a collateral proposal or a proposal / request for collateral substitution. It is used to advise the status of the received message. It may also be used to:

146 139 reject or accept a claim, proposal, or the proposal / request of a collateral substitution advise the settlement details of proposed collateral Category 5 - Collateral Management - Triparty Triparty Collateral Instruction - MT 527 Triparty Collateral Status and Processing - MT 558 Collateral Taker/ Triparty Collateral and Exposure Statement - MT 569 Try party Agent Giver Copy to third party Copy to third party MT 527 Tri-party Collateral Instruction - This message is sent by a trading party to its tri-party agent as instruction to perform a specific action on a collateral management transaction. MT 558 Tri-party Collateral Status And Processing Advice - This message is sent by a tri-party agent after the receipt of a collateral instruction from its client. In this message, the Sender is the tri-party agent and the Receiver is either the collateral taker or the collateral giver. This message provides valuation results as well as the status of the collateral instruction and the status of the proposed collateral movements (cash and securities). MT 569 Tri-party Collateral and Exposure Statement - This message is sent by a triparty agent to both the collateral giver and the collateral taker to provide the details of the valuation of both the collateral and the exposure: after all collateral movements have been affected to show the end (fixed) positions or, after settlement but taking into account future collateral management instructions (forecasting the M-to-M). Category 5 - Securities Lending and Borrowing Contrary to the previously described messages, the MT 516, MT 526 and MT 581 are based on the ISO 7775 standard. These messages are typically sent between a client (e.g. IM) and a financial institution (e.g. Custodian) to provide lists of securities available for lending, request the borrowing of a particular security, and confirm the details of a new securities loan. MT 516 Securities Loan Confirmation - This message is sent from one financial institution to another, both of which are involved in the lending of securities. It is used to confirm the details of a new securities loan, a partial recall of securities previously out on loan, a partial return of securities previously out on loan and the closeout of a securities loan.

147 140 Confirm details of new loan Partial recall of securities on loan Lender Partial return of securities on loan Close-out a securities loan Borrower MT 526 General Securities Lending / Borrowing Message - This message type is sent from one financial institution to another, both of which are involved in the lending of securities. It is used to: list specified securities available for lending by the lender or its agent list specified securities no longer available for lending by the lender or its agent request the borrowing of a specified security from the lender or its agent notify the borrower or its agent of a partial or total return of the securities out on loan notify the lender or its agent of a partial or total return of the securities borrowed request the potential lender to hold the specified securities until further notice confirm that specified securities are being held request the potential borrower to confirm a securities loan or cancel a request to hold securities until further notice List securities available / not available for loan Request the borrowing of a security Notification of partial / total return of securities Lender Request / confirm a hold on securities to be lent Request a confirm of a loan Cancel a request to hold securities Borrower

148 141 MT 581 Collateral Adjustment Message - This message is sent from one financial institution to another, both of which are involved in a securities transaction for which collateral has been provided (e.g. a securities loan). It is used to claim or notify an increase or decrease to the collateral amount resulting from a change in the value of the existing collateral amount relative to the securities on loan. Claim / notify change to collateral amount Lender Borrower

149 142 Category 6 Treasury Markets - Precious Metals MT MT Name Purpose 600 Precious Metal Trade Confirms the details of a precious metal trade Confirmation and its settlement 601 Precious Metal Option Confirms the details of a precious metal option Confirmation contract 604 Precious Metal Transfer/ Instructs the Receiver to transfer by book-entry, Delivery Order or physically deliver, a specified type and quantity of precious metal to a specified party 605 Precious Metal Notice Notifies the Receiver of an impending book-entry to Receive transfer or physical delivery of a specified type and quantity of precious metal 606 Precious Metal Debit Advice Advises the Receiver of a debit entry to a specified metal account 607 Precious Metal Credit Advice Advises the Receiver of a credit entry to a specified metal account 608 Statement of a Metal Account Provides the details of all bookings to a metal account 609 Statement of Metal Contracts Identifies all outstanding metal contracts, as at a specified date for which confirmations have been exchanged Precious Metal Trade Confirmation MT 600 Precious Metal Option Confirmation MT 601 Metal Fixed Loan/Deposit Confirmation MT 620 Statement of Metal Contract MT609 Broker / Dealer Investment Manager Metal Transfer/Delivery Order MT 604 (When IM is Metal Seller) Metal Notice to Receive MT 605 (When IM is Metal Buyer) Metal Debit Advice MT 606 (When IM is Metal Seller) Metal Credit Advice MT 607 (When IM is Metal Buyer) Custodian Statement of Metal Account MT 608 (When IM is Metal Buyer or Metal Seller)

150 143 MT 600 Precious Metal Trade confirmation - This message type is exchanged between the financial institutions which have agreed to a precious metal trade. It is used to confirm the details of: a new contract between the parties an amendment to a previously agreed contract the cancellation of a contract the settlement of a metal option which has been exercised. This message may also be exchanged to confirm the liquidation of a forward deal MT 601 Precious Metal Option Confirmation - This message type is exchanged between the financial institutions which have agreed to a precious metal option contract. It is used to confirm the details of: a new contract between the parties an amendment to a previously agreed contract the cancellation of a contract the surrender of an option by the buyer (holder) to the seller (grantor) for compensation. MT 620 Metal Fixed Loan/Deposit Confirmation - This message is exchanged to confirm a metal fixed term loan/deposit contract. It is used to confirm the details of: a new contract between the parties an amendment to a previously agreed contract the cancellation of a confirmation a rolled over/renewed contract between the parties the maturity of a contract MT 609 Statement of Metal Contracts - This message is sent by a metal trader to its counterparty. It is a listing of all undelivered spots and/or outstanding forward contracts, and/or unexercised options, as at a specified date. MT 604 Precious Metal Transfer/Delivery Order - This message is sent by the owner of a metal account or its authorised agent to the metal account servicing institution. It is used to instruct the Receiver to transfer by book entry, or physically deliver, specified quantities of allocated or unallocated precious metal to a specified party. MT 605 Precious Metal Notice to Receive - This message is sent by the owner of a metal account or its authorised agent to the metal account servicing institution. It notifies the Receiver of the impending delivery/transfer of specified quantities of precious metal, physically or by book entry, to be held for, or credited to, the account serviced for the Sender. MT 606 Precious Metal Debit Advice -This message is sent by the metal account servicing institution to the account owner or its authorised agent. It is used to advise the Receiver of an entry which has been debited to its account or an account for which the Receiver is an authorised agent. MT 607 Precious Metal Credit Advice - This message is sent by the metal account servicing institution to the account owner or its authorised agent. It is used to advise the

151 144 Receiver of an entry which has been credited to its account or an account for which the Receiver is an authorised agent. MT 608 Statement of a Metal Account - This message is sent by a metal account servicing institution to the metal account owner or its authorised agent. It is used to advise the Receiver of transactions booked to a metal account. This statement message contains all bookings present in the account, whether caused by a message received via SWIFT or by some other means. Category 6 - Treasury Markets - Syndications MT MT Name Purpose 643 Notice of Drawdown/Renewal Provides notice of the Borrower(s) request for drawdown(s)/renewal(s) on a given date 644 Advice of Rate and Amount Specifies the interest rate and, if applicable, the Fixing the exchange rate, for the next interest period 646 Payment of Principal and/or Advises of payments and/or prepayments of of Interest principal and/or of interest with the same value date, but not related to any subsequent drawing or renewal 649 General Syndicated Facility Provides for communications related to syndicated Message facilities for which no specific message has been defined Category 9 Cash Management and Customer Status MT MT Name Purpose 900 Confirmation of Debit Advises an account owner of a debit to its account 910 Confirmation of Credit Advises an account owner of a credit to its account 920 Request Message Requests the account servicing institution to send an MT 940, 941, 942 or Rate Change Advice Advises the Receiver of general rate change(s) and/or rate change(s) which applies to a specific account other than a call/notice loan/deposit account 940 Customer Statement Message Provides balance and transaction details of an account to a financial institution on behalf of the account owner 941 Balance Report Provides balance information of an account to a financial institution on behalf of the account owner 942 Interim Transaction Report Provides balance and transaction details of an account, for a specified period of time, to a financial institution on behalf of the account owner 950 Statement Message Provides balance and transaction details of an account to the account owner

152 145 MT MT Name Purpose 960 Request for Service Initiation Initiates a Bilateral Key Exchange (BKE)process Message 961 Initiation Response Message Acknowledges receipt of an MT Key Service Message Contains a bilateral authenticator key for another financial institution 963 Key Acknowledgement Message Acknowledges receipt of the bilateral key sent in a previous MT Error Message Responds to an MT 960, 961, 963, 966 or 967 if an error has been detected to report that error 965 Error in Key Service Message Responds to an MT 962 if an error has been detected and reports that error 966 Discontinue Service Message Discontinues one or several bilateral authenticator keys already in existence between the Sender and Receiver 967 Discontinuation Acknowledgement Acknowledges receipt of a previous MT 966 and Message confirms discontinuation of the authenticator key(s) specified in the MT Netting Statement Provides balance and transaction details of a netting position as recorded by a netting system 971 Netting Balance Report Provides balance information for specified netting position(s) 972 Netting Interim Statement Advises interim balance and transaction details of a netting position as recorded by a netting system 973 Netting Request Message Requests and MT 971 or 972 containing the latest available information 985 Status Enquiry Requests an MT Status Report Provides business related information about a customer or institution Messages most used by investment managers for intraday: Notification of debit to account - MT 900 Notification of credit to account - MT 910 Account Owner Balance Report - MT 941 Interim Transaction Report - MT 942 Account Servicer

153 146 MT 900 Confirmation of Debit - This message is sent by an account servicing institution to an account owner. It is used to notify the account owner of an entry which has been debited from its account. The entry will be further confirmed by statement. MT 910 Confirmation of Credit - This message is sent by an account servicing institution to an account owner. It is used to notify the account owner of an entry which has been credited to its account. The entry will be further confirmed by statement. MT 941 Balance Report - This message is sent by an account servicing institution to a financial institution which has been authorised by the account owner to receive it. It is used to transmit balance information, reflecting the situation as at an identified time. MT 942 Interim Transaction Report - This message is sent by an account servicing institution to a financial institution which has been authorised by the account owner to receive it. It is used to transmit detailed and / or summary information about entries debited or credited to the account since: the last statement or balance report, or the last interim transaction report. MT 920 Request Message - This multiple message is sent by an account owner, or financial institution (concentrating institution) acting on behalf of an account owner, to an account servicing institution. It is used to request the account servicing institution to transmit one or more MT 940 Customer Statement(s), MT 941 Balance Report(s), MT 942 Interim Transaction Report(s), or MT 950 Statement Message(s) containing the latest information available for the account(s) identified in the message. MT 935 Rate Change Advice - This multiple message is used by the Sender to advise interest rate change(s) to the Receiver. It is used to advise the details of: General interest rate change(s) Interest rate change(s) which apply to specific account(s), other than call/notice loan/deposit account(s), serviced by the Sender of the message for the Receiver. Interest rate change(s) that can be advised by this message type include: NOTICE, CALL, PRIME, COMMERCIAL, BASE, CURRENT and DEPOSIT. Messages most used by investment managers for end of day: Customer Statement Message - MT 940 Account Owner Statement of detailed entries booked to account - MT950 Account Servicer

154 147 MT 940 Customer Statement Message - This message is sent by an account servicing institution to a financial institution which has been authorised by the account owner to receive it. It is used to transmit detailed information about all entries booked to the account. MT 950 Statement Message - This message is sent by an account servicing institution to an account owner. It is used to transmit detailed information about all entries booked to an account. Category n Common Group Messages MT MT Name Purpose n90 Advice of Charges, Interest Advises an account owner of charges, interest and Other Adjustments or other adjustments to its account n91 Request for Payment of Charges, Requests payment of charges, interest or other Interest and Other Expenses expenses n92 Request for Cancellation Requests the Receiver to consider cancellation of the message identified in the request n95 Queries Requests information relating to a previous message or amendment to a previous message n96 Answers Responds to an MT n95 Queries or MT n92 Request for Cancellation or other messages where no specific message type has been provided for the response n98 Proprietary Message Contains formats defined and agreed to between users and for those messages not yet live n99 Free Format Message Contains information for which no other message type has been defined

155 148 A.2 MX Standards The SWIFT Standards MX messages are listed according to the business area in which they have been defined. Cash Management MX Identifier MX Name Purpose camt GetAccount Sent by a member to the transaction administrator. It requests information on the details of one or more accounts held at the transaction administrator, including information on the balances. camt ReturnAccount Sent by a member to the transaction administrator. It provides information on the details of one or more accounts held at the transaction administrator, including information on the balances. The ReturnAccount message can be sent as a response to a related GetAccount message (pull mode) or initiated by the transaction administrator (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred. camt GetTransaction Sent by a member to the transaction administrator. It requests information about payment instructions held at the transaction administrator. Payment instructions are either sent by the member, debiting or crediting its account at the transaction administrator or received by the transaction administrator, crediting or debiting the member s account. camt camt camt ReturnTransaction Sent by the transaction administrator to a member of the system. It provides information on transactions and booked entries held at the transaction administrator. The ReturnTransaction message can be sent as a response to a related GetTransaction message (pull mode) or initiated by the transaction administrator (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred. ModifyTransaction Sent by a member to the transaction administrator. It requests one modification in one payment instruction held at the transaction administrator and sent by the member, debiting or crediting its account at the transaction administrator. CancelTransaction Sent by a member to the transaction administrator. It requests the cancellation of one payment instruction held at the transaction administrator and sent by the member. camt GetLimit Sent by a member to the transaction administrator. It requests information on the details of one or more limits set by the member (or on behalf of the member) and managed by the transaction administrator. camt ReturnLimit Sent by the transaction administrator to a member of the system. It provides information on the details of one or more limits set by the member (or on behalf of the member) and managed by the transaction administrator. The ReturnLimit message can be sent as a response to a related GetLimit message (pull mode) or initiated by the transaction administrator (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred.

156 149 MX Identifier MX Name Purpose camt ModifyLimit Sent by a member to the transaction administrator. It requests modifications in the details of one particular limit set by the member and managed by the transaction administrator. Each ModifyLimit message can alter only one type of limit (current or default). camt DeleteLimit Sent by a member to the transaction administrator. It requests the deletion of one particular limit set by the member and managed by the transaction administrator. Each DeleteLimit message can only delete one type of current limit (risk or liquidity management limit). camt GetMember Sent by a member to the transaction administrator. It requests information on static data maintained by the transaction administrator and related to the participants in the system and their membership status vis-à-vis this system. camt ReturnMember Sent by the transaction administrator to a member of the system. ExchangeRate It provides information on static data maintained by the transaction administrator and related to the participants in the system and their membership status vis-à-vis this system. The ReturnMember message can be sent as a response to a related GetMember message (pull mode) or initiated by the transaction administrator (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred. camt ModifyMember Sent by a member to the transaction administrator. It requests modifications to the static data related to the profile of a member that the transaction administrator maintains. camt GetCurrency Sent by a member to the transaction administrator. It requests ExchangeRate information on static data maintained by the transaction administrator and related to currency exchange details as maintained for the system operations by the transaction administrator. camt ReturnCurrency Sent by the transaction administrator to a member of the system. ExchangeRate It provides information on static data and related to currency exchange details as maintained for system operations by the transaction administrator. The ReturnCurrencyExchangeRate message can be sent as a response to a related GetCurrencyExchangeRate message (pull mode) or initiated by the account servicer (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred. camt GetBusiness Sent by a member to the transaction administrator. DayInformation It requests information on different types of administrative data linked to the system. camt ReturnBusiness Sent by the transaction administrator to a member of the system. DayInformation It provides information on different types of administrative data linked to the system. The ReturnBusinessDayInformation message can be sent as a response to a related GetBusinessDayInformation message (pull mode), or initiated by the transaction administrator (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred.

157 150 MX Identifier MX Name Purpose camt GetGeneral Sent by a member to the transaction administrator. BusinessInformation It requests information on a broadcast-type message previously sent by the transaction administrator to all or some of the members, giving information related to the processing business. camt ReturnGeneral Sent by the transaction administrator to a member of the system. BusinessInformation It provides some or all of the members with information related to the processing of the system. The ReturnGeneralBusinessInformation message can be sent as a response to a related GetGeneralBusinessInformation message (pull mode) or initiated by the transaction administrator (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred. camt BackupPayment Sent by a member to the transaction administrator. It requests a liquidity transfer from the member to another participant in the system when the user is in recovery mode. camt ModifyStandingOrder Sent by a member to the transaction administrator. It requests a change in the features of a permanent order for the transfer of funds between two accounts belonging to the same member and being held at the transaction administrator. camt Receipt Sent by the transaction administrator to a member of the system. It acknowledges the receipt of a message previously sent. The Receipt message is an application receipt acknowledgement and conveys information about the processing of the original message. camt DuplicateInstruction Used by financial institutions, with their own offices, and/or with other financial institutions with which they have established bilateral agreements. It allows the exchange of duplicate payment instructions. camt GetReservation Sent by a member to the transaction administrator. It requests information on the details of one or more reservation facilities set by the member and managed by the transaction administrator. camt ReturnReservation Sent by a member to the transaction administrator. It provides information on the details of one or more reservation facilities set by the member and managed by the transaction administrator. The ReturnReservation message can be sent as a response to a related GetReservation message (pull mode) or initiated by the transaction administrator (push mode). The push of information can take place either at prearranged times or as a warning or alarm when a problem has occurred. camt ModifyReservation Sent by a member to the transaction administrator. It requests a modification of details of one or more reservation facilities set by the member and managed by the transaction administrator. camt DeleteReservation Sent by a member to the transaction administrator. It requests a deletion of one or more reservation facilities set by the member and managed by the transaction administrator.

158 151 MX Identifier MX Name Purpose camt LiquidityCreditTransfer Sent by a member to the transaction administrator. It requests a transfer of funds between two accounts belonging to the same member or the same group of accounts, and being held at the transaction administrator. camt LiquidityDebitTransfer Sent by a member to the transaction administrator. It requests a transfer of funds between two accounts belonging to the same member or the same group of accounts, and being held at the transaction administrator. camt BankToCustomer Sent by the account servicer to an account owner or to a AccountReport party authorised by the account owner to receive the message. It can be used to inform the account owner, or authorised party, of the entries reported to the account, and/or to provide the owner with balance information on the account at a given point in time. camt BankToCustomer Sent by the account servicer to an account owner or to a Statement party authorised by the account owner to receive the message. It is used to inform the account owner, or authorised party, of the entries booked to the account, and to provide the owner with balance information on the account at a given point in time. camt BankToCustomer Sent by the account servicer to an account owner or to a DebitCreditNotification party authorised by the account owner to receive the message. It can be used to inform the account owner, or authorised party, of single or multiple debit and/or credit entries reported to the account. Derivatives (see MX IdentifierMX Name Purpose defp ContractCreated The ContractCreated notification message indicates that a contract has been created at the allocation level defp ContractNovated Provides the recipient with the latest terms for a full or partial novation of the indicated contract. defp ContractIncreased Provides the recipient with the terms for an economic enlargement of the indicated contract defp ContractPartialTermination Indicates that a contract has been terminated partially. defp ContractFullTermination Provides the recipient with the latest terms for a full termination of the indicated contract. defp ContractCancelled The ContractCancelled notification allows a contract created by mistake to be cancelled entirely. defp RequestTradeConfirmation The RequestTradeConfirmation allows a trading party to confirm a trade to its counterparty defp ModifyTradeConfirmation Allows a trading party to modify a trade previously confirmed to its counterparty.

159 152 MX Identifier MX Name Purpose defp CancelTradeConfirmation Allows a trading party to cancel a trade previously confirmed to its counterparty. defp ContractNovatedCancelled Notifies the recipient that a ContractNovated is cancelled. defp ContractIncreased The ContractIncreasedCancelled message notifies the Cancelled recipient that a ContractIncreased is cancelled defp ContractPartialTermination The ContractPartialTerminationCancelled notifies that a Cancelled ContractPartialTermination is cancelled defp ContractFullTermination The ContractFullTerminationCancelled message notifies Cancelled that a ContractFullTermination is cancelled Payments Clearing and Settlement MX Identifier MX Name Purpose pacs PaymentStatusReport The PaymentStatusReport message is sent by an instructed agent to the previous party in the payment chain. It informs this party about the positive or negative status of an instruction (either single or file). It can also report on a pending instruction. pacs FlToFICustomerDirectDebit Sent by the creditor agent to the debtor agent, directly or through other agents and/or a payment clearing and settlement system. It collects funds from a debtor account for a creditor. pacs PaymentReturn The PaymentReturn message is sent by an agent to the previous agent in the payment chain to undo a payment previously settled. pacs PaymentCancellation The PaymentCancellationRequest message is sent by Request the initiating party or any agent, to the next party in the payment chain. It requests the cancellation of an instruction previously sent. pacs FIToFIPaymentReversal The FIToFIPaymentReversal message is sent by an agent to the next party in the payment chain. It reverses a payment previously executed. pacs FIToFICustomer The FIToFICustomerCreditTransfer message is sent by CreditTransfer the debtor agent to the creditor agent, directly or through other agents and/or a payment clearing and settlement system. It moves funds from a debtor account to a creditor. pacs FinancialInstitution The FinancialInstitutionCreditTransfer message is sent by CreditTransfer a debtor financial institution to a creditor financial institution, directly or through other agents and/or a payment clearing and settlement system. It moves funds from a debtor account to a creditor, where both debtor and creditor are financial institutions.

160 153 Payments Initiation MX Identifier MX Name Purpose pain CustomerCredit Sent by the initiating party to the forwarding agent or TransferInitiation debtor agent. It requests movement of funds from the debtor s account to a creditor. pain PaymentStatusReport Sent by an instructed agent to the previous party in the payment chain. It informs this party about the positive or negative status of an instruction (either single or file). It can also report on a pending instruction. pain CustomerPaymentl Sent by the initiating party to the next party in the payment Reversa chain. It reverses a payment previously executed. pain CustomerDirect Sent by the initiating party to the forwarding agent or creditor DebitInitiation agent. It requests single or bulk collection(s) of funds from one or various debtor s account(s) for a creditor. Securities Events MX Identifier MX Name Purpose seev MeetingNotification Sent by a notifying party, eg, an issuer, its agent or an intermediary to a party holding y, the right to vote, to announce a shareholders meeting. It provides information on the participation details and requirements for the meeting, the vote parameters and the resolutions. seev MeetingCancellation Sent by the party that sent the MeetingNotification message to the original receiver. It is sent to cancel the previous MeetingNotification message previously sent or to advise the cancellation of a meeting. seev MeetingEntitlement Sent by an account servicer t to an issuer, its agent, an Notification intermediary or an account owner to advise the entitlement in relation to a shareholders meeting. seev MeetingInstruction Sent by a party holding the right to vote to an intermediary, the issuer or its agent to request the receiving party to act upon one or several instructions. The MeetingInstruction message is used to register for a shareholders meeting, request blocking or registration of securities. It is used to assign a proxy, to specify the names of meeting attendees and to relay vote instructions per resolution electronically. seev MeetingInstruction Sent by the same party that sent the MeetingInstruction CancellationRequest message. It is sent to request the cancellation of all instructions included in the original the MeetingInstruction message.

161 154 MX Identifier MX Name Purpose seev MeetingInstructionStatus Sent by the Receiver of the MeetingInstruction or MeetingInstructionCancellationRequest to the Sender of these messages. The message gives the status of a complete message or of one or more specific instructions within the message. It can also be used used as a reminder to request voting instructions. seev MeetingVoteExecution Sent by an issuer, its agent or an intermediary to confirm Confirmation to the Sender of the MeetingInstruction message, the execution of their voting instruction. This message is sent after the meeting has taken place. seev MeetingResult The MeetingResultDissemination message is sent by Dissemination an issuer, its agent or an intermediary to another intermediary, to a party holding the right to vote, to a registered security holder or to a beneficial holder to provide information on the voting results of a shareholders meeting. It may also provide information on the level of participation. This message is also used to notify an update. Securities Management MX Identifier MX Name Purpose semt SecuritiesMessage Rejects a previously received message on which action Rejection cannot be taken semt CustodyStatement Provides detailed quantity and availability information for OfHoldings financial instrument holdings of a portfolio. semt RegulatoryTransaction Reports the transaction details of securities trades that Report have been executed on or off-exchange. semt RegulatoryTransaction Used to request the cancellation of one or more or all ReportCancellationRequest previously sent individual transactions reports. semt RegulatoryTransaction Used to provide the status of one or more or all ReportStatus previously received individual transactions reports. semt RegulatoryTransaction Used to provide the status of one or more or all ReportCancellationStatus previously received individual transactions reports cancellations requests.

162 155 Treasury MX Identifier MX Name Purpose trea CreateNonDeliverable Sent by a participant to a central system or to a ForwardOpening counterparty to notify the opening of a non deliverable trade. trea AmendNonDeliverable Sent by a participant to a central system or to a ForwardOpening counterparty to notify the amendment of the opening of a non deliverable trade previously confirmed by the sender. trea CancelNonDeliverable Sent by a participant to a central system or to a ForwardOpening counterparty to notify the cancellation of the opening of a non deliverable trade previously confirmed by the sender. trea CreateNonDeliverable Sent by a participant to a central system or to a ForwardValuation counterparty to notify the valuation of a non deliverable trade. trea AmendNonDeliverable Sent by a participant to a central system or to a ForwardValuation counterparty to notify the amendment of the valuation of a non deliverable trade previously confirmed by the sender. trea CancelNonDeliverable Sent by a participant to a central system or to a ForwardValuation counterparty to notify the cancellation of the valuation of a non deliverable trade previously confirmed by the sender. trea NonDeliverable Sent by a central system to a participant to provide details ForwardNotification of a non deliverable forward trade. trea StatusNotification Sent by a central system to a participant to notify the current status of a foreign exchange option trade in the system. trea CreateForeign Sent by a participant to a central system or to a ` ExchangeOption counterparty to confirm a foreign currency option contract. This message is only suitable for Simple (i.e. not Barrier) Vanilla (i.e. not Binary, Digital, Notouch) Foreign Exchange Options. trea AmendForeign Sent by a participant to a central system or to a ExchangeOption counterparty to notify the amendment of a foreign currency option contract. This message is only suitable for Simple (i.e. not Barrier) Vanilla (i.e. not Binary, Digital, Notouch) Foreign Exchange Options. trea CancelForeign Sent by a participant to a central system or to a counterparty to notify the cancellation of a foreign currency option contract. This message is only suitable for Simple (i.e. not Barrier) Vanilla (i.e. not Binary, Digital, Notouch) Foreign Exchange Options. trea ForeignExchange Sent by a central system to a participant to notify the OptionNotification current status of a trade in the system. trea WithdrawalNotification Sent by a central system to notify the withdrawal of a trade which was previously notified to the receiver

163 156 Payments exception and Investigation - Case assignment There is one specific case assignment message for each of the four business activities: MX Identifier MX Name Purpose camt RequestTo Sent by a case creator/case assigner to a case assignee. CancelPayment It requests the cancellation of an original payment instruction. camt RequestTo Sent by a case creator/case assigner to a case assignee. ModifyPayment It requests the modification of characteristics of an original payment instruction. camt UnableToApply Sent by a case creator/case assigner to a case assignee. It initiates an investigation of a payment instruction that cannot be executed or reconciled. camt ClaimNonReceipt Sent by a case creator/case assigner to a case assignee. It initiates an investigation for missing funds at the creditor (missing credit entry to its account) or at an agent along the processing chain (missing cover for a received payment instruction). These messages are exchanged between case assigners and case assignees. They support the following payment-related investigation activities. Payments exception and Investigation - Case management MX Identifier MX Name Purpose camt Additional Sent by an account servicing institution to an account owner. PaymentInformation It provides additional or corrected information on a payment instruction or statement entry, in order to allow reconciliation. camt ResolutionOf Sent by a case assignee to a case creator/case assigner. Investigation It informs of the resolution of a case, and optionally provides details about the corrective action undertaken by the case assignee. camt NotificationOf Sent by a case assignee to a case creator/case assigner. CaseAssignment It informs the case assigner of further action that is undertaken by the case assignee to process the case, eg, the assignment of the case to a next case assignee. camt RequestFor Sent by the case assignee to the case creator/case assigner. DuplicateInstruction It requests a copy of the original payment instruction considered in the case. camt DuplicateInstruction Used by financial institutions, with their own offices, and/or with other financial institutions with which they have established bilateral agreements. It allows the exchange of duplicate payment instructions. camt RejectCase Sent by a case assignee to a case creator/case assigner. Assignment It is used to reject a case. camt CancelCase Sent by a case creator/case assigner to a case assignee. It requests the cancellation of a case.

164 157 MX Identifier MX Name Purpose camt CaseStatusReport Sent by a case creator/case assigner to a case assignee. Request It requests the status of a case. camt CaseStatusReport Sent by a case assignee to a case creator/case assigner. It reports on the status of a case. camt DebitAuthorisation Sent by an account owner to its account servicing Response institution. It is used to approve or reject a debit authorisation request. camt DebitAuthorisation Sent by an account servicing institution to an account Request owner. It requests authorisation to debit an account. camt ProprietaryFormat Used by financial institutions, with their own offices, Investigation and/or with other financial institutions with which they have established bilateral agreements. It is used as an envelope for a non standard message. It provides means to manage an exception or investigation which falls outside the scope or capability of any other formatted message. It also allows financial institutions to use message types which are awaiting live implementation in the Exceptions & Investigations solution The above activities are supported by the case management messages. Funds - Account Management MX Identifier MX Name Purpose camt AccountOpening Open an account directly or indirectly with the account Instruction servicer or an intermediary. acmt AccountModification Modify the details of an existing account. Instruction acmt AccountDetails Confirm the opening of an account, modification Confirmation of an account or the provision of information requested in a previously sent Get Account Details message. acmt GetAccountDetails Query all or some of the account details for a given account held with an account servicer. acmt RequestForAccount Request the processing status of a previously sent ManagementStatus Account Opening Instruction message or Account Report Modification Instruction message for which a Account Details Confirmation message has not yet been received acmt AccountManagement Provides the processing status of a previously received StatusReport Account Opening Instruction or of an Account Modification Instruction message. Account management messages are used to manage investment account opening and modifications to registered account information.

165 158 Account Opening Instruction Account Modification Instruction Account Owner Account Details Confirmation Get Account Details Request for Account Mangaement Status Report Account Management Status Report Account Servicer Funds - Order, confirmation and cancellation messages Order messages are used to instruct the executing party to subscribe, to redeem or to switch a given amount/quantity of a specified financial instrument. As the processes are different for many institutions, there is a need to differentiate at message type level. These messages can be grouped into three categories: Subscription, Redemption, Switch. Orders in the funds industry may be given according to different scenarios, eg, some players group orders before sending them to the next party in the chain. MX Identifier MX Name Purpose setr RedemptionBulkOrder Bulks several individual redemption orders for one financial instrument into one bulk order for multiple accounts. setr RedemptionBulkOrder Requests the cancellation of a previously sent CancellationRequest RedemptionBulkOrder message. The message may request the cancellation of one, many or all redemption orders contained in a previously sent RedemptionBulkOrder message. setr RedemptionBulk Confirms the execution of a previoulsy received OrderConfirmation RedmptionBulkOrder message. The message may confirm one, many or all redemption orders contained in a previously received RedemptionBulkOrder message. setr RedemptionOrder Instructs the redemption of one or more financial instruments for one investment fund account. setr RedemptionOrder Requests the cancellation of a previously sent CancellationRequest RedemptionOrder message. The message may request the cancellation of one, many or all redemption orders contained in a previously sent RedemptionOrder message.

166 159 MX Identifier MX Name Purpose setr RedemptionOrder Confirms the execution of a previously received Confirmation RedemptionOrder message. The message may confirm the execution of one, many or all redemption orders contained in a previously received RedemptionOrder message. setr SubscriptionBulkOrder Bulks several individual subscription orders for one financial instrument into one bulk order for multiple accounts. setr SubscriptionBulkOrder Requests the cancellation of a previously sent CancellationRequest SubscriptionBulkOrder. The message may request the cancellation of one, many or all subscription orders contained in a previously received SubscriptionBulkOrder message. setr SubscriptionBulkOrder Confirms the execution of a previously received Confirmation SubscriptionBulkOrder message. The message may confirm the execution of one, many or all subscription orders contained in a previously received subscriptionbulkorder message. setr SubscriptionOrder Instructs the subscription of one or more financial instruments for one investment fund account. setr SubscriptionMultiple Requests the cancellation of a previously sent OrderCancellation SubscriptionOrder message. The message may Request request the cancellation of one, many or all subscription orders contained in a previously sent SubscriptionOrder message. setr SubscriptionOrder The SubscriptionOrderConfirmation message confirms Confirmation the execution of a previously received SubscriptionOrder message. The message may confirm the execution of one, many or all subscription orders contained in a previously received SubscriptionOrder message. setr SwitchOrder Instructs a switch transaction from a financial instrument or multiple financial instruments to a different specified financial instrument or instruments for a specified amount/quantity. setr SwitchOrder Requests the cancellation of a previously sent SwitchOrder Cancellation Request message. The message may request the cancellation of one, many or all switch orders contained in a previously sent SwitchOrder message. setr SwitchOrder Confirms the execution of a previously received Confirmation SwitchOrder message. The message may confirm the execution of one, many or all switch orders contained in a previously received SwitchOrder message.

167 160 In order to cater for this, two sub-categories have been created for the subscription and the redemption types of messages. Bulk order: A bulk message is typically a message containing a series of individual order transactions from different accounts, but for the same financial instrument with the same intermediary details. The order will result in a single cash settlement (not settlement per individual order) executed using one single method. This order is sent by a concentrator or a party collecting orders and bulking them to relay the transactions to the transfer agent or another intermediary. Order: An order message is typically a message containing a single order or multiple orders (list of orders related to several financial instruments) for the same account. It is a shopping list for one account. This type of order is typically sent by financial advisers or banks that are managing a portfolio for a particular account. In short, a bulk is "1 financial instrument-n accounts"; and an order is "1 account-1 financial instrument" if it is a single order and "1 account-n financial instruments" if it is a multiple order. No specific order category has been created for cross or bed and breakfast orders. In some countries, for legal reasons, these must appear as separate orders, while in others, the two orders may be given together. Therefore, no specific order has been created for a bed and breakfast order, as this transaction is the combination of a redemption and a subscription linked together. Limit and forward orders are not covered, as these are not common in the Funds industry. For each category, below main flows are covered: the order, the order confirmation, the order cancellation instruction. There is no order amendment message, as the agreed philosophy is cancel and replace. In addition, messages for 2 new flows are now available. They are: the order confirmation amendment, the order confirmation cancellation. These messages cover the cases where one or several details in the order confirmation message need to be amended or when the entire order confirmation message needs to be cancelled.

168 161 Funds - Order status reporting messages MX Identifier MX Name Purpose setr OrderInstruction Reports the status of a subscription, redemption or switch StatusReport order prior to execution. setr OrderCancellation Reports the status of an order cancellation request StatusReport that was previously received. setr RequestForOrder Requests the status of one or more order instruction StatusReport or order cancellation request messages. setr SubscriptionOrder Cancels one or more previously sent subscription ConfirmationCancellation order confirmations. Instruction setr SubscriptionOrder Amends a previously sent subscriptionorderconfirmation ConfirmationAmendment message. setr SubscriptionBulkOrder Cancels one or more previously sent subscription order ConfirmationCancellation confirmations. Instruction setr SubscriptionBulkOrder Amends a previously sent ConfirmationAmendment SubscriptionBulkOrderConfirmation message. setr RedemptionOrder Cancels one or more previously sent redemption order ConfirmationCancellation confirmations. Instruction setr RedemptionOrder Amends a previously sent RedemptionOrderConfirmation ConfirmationAmendment message. setr RedemptionBulkOrder Cancels a previously sent ConfirmationCancellation RedemptionBulkOrderConfirmation. The message may be Instruction used to cancel one, many or all redemption order confirmations contained in a previously sent RedemptionBulkOrderConfirmation message. setr RedemptionBulkOrder Amends a previously sent ConfirmationAmendment RedemptionBulkOrderConfirmation message. setr SwitchOrderConfirmation Cancels one or more previously sent switch order CancellationInstruction confirmations. setr SwitchOrder Amends a previously sent switchorderconfirmation ConfirmationAmendment message. setr OrderConfirmation Reports the status of an order confirmation or an order StatusReport confirmation amendment. setr RequestForOrder Requests the status of one or several order confirmations. ConfirmationStatusReport

169 162 The Request For Order Status Report message covers the message flow between an instructing party and an executing party. This message requests the status of an order message or an order cancellation instruction message. The Order Instruction Status Report message covers the message flow between an executing party and an instructing party. This message informs the instructing party of the status of its order message, ie, SubscriptionOrder, SubscriptionBulkOrder, RedemptionOrder, RedemptionBulkOrder or SwitchOrder. The OrderCancellationStatusReport message covers the message flow between an executing party and an instructing party. This message informs the instructing party of the status of its order cancellation request message, ie, SubscriptionOrderCancellationRequest, SubscriptionBulkOrderCancellationRequest, RedemptionOrderCancellationRequest, RedemptionBulkOrderCancellationRequest or SwitchOrderCancellationRequest. Two new messages are now available: the RequestForOrderConfirmationStatusReport and the OrderConfirmationStatusReport. They cover cases where the status of a confirmation needs to be communicated by the instructing party to the executing party (ie, the requesting party). Funds - Order status reporting messages MX Identifier MX Name Purpose camt FundEstimatedCash Reports the estimated cash incomings and outgoings of ForecastReport one or more investment funds on one or more trade dates. camt FundConfirmedCash ForecastReport camt FundDetailedEstimated CashForecastReport camt FundDetailedConfirmed CashForecastReport camt FundConfirmedCash ForecastReport Cancellation camt FundDetailedConfirmed CashForecastReport Cancellation Confirms the cash incomings and outgoings of one or more investment funds on one or more trade dates. Reports the estimated cash incomings and outgoings, sorted by criteria defined by the user of one or more investment funds on one or more trade dates. Reports the cash incomings and outgoings, sorted by criteria defined by the user of one or more investment funds on one or more trade dates. The FundConfirmedCashForecastReportCancellation message cancels a previously sent FundConfirmedCashForecastReport message. Cancels a previously sent FundDetailedConfirmedCashForecastReport message. The fund cash forecast reporting messages are used to provide a report of the cash incomings and outgoings per investment fund. The cash incomings and outgoings result from redemption, subscription and switch transactions.

170 163 Funds Statements MX Identifier MX Name Purpose semt AccountingStatement Provides valuation detail OfHoldings semt CustodyStatementOf HoldingsCancellation semt AccountingStatementOf HoldingsCancellation semt StatementOfInvestment FundTransactions semt StatementOfInvestment FundTransactions Cancellation Cancels a previously sen CustodyStatementOfHoldings message. Cancels a previously sent AccountingStatementOfHoldings message. Reports detailed transactions (increases and decreases) of holdings which occurred during a specified period of time. Cancels a previously sent StatementOfInvestmentFundstransactions message. Statement messages are used to report the holdings of or transactions on a specific account or sub-account on a specified date or period. These messages can be grouped into three categories: Accounting holdings statement, Custody holdings statement, Transactions statement. For each category, two main flows are covered: the statement the statement cancellation Additional messages, eg, request for statement message or statement of pending transactions will be available in the next phases of the standards initiative. These messages are grouped into two categories. Estimated report: contains estimated cash forecasts, ie, cash flows calculated with an estimated price, usually the price of the previous trade date. Confirmed report: contains confirmed cash forecasts, ie, cash flows calculated with the definitive price on a specific trade date. Each category is divided into two sub-categories: Short report: contains incoming and outgoing cash flows. Detailed report: contains incoming and outgoing cash flows. These may be sorted according to predefined or user defined criteria and breakdown information may be given. Estimated cash forecast messages do not need to be cancelled and replaced, as an estimated message overwrites the previous estimated message. Confirmed cash forecast reports may be cancelled and for this reason, two cancellation messages exist.

171 164 Funds - Price Reporting messages (NAV: Net Asset Value) MX Identifier MX Name Purpose reda PriceReport Reports the net asset value and price information for one or more financial instruments on specific trade dates and, optionally, to quote price variation information. reda PriceReportCancellation Cancels a previouslysent PriceReport message. reda PriceReportCorrection Corrects specific price information included in a previously sent PriceReport message. The price reporting messages cover the message flows between a report provider and a report user. The price messages are used to: communicate the price of an investment fund, correct a price that was previously sent, cancel a previously sent PriceReport. A report provider, eg, a transfer agent, fund accountant or market data provider, sends the PriceReport message to the report recipient, eg, a fund management company, transfer agent, market data provider, regulator or other interested party to provide the net

172 165 Funds - Transfer, confirmation and cancellation messages MX Identifier MX Name Purpose sese TransferOutInstruction sese TransferOutCancellation Request sese TransferOutConfirmation sese ReversalOfTransferOut Confirmation sese TransferInInstruction sese TransferInCancellation Request sese TransferInConfirmation sese ReversalOfTransferIn Confirmation The TransferOutInstruction message instructs the delivery of a financial instrument, free of payment, to another of the instructing parties own accounts or to a third party. The TransferOutCancellationRequest message requests the cancellation of a previously sent TransferOutInstruction message. The TransferOutConfirmation message confirms the execution of a previously received TransferOutInstruction message. The ReversalOfTransferOutConfirmation message reverses (cancels) a previously sent TransferOutConfirmation message. The TransferInInstruction message instructs the receipt of a financial instrument, free of payment, from another account, either owned by the instructing party or by a third party. The TransferInCancellationRequest message requests the cancellation of a previously sent TransferInInstruction message. The TransferInConfirmation message confirms the execution of a previously received TransferInInstruction message. The ReversalOfTransferInConfirmation message reverses (cancels) a previously sent TransferInConfirmation message. The functions involving changes in the fund register due to a change of record keeper (with or without changing the beneficial owner). An instructing party, eg, an investment manager or its authorised representative, sends the Transfer message to the executing party, eg, a transfer agent, to instruct the receipt or delivery of a financial instrument, free of payment, on a given date from a specified party. This message may also be used to instruct the receipt of a financial instrument, free of payment, from another of the instructing parties own accounts or from a third party. Transfer messages are used to instruct the transfer of a given amount/quantity of a specified financial instrument from one account to another own account or to a third party account. These messages can be grouped into two categories: Transfer out, Transfer in.

173 166 Specific messages have been created for transfer out and transfer in. As processing of transfers is different for many institutions, there is a need to differentiate at message type level. For each category, four main flows are covered: the transfer instruction, the transfer cancellation request, the transfer confirmation, the reversal of the transfer confirmation. Funds - Transfer status messages and request for transfer status message MX Identifier MX Name Purpose sese RequestForTransferStatus The RequestForTransferStatusReport message requests Report the status of a previously instructed transfer or the status of a previously sent cancellation of transfer request. sese TransferCancellationStatus The TransferCancellationStatusReport message reports the Report status of a transfer in or transfer out cancellation request. sese TransferInstructionStatus Report The TransferInstructionStatusReport message reports the status of a previously received TransferInInstruction or TransferOutInstruction message. These transfer status report messages allow to report on the status of transfer messages and transfer cancellation instruction messages, and to request a status report. The TransferInstructionStatusReport message covers the message flow between an instructing party and an executing party. It informs the instructing party on the status of its transfer message, ie, TransferOutInstruction or TransferInInstruction. The TransferCancellationStatusReport message covers the message flow between an instructing party and an executing party. It informs the instructing party on the status of its transfer cancellation instruction message, ie, TransferOutCancellationRequest or TransferInCancellationRequest. The RequestForTransferStatusReport message covers the message flow between an instructing party and an executing party. It requests the status of a transfer message or a transfer cancellation instruction message.

174 167 Funds - PEP or ISA or Portfolio transfer messages MX Identifier MX Name Purpose sese PEPOrISAOrPortfolio TransferInstruction sese PEPOrISAOrPortfolio TransferConfirmation sese PEPOrISAOrPortfolio TransferCancellation Request sese PEPOrISAOrPortfolio Information sese RequestForPEPOrISAOr PortfolioInformation The PEPOrISAOrPortfolioTransferInstruction message instructs the transfer of financial instruments from the clients account at the old plan manager to the clients account at the new plan manager through a nominee account. The PEPOrISAOrPortfolioTransferConfirmation message confirms the execution of a previously received PEPOrISAOrPortfolioTransferInstruction message. The message may be used to confirm the execution of one, many or all transfers contained in a previously received PEPOrISAOrPortfolioTransfer message. The PEPOrISAOrPortfolioTransferCancellationRequest message requests the cancellation of a previously sent PEPOrISAOrPortfolioTransferInstruction message. The message requests the cancellation of all transfer instructions contained within a previously sent PEPOrISAOrPortfolioTransferInstruction message. The PEPOrISAOrPortfolioInformation message provides information about one or more PEP or ISA or portfolio products held in a client s account. The RequestForPEPOrISAOrPortfolioInformation message requests information about one or more PEP or ISA or portfolio products held in a client s account for which a transfer will be instructed at a later time. PEP/ISA transfer messages are used to instruct the transfer of one or more assets from an investor s account at an old plan manager to an account with the new plan manager. In addition, 2 new messages are now available to request information and provide information about a particular PEP or ISA or Portfolio. These messages are the request for PEP or ISA or portfolio information and the PEP or ISA or portfolio information. Funds - Rejection Message MX Identifier MX Name Purpose admi MessageReject Sent by a central system to notify the rejection of a previously received message. It provides specific information about the rejection reason.

175 168 Funds FPP (Funds Processing Passport) MX Identifier MX Name Purpose reda FundProcessingPassport Used to convey the key reference data for financial Report instruments needed to facilitate trading. reda RequestForInvestment Used to request a funds processing passport report. It may FundReport also be used to request other investment funds reports, such as a fund cash forecast report. The request message may also be used to request statements, such as the statement of investment fund transactions. FundProcessingPassportReport - A report provider, eg, a fund promoter, fund management company, transfer agent, or market data provider, sends the FundProcessingPassportReport message to the report recipient, eg, a professional investor, investment fund distributor, market data provider, regulator or other interested party to provide the key reference data for financial instruments to facilitate trading. RequestForInvestmentFundReport - A report user, eg, a professional investor, investment fund distributor, market data provider, regulator or other interested party sends the RequestForInvestmentFundReport message to the report provider, eg, a fund promoter, fund management company, transfer agent, or market data provider to request a report. The RequestForInvestmentFundReport message can be used to request the following reports and statements: Fund cash forecast report, eg, a FundDetailedConfirmedCashForecastReport FundProcessingPassportReport PriceReport Statement, eg, AccountingStatementOfHoldings User defined report Administration MX Identifier MX Name Purpose admi Report Used for general application level data reporting. A message may contain either a full report or one single tranche (part) of a report split in multi-tranches (multiparts). The message contains a mechanism to support the correct reassembling of the reporting data by an application. admi MessageReject admi SystemEventNotification Sent by a central system to notify the rejection of a previously received message. It provides specific information about the rejection reason. Sent by a central system to notify the occurrence of an event in a central system.

176 169 The SecuritiesMessageRejection message is used to reject any securities message. An account servicer, eg, a registrar, transfer agent or custodian bank, sends the SecuritiesMessageRejection message to an account owner, eg, an investor or its authorised agent, to reject a previously received message on which action cannot be taken. The message may also be sent by the executing party, eg, transfer agent to the instructing party, eg, investment manager or its authorised representative to reject a previously received message on which action cannot be taken. A.3. FpML Standards The FpML messages are listed according to the business area in which they have been defined. Syndicated Loans MX Name DrawdownNotice (also used for a RateSetNotice) Purpose After the agent bank received a written drawdown request, it calculates the amount of principal due from each lender based on their share of the underlying unutilised commitment. The agent bank creates a DrawdownNotice for each of the lenders. The interest rate to be applied to the contract is not always known at the time that the drawdown notice is sent out. The agent bank therefore sends out the notice without interest rate information. This information is then provided in a separate RateSetNotice. InterestPaymentNotice After the agent bank requested the borrower to make an interest payment, the agent bank calculates each lender s interest amount. An InterestPaymentNotice is then sent to each lender to communicate this information. RepaymentNotice OnGoingFeeNotice The agent bank requests the borrower to make a principal repayment. The borrower makes a payment to the agent bank. The agent bank then calculates each lender s principal amount. A RepaymentNotice is sent to each lender. This is the position when a scheduled principal repayment is made. Due to the nature of credit agreements, the borrower can make two additional categories of repayments against any outstanding contracts: unscheduled Mandatory Principal Repayments unscheduled Voluntary Principal Repayments. The agent bank requests the borrower to make a fee payment according to the credit agreement, upon which the fee is paid. The agent bank then calculates each lender s fee amount and sends an OnGoingFeeNotices to each lender. The fee types included in this specification are as follows: Commitment Fee: Calculated as a percentage of the unutilised portion of the facility. Utilisation Fee: Calculated as a percentage of the utilised portion of the facility. This fee type is subject to banding rule, that is different portions of the utilisation amount may be subject to different percentages. Facility Fee: Calculated as a percentage of the global commitment amount of a facility. Letter of Credit Fee: Calculated as a percentage of the outstanding Letter of Credit exposure within a facility.

177 170 MX Name OneOffFeeNotice Purpose The agent bank requests the borrower to make a fee payment according to the credit agreement, upon which the fee is paid. The agent bank then calculates each lender s fee amount and sends OneOffFeeNotices to each lender. The following fee types are included in this specification: Amendment Fee: A fee charged to the borrower for an amendment being made to the originally agreed credit agreement. The fee is based on a rate (as stated in the agreement) applied to the current commitment level. Waiver Fee: This fee represents any fee paid by the borrower to the syndicate lenders or agent bank for accepting or processing a waiver request. The borrower sends a waiver request to obtain approval from the syndicate lenders for any requirement outside of the terms of the agreement. Upfront Fee: Also known as participation fee or arrangement fee. It represents compensation to the members of the lending syndicate in return for their commitment of capital. Facility Extension Fee: Represents any fee paid by the borrower to the syndicate lenders for extending an existing facility. Funding Fee: Fee associated with the funding requirements of a given facility. Drawdown Notice Interest Payment Notice Investment Manager Principal Repayment Notice On-Going Fee Payment Notice One-Off Fee payment Notice Market Infrastructure (DTCC/EOC) or Loan Agent The release 2.0 (FpML 4.5) will be delivered at later date. OTC Derivatives Business Process Notification of a new Contract Notification of an Increase Notification of a Novation Notification of a Partial Termination Definition After a contract is agreed and allocated between the asset manager and the dealer, the asset manager informs its custodians about the details of the contract. The notification can be done either before or after the contract is confirmed between the dealing counterparties. The asset manager notifies the custodian of an increase of the contract notional. The asset manager notifies the custodian of a full or partial novation of an existing contract. The asset manager notifies the custodian of a partial termination of an existing contract. Notification of a Full Termination The asset manager notifies the custodian of a full termination of an existing contract.

178 171 Notification of a Cancellation Notification of the cancellation of an Increase Notification of the cancellation a Novation Notification of the cancellation a Partial Termination Notification of the cancellation a Full Termination Confirm a new trade Modify an already confirmed trade Cancel an already confirmed trade Initiate a Credit Transfer on behalf of a fund Provide the status of a payment instruction Cancel a payment instruction Reverse a payment instruction The asset manager notifies the custodian of the cancellation of the notification of a new contract. The asset manager notifies the custodian that an increase of the contract notional is cancelled. The asset manager notifies the custodian that a full or partial novation is cancelled. The asset manager notifies the custodian that a partial termination is cancelled. The asset manager notifies the custodian that a full termination. is cancelled. After a trade has been agreed between buy-side and sell side, both parties confirm the elements of the trades from their respective point of view. One or both parties send a modification to update or correct elements of the trade. One or both parties cancel an already sent confirmation. The asset manager sends the CustomerCreditTransferInitiation message to the custodian. This message requests movement of funds from the debtor s account to a creditor. The custodian sends the PaymentStatusReport message to the asset manager. This message informs this party about the positive or negative status of an instruction. It can also report on a pending instruction. The asset manager sends the PaymentCancellationRequest message to the custodian. This message requests the cancellation of an instruction previously sent. The asset manager sends the CustomerPaymentReversal message to the custodian. This message reverses a payment previously executed. Request the collection of funds The asset manager sends the CustomerDirectDebitInitiation message to the custodian. This message requests single or bulk collection(s) of funds from one or various debtor s account(s) for a creditor.

179 172 A.4 FIX Standards FIX Pre-trade Trade Name Indication of Interest Quote Request Quote New Order Single or Multi-Leg Execution Report Purpose Unsolicited list of offerings from the sell-side, sent from the executing party (e.g. Broker / Dealer) to the IM. Unsolicited inquiry for bids wanted from the buy-side.unsolicited; can also be used to identify an instrument based on attributes, learn a security identifier or to calculate size pre-trade. It is sent by the IM to the executing party. This is sent by the executing party back to the IM in response to a Quote Request. This can be sent unsolicited by the IM to the executing party, or in response to a Quote or firm Offering. This is sent by the executing party to the IM immediately in response to New Order and each time the state of the order changes. FIX Post trade/pre-settlement Name Allocation Instruction Allocation Instruction Ack Allocation report Allocation report Ack Purpose This is sent by the IM to the executing party, and follows up New Order before or after the trade is filled. It is used to indicate how a trade is allocated into specific accounts. This is sent by the executing party to the IM to acknowledge receipt of the allocation instruction, but not yet accepted, or can report errors in the allocation instruction message. This is sent by the executing party to the IM to accept and confirm the allocation instruction, and conveys data for each sub-account (i.e. net money, accrued interest, etc.). This is sent by the IM to the executing party to confirm the allocation report and its calculations or to reject the allocation report. B. What is in it for you? - Calculating your business case for SWIFT As an IM, ask yourself the following questions: Are your business volumes fluctuating? Fluctuating volumes make it very hard for institutions to adequately staff up for peak volumes. With SWIFT messaging, you can reduce the manual effort and thus reduce the dependency on volumes. Quote from an IM already using SWIFT: Our transaction volumes vary significantly from one day to the next. However, the effort involved in generating our SWIFT based settlement instructions that are sent to custodians is limited given the high level of automation we have achieved in this area we therefore barely notice the volume of settlement instructions sent from day-to-day.

180 173 Are you using several proprietary terminals? Proprietary terminals often look like the most cost-effective way of communicating with counterparties. There is however an important hidden cost in terms of training and re-keying data. SWIFT estimates (based on feedback from a number of IMs) that the cost of a proprietary terminal averages EUR 25,000 per year. Quote from an IM already using SWIFT: Before we had SWIFT, we had proprietary terminals all over the office. Staff needed to be trained on all these different systems, and data was re-keyed all day long. Now, we simply have one system. Are you still sending and receiving a lot of faxes? Faxes are labour intensive. Even if you are using an autofax facility, the counterparty will still be faced with manual input. This manual input increases the cost and the risk of faxes. Now that more and more industry players are starting to surcharge for faxes received, there is an increased need to look at alternative communication channels. Quote from an IM already using SWIFT: If we were to report everything over fax, we would probably need twice as many people to do this. We have increased our traffic by tenfold without really increasing the headcount. Do you need to talk to several different brokers, custodians, banks and a multitude of other counterparties? Setting up and maintaining communication channels with a multitude of counterparties is labour intensive and costly. If they all have their own particular way of communicating, this further increases costs and reduces efficiency. With SWIFT, you are sure you always communicate using the same language, while adding another counterparty is done without additional effort or investment. Quote from an IM already using SWIFT: The cost of SWIFT is insignificant compared to the cost of other more manual messaging means. Is reputation one of the most important assets of your institution? For most IMs, reputation is the single most important asset. Risk reduction is therefore key to the success of the institution. Guaranteed and timely delivery of your instructions and other messages will make sure that your good reputation is not negatively impacted by failing settlements, late reporting, etc. Quote from an IM already using SWIFT: Without SWIFT we would certainly need to double the number of operations staff and maybe even more. Fluctuations in business cycles cause problems because you have to hire temporary staff to handle additional volumes. This increases risk and further reduces efficiency.

181 174 Are you using or the internet for confidential or time critical communication? and internet are certainly the most frequently used communication channels of this day and age. The need for follow up, lack of standardisation and increased risk, however puts an additional burden on your operations staff. Make sure they can focus on customer oriented tasks instead of being bogged down with operational issues. Quote from an IM already using SWIFT: SWIFT brings intangible benefits as well. By automating the operations processes, operations staff can focus on more challenging tasks. Job satisfaction increases and staff turnover drops. Do you anticipate your trading volumes to grow significantly in the future? If you are looking at increasing your volumes, SWIFT will enable you to automate, so that doubling your volumes does not necessarily mean doubling your staff. Automation is the key to success for increased volumes. SWIFT will help you drive automation in your organisation. Quote from an IM already using SWIFT: The scalability we get through SWIFT automation is huge. We would not have been able to support our growth and stay in this business without it. If you answered yes to any of the above questions, SWIFT can help you. To find out what your costs and potential savings from joining SWIFT will be, contact the SWIFT Sales Representative in your region. They can work with you to calculate and compare the costs of your existing environment to what it would be if you joined SWIFT. If you are already an existing SWIFT user, SWIFT can work with you to find out what additional costs (if any) you will incur, and increased potential savings you can attain, through greater use of SWIFT. Note: please refer to official source documentation provided by SWIFT for updates.

182 175 C. Roadmap by Asset class and business function Currency exchange Order w/ Execution Trade confirmation Allocation Matching Settlement Custodian with Brokers with Brokers with Broker with Broker with Custodian FX MT 380/381 N/A MT 300 MT 303 Accord MT 304 FX Swaps N/A N/A MT 300 N/A Accord MT 304 NDF N/A N/A MT 300 N/A Accord MT 304 Vanilla option N/A N/A MT 305 MT 303 Accord N Exotic Option N/A N/A MT 306 N/A Accord N Loan deposit Fixed loan or N/A N/A MT 320 N/A Accord MT 321 deposit Call Notice N/A N/A MT 330 N/A Accord N/A OTC Derivatives FRA N/A N/A MT 340/ MT 341 N/A Accord N/A IRS N/A N/A MT 36x/ FpML N/A Accord planned FpML for FpML Single Currency N/A N/A FpML N/A Accord planned FpML Swaptions SPT Cap Floors and N/A N/A MT 360/ FpML N/A Accord planned FpML Collars CPC for FpML Interest Rate Swaps N/A N/A MT 36x/ FpML N/A Accord planned FpML (including OIS) for FpML CD N/A N/A FpML N/A Accord planned FpML Single Credit Default Swaps N/A N/A FpML N/A Accord planned FpML CDS Index Credit Default Swaps N/A N/A FpML N/A Accord planned FpML CDX Index Tranche Credit Default N/A N/A FpML N/A Accord planned FpML Swaps CXT. Basket Credit Default Swaps N/A N/A FpML N/A Accord planned FpML CDB Basket Tranche Credit Default N/A N/A FpML N/A Accord planned FpML Swaps CBT

183 176 Equities and FI, Listed derivatives Order w/ Execution Trade confirmation Allocation Matching Settlement Custodian with Brokers with Brokers with Broker with Broker with Custodian Equities Fixed Income MT 502/ MT 515 / FIX MT 502/ MT 515 / FIX Commodities Precious metals MT 6xx Physical and non physical FpML Interest Rate swaps Cap Floors and Collars CPC (360) + FpML Interest Rate Swaps (including OIS) (36x) +FpML Credit Default Rate swaps Single Credit Default Swaps CDS Index Credit Default Swaps CDX Index Tranche Credit Default Swaps CXT. Basket Credit Default Swaps CDB Basket Tranche Credit Default Swaps CBT None of us is as smart as all of us With a big thank you to all the people from the industry and SWIFT who have helped to put this book together

184 177 D. Glossary Acronym Accord BIC CUG FIX FIX Connector ISO MA-CUG SIPN SNL XML Definition SWIFT s matching and netting service. It provides financial institutions with a complete foreign exchange, money market and derivatives solution. Bank Identifier Code: An International Standardisation Organisation, technical code that uniquely identifies a financial institution. SWIFT is the Registration Authority for BICs. The BIC consists of eight or eleven characters, comprising a financial institution code (four characters), a country code (two characters), a location code (two characters), and for FIN and IFT, an optional branch code (three characters). Closed User Group: A subset of Customers grouped for the purposes of their use of the relevant SWIFT Services and Products when accessing a Service. Financial Information exchange: A message standard developed to facilitate the electronic exchange of information related to securities transactions. A software module positioned between a FIX Engine and the SWIFTNet Link that enables a Financial Information exchange session to take place over SWIFTNet. International Organisation for Standardisation: Based in Geneva, the ISO is responsible for the development of international standards. Member Administered Closed User Group: A CUG administered by a SWIFT Member (e.g. allowing for communication via SWIFTNet between a Member and the Member s own customers who are not SWIFT users). Secure IP Network: SWIFT s worldwide, highly secure and extremely reliable virtual private network. The SIPN is based on the Internet Protocol (IP) and related technologies and provides transport services required by SWIFTNet services. SWIFTNet Link (SNL) application-to-application access mode ensures technical inter operability between users by providing the minimal functionality required to communicate over the SWIFTNet services. Extensible Mark-up Language: A standard for data representation and manipulation. XML is a meta-language subset of SGML (Standard Generalised Mark-up Language) that has been specifically designed for describing and exchanging structured data on the World Wide Web. With XML a document is divided into three parts: structure, content and style. XML naming conventions for Message Identifiers as follows: The Message is given a Message Identifier, defined by the ISO Registration Authority. The Message Identifier uniquely identifies the message and has the following structure: xxxx.nnn.aaa.bb, whereby xxxx is an alphabetic code in four positions (fixed length) identifying the Business Process, nnn is an alphanumeric code in three positions (fixed length) identifying the Message Functionality, aaa is a numeric code in three positions (fixed length) identifying a particular flavour (variant) of Message Functionality, bb is a numeric code in two positions (fixed length) identifying the version, and. is the delimiter character between elements.

185 Index

186 179 Index Section 1 Introduction 1 Executive summary Investment Manager (IM) SWIFT SWIFT in the investment management markets Investment Managers needs and how SWIFT can help The value of SWIFT to investment managers 8 Section 2 SWIFT s value proposition for investment managers SWIFT s value proposition for investment managers 11 Section 3 Business areas of an investment manager and SWIFT s solutions 3 Business areas of an investment manager and SWIFT s solutions Overview SWIFT solutions per business activities Asset Management Pre-Trade/Trade: Equities, Fixed Income, Listed derivatives Post/Trade, Pre-settlement: Trade confirmation: Equities, Fixed Income, Listed derivatives Post/Trade, Pre-settlement: Trade confirmation: FX, MM and FX options Post Trade/Pre-settlement: Syndicated Loans Post/Trade, Pre-settlement: Trade confirmation: Commodities Post/Trade, Pre-settlement: OTC Derivatives Clearing and settlement: Securities Clearing and settlement: Forex through SWIFT CLS Third Party Service Securities reporting Asset servicing and administration: Data distribution Asset servicing and administration: Corporate Actions Asset servicing and administration: Proxy Voting Portfolio Administration Payments and cash management: Payments initiation Payments and Cash management: Cash Reporting Payments and Cash management: Exceptions and investigations Collateral Management Regulatory reporting Funds Funds flows 62

187 180 Section 4 Initiatives and solutions 4 Initiatives and initiatives Light connectivity Trade capture Automating FX Allocations FX and securities post trade/pre-settlement Securities Pre-settlement matching: Accord SSI Total Portfolio Valuation Collateral management and portfolio reconciliation Securities Financing Commodities Funds distribution 70 Section 5 Applications 5 Applications SWIFT s Accord matching application SWIFT s Affirmations application Securities Market Infrastructures Banking Market Infrastructures 76 Section 6 Standards 6 Standards Introduction SWIFT Standards ISO (International Organisation for Standardisation) The Giovannini Group Financial Products Markup Language (FpML) The Financial Information exchange Protocol (FIX) Market Practices Global Market Practice Groups Securities Market Practice Groups (SMPG) Payments Market Practice Groups (PMPG) National Market Practice Group (NMPGs) 79 Section 7 Messaging 7 Messaging Transaction exchange 81

188 FIN FINInform FINCopy Bulk data exchange Fileact Interactive services Interact Browse Directories Business intelligence Simulation Testing and Qualification Services (STaQS) 85 Section 8 Connectivity 8 Connectivity Who can connect to SWIFT? Is my institution eligible to join? Categories of SWIFT User (until September 2009) SWIFT s Legal Definition of a Fund Administrator SWIFT Categories and IMs Categories of SWIFT User (from September 2009) SWIFT Pricing and Fees Joining and connecting to SWIFT Using SWIFT Services and Business Solutions Other SWIFT Services SWIFT Connectivity Solutions Direct Connectivity Indirect Connectivity Interfaces 99 Section 9 Service 9 Service Business Assessment Programme SWIFT Partner Programme Value Based Partner Segmentation SWIFT Registered Vendors SWIFT Solution Providers SWIFT Partners 103

189 SWIFTReady Certification of Solution Components SWIFTReady Applications SWIFTReady Services and Expertise SWIFTReady Connectivity Promotion of SWIFT Solution Providers and SWIFT Partners Listing SWIFT Training 105 Section 10 About SWIFT 10 About SWIFT Community inspired History and Evolution Sibos 109 Appendix A. Details of standardised messaging 111 A.1. FIN Standards 111 A.2. MX Standards 148 A.3. FpML Standards 169 A.4. FIX Standards 172 B. What is in it for you? Calculating your business case for SWIFT 172 C. Roadmap by Asset class and business function 175 D. Glossary 177

190 183 Further Information Further Information To obtain further information about SWIFT or on any of the SWIFT services and products please contact your regional account manager. Alternatively visit SWIFT s web site at where you can find detailed overviews of SWIFT s business solutions under the Products & Services tab. North & Latin Americas Brazil Avenida Paulista, andar Sao Paulo SP Tel: Fax: SWIFT BIC: SWHQ BR RJ United States - New York 7 Times Square 45th floor New York, NY Tel: Fax: SWIFT BIC: SWHQ US 3N United States - San Francisco 50 California Street Suite 1601 San Francisco, CA United States Tel.: Fax: Asia Pacific Australia Suite 3202 AMP Centre 50 Bridge Street, Sydney NSW 2000 Tel: Fax: India Unit No.303, Ceejay House Plot No. F, Shivsagar Estate Dr. A.B Road, Worli Mumbai Tel: Fax: Hong Kong 31/F One International Finance Centre 1 Harbour View Street Central Tel: Fax: SWIFT BIC: SWHQ HK HH Japan 2nd floor - AIG Building 1-3 Marunouchi 1-chome Chiyoda-ku, Tokyo 100 Tel: Fax: SWIFT BIC: SWHQ JP JT

191 184 People s Republic of China Units th Floor No. 7 Financial Street Winland International Finance Centre Xicheng District Beijing Tel: Shanghai Unit , One Lujiazui No.68 Central Yincheng Rd Shanghai Tel: Fax: Singapore Unit 16-02, 80 Robinson Road Singapore Tel: Fax: EMEA Austria SWIFT Austria GmbH Fischhof 3/6 Reception: 1st floor A-1010 Vienna Tel: Fax: HQ & Belgium Headquarters Avenue Adèle 1 B-1310 La Hulpe Tel: Fax: SWIFT BIC: SWHQ BE BB France Opera Trade Center 4 rue Auber Paris Tel: Fax: Germany 20th Floor, City-Haus I Friedrich-Ebert-Anlage Frankfurt am Main Tel: Fax: Italy Corso G. Matteotti, Milano Tel: Fax: South Africa Unit 18, 2nd Floor 1 Melrose Boulevard Gauteng 2076 Tel: Fax:

192 185 Spain Edificio Cuzco IV Paseo de la Castellana 141, 22A Madrid Tel: Fax: Sweden Oxtorgsgatan 4, 7th floor Stockholm Tel: Fax: Switzerland Freischützgasse Zurich Tel: Fax: United Arab Emirates Office 42 Level 15 The Gate Building P.O. Box Dubai Tel: Fax: United Kingdom 7th floor, The Corn Exchange 55 Mark Lane London EC3R 7NE Tel: Fax: SWIFT BIC: SWHQ GB 2L

193 Interested in joining us? Visit our website to apply online and discover all our other career opportunities. Wish to know more about SWIFT? Browse our website SWIFT Avenue Adèle, 1 B-1310 La Hulpe Belgium JAN 2009