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Slide 1 UNIFI_(ISO_20022)_v32 UNIFI (ISO 20022) Introduction to ISO 20022 – UNIversal Financial Industry message scheme.

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Presentation on theme: "Slide 1 UNIFI_(ISO_20022)_v32 UNIFI (ISO 20022) Introduction to ISO 20022 – UNIversal Financial Industry message scheme."— Presentation transcript:

1 Slide 1 UNIFI_(ISO_20022)_v32 UNIFI (ISO 20022) Introduction to ISO – UNIversal Financial Industry message scheme

2 Slide 2 UNIFI_(ISO_20022)_v32 Agenda  UNIFI (ISO 20022): –value proposition –the standard –the actors –the registration process –the Repository  UNIFI registration platform  Cross industry harmonisation  Interoperability within the financial industry  Q & A

3 Slide 3 UNIFI_(ISO_20022)_v32 The UNIFI value proposition (1/5) Objective To enable communication interoperability between financial institutions, their market infrastructures and their end-user communities Major obstacle Numerous overlapping standardisation initiatives looking at XML financial messages: MDDL, FIX, FinXML, VRXML, RIXML, XBRL, FpML, IFX, TWIST, SWIFT, RosettaNet, OAGi, ACORD, CIDX, etc.

4 Slide 4 UNIFI_(ISO_20022)_v32 Proposed solution A single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives The UNIFI value proposition (2/5) UNIFI (ISO 20022)

5 Slide 5 UNIFI_(ISO_20022)_v32 Convergence into ONE standard is the long term objective…. The UNIFI value proposition (3/5) …but in the interim several standards need to coexist to enable quick response to competitive pressures and regulatory demands Source: John Mersberg, IBM Corporation

6 Slide 6 UNIFI_(ISO_20022)_v32 Growth adds exponential complexity and expense… The UNIFI value proposition (4/5) RosettaNet OAGi TWIST Proprietary format SWIFTIFX EDIFACT Without common building blocks: Point-to-point connection Data is mapped directly from one application to another Costly, unscalable and difficult to implement and maintain Process, routing, rules logic needs to be coded to specific message types 42 interfaces = n * (n-1) Source: John Mersberg, IBM Corporation

7 Slide 7 UNIFI_(ISO_20022)_v32 Standardised implementation reduces cost, time to effect change and improves overall performance… Canonical message model = T rue process integration Reduced brittleness, faster to respond to change Shared message services – single/shared parser, message independent rules engine, etc. Unified monitoring / audit trail RosettaNet TWIST SWIFTIFX EDIFACT Canonical Message Model (i.e. ISO 20022) UNIFI aims at long term convergence, while facilitating short term coexistence… 14 interfaces = n * 2 Source: John Mersberg, IBM Corporation The UNIFI value proposition (5/5) OAGi Proprietary format

8 Slide 8 UNIFI_(ISO_20022)_v32 UNIFI - Illustrating business modelling All institutions have their own sets of data objects ISO standardises common data objects… Account Order Date …and groups them into ‘syntax- neutral’ message models, which... Order Date XML ISO … can be ‘transformed’ in message formats in the desired syntax FIX EDIFACT

9 Slide 9 UNIFI_(ISO_20022)_v32 The UNIFI recipe – Major ingredients (1/2):  Modelling-based standards development  Syntax-specific design rules for XML  Reverse engineering approach - Syntax-independent business standard - Validated by the industry - Predictable and ‘automatable’ - Protect standard from technology evolution - Protect industry investment and ease interoperability - Prepare for future migration

10 Slide 10 UNIFI_(ISO_20022)_v32 The UNIFI recipe – Major ingredients (2/2):  Development / registration process  Repository on the ISO website - Clearly identified activities and roles - Business experts and future users involved upfront - Business Process Catalogue & Data Dictionary -Outside of official standard (maintained by registration bodies)

11 Slide 11 UNIFI_(ISO_20022)_v32 UNIFI – The five parts of ISO International Standard: Overall methodology and format specifications for inputs to and outputs from the ISO Repository International Standard: Roles and responsibilities of the registration bodies Technical Specification: ISO modelling guidelines Technical Specification : ISO XML design rules Technical Specification: ISO reverse engineering Copies can be obtained from Part 1: Part 2: Part 3: Part 4: Part 5:

12 Slide 12 UNIFI_(ISO_20022)_v32 Communities of users or organisations that want to develop UNIFI compliant messages to support their financial transactions Submitting organisations Could be ACBI Clearstream CLS EPAS Euroclear FIX FpML IFX ISITC ISTH MDDL OAGI Omgeo SWIFT TWIST TBG5 Creation of a new set of UNIFI messages to support a specific transaction Update of existing UNIFI message sets to accommodate the evolution of the business Reasons UNIFI – The actors (1/2) Etc.

13 Slide 13 UNIFI_(ISO_20022)_v32 UNIFI – The actors (2/2)  Registration Management Group, RMG –Overall governance / court of appeal –Approve business justifications for new standards –Create Standards Evaluation Groups (SEGs)  Standards Evaluation Groups, SEGs –Represent future users of specific financial areas –Validate message standards  Registration Authority, RA –Ensure compliance –Maintain and publish UNIFI Repository  Technical Support Group, TSG (to be created) –Assist RMG, SEGs, RA and submitting organisations

14 Slide 14 UNIFI_(ISO_20022)_v32 UNIFI - The registration process (1/3) Submitter Financial industry group or standards body Business justification Business justification RMG Project approval & allocation to a SEG SEG Endorsement of scope and developers Submitter & RA Development & provisional registration SEG Business validation RA Official registration and publication Repository Dictionary Catalogue Optional pilot testing or first implementers RMGmonitorsRMGmonitors Submitter & users

15 Slide 15 UNIFI_(ISO_20022)_v32 UNIFI - The registration process (2/3) Submitter Financial industry group or standards body Business justification Business justification RMG Project approval & allocation to a SEG SEG Endorsement of scope and developers Submitter & RA Development & provisional registration SEG Business validation RA Official registration and publication Repository Dictionary Catalogue Optional pilot testing or first implementers RMGmonitorsRMGmonitors Submitter & users Candidate UNIFI messages UNIFI messages

16 Slide 16 UNIFI_(ISO_20022)_v32 UNIFI Standards Evaluation Groups ISTH Omgeo CLS SWIFT Euroclear ISITC ACBI Data Dictionary Business Process Catalogue UNIFI Financial Repository UNIFI Registration Management Group Securities Payments UNIFI Registration Authority UNIFI Users  Business models  Candidate UNIFI messages  Business justification  UNIFI messages UNIFI - The registration process (3/3) Trade Services Forex

17 Slide 17 UNIFI_(ISO_20022)_v32 UNIFI – The Financial Repository Data Dictionary - Business Concepts - Message Concepts - Data Types Business Process Catalogue - Financial business process models - Financial business transactions, including messages - XML message schemas

18 Slide 18 UNIFI_(ISO_20022)_v32 Continuing with today’s agenda UNIFI registration platform UNIFI (ISO 20022)

19 Slide 19 UNIFI_(ISO_20022)_v32  Approval of the international standard  Selection of the Registration Authority  Set-up of  Creation of Registration Management Group  Creation of the first Standards Evaluation Groups  Registration and publication of first ‘UNIFI messages’ UNIFI - The deployment Ongoing: promotion to developers (standardisers, industry bodies) and users (vendors, end-users)

20 Slide 20 UNIFI_(ISO_20022)_v32 UNIFI – How does it fit into the ISO structure? ISO Technical Committee TC68 Financial Services UNIFI RMG SEG Payments SEG Securities RA SEG FX RMG members nominated by P-member countries and A- liaison organisations TSG & SEG members nominated by all member countries and liaison organisations SC7 Banking SC4 Securities SC2 Security WG4 UNIFI Review SEG Trade Services TSG

21 Slide 21 UNIFI_(ISO_20022)_v32  Members - 50 senior managers from: –18 countries: AT, AU, CA, CH, DE, DK, FI, FR, GB, IT, JP, KR, LU, NL, NO, SE, US, ZA. –9 liaison organisations: Clearstream, Euroclear, FPL, FpML, ISITC, SWIFT, TWIST, UN/CEFACT/TBG5, VISA.  Convener: Gerard Hartsink, ABN Amro (NL); Vice-convener: Bob Blair, JPMorgan Chase (US); Secretary: Cynthia Fuller, X9 (US)  Meetings: twice a year  Key decisions: –Creation of Payments and Securities SEGs in 2005 –Creation of Trade Services and Forex SEGs in 2006 –Approval of 26 projects (Business Justifications) UNIFI – Registration Management Group

22 Slide 22 UNIFI_(ISO_20022)_v32  Members – 39 experts –13 countries: AT, AU, CH, DE, DK, FI, FR, GB, NL, NO, SE, US, ZA –5 liaison organisations: Euroclear, IFX, SWIFT, TWIST, UN/CEFACT/TBG5  Convener: Len Schwartz, ABN Amro (NL); Vice-convener: Bob Blair, JP Morgan Chase (US); Secretary: Deb Hjortland, FRB (US)  Kick-off meeting: in June 2005  Approved: C2B payment initiation (SWIFT/ISTH), Interbank credit transfers and direct debits (SWIFT), Exceptions and investigations (SWIFT), B2C advice & statement (ISTH/ISITC)  Next: Change/Verify Account Identification (GUF), Cash management (SWIFT) UNIFI – The Payments SEG (1/3)

23 Slide 23 UNIFI_(ISO_20022)_v32 UNIFI – The Payments SEG (2/3) Payments Credit transfer s covering instruments such as: Direct debits Cheque s Debit & credit cards covering actors such as: Private & corporate customers Financial institution s Central banks Clearing houses & RTG systems Payment ‘factories’

24 Slide 24 UNIFI_(ISO_20022)_v32 Payments including business areas such as: Retail / commercial payments, communications between the ordering customer and its bank, etc. Interbank transfers via correspondent banking or ACHs, high value payments, low value bulk payments, RTGS, etc. Account opening, standing orders, transaction and account information, advices & statements from … Payment initiation Clearing & settlement Cash management between various actors:...the account servicing institutions to account owners, including reporting from the financial institution… …to the ordering & beneficiary customers, reconciliation, exceptions & investigations handling. UNIFI – The Payments SEG (3/3)

25 Slide 25 UNIFI_(ISO_20022)_v32  Members – 54 experts –16 countries: AU, CA, CH, DE, DK, FI, FR, GB, JP, LU, NL, NO, SE, TR, US, ZA –7 liaison organisations: Clearstream, Euroclear, ISDA/FpML, ISITC, FISD/MDDL, FPL, SWIFT  Convener: Karla McKenna, Citigroup (US); Vice-convener: Didier Hermans, Euroclear; Secretary: Dana Brants, SWIFT  Kick-off meeting: in June 2005  Approved: Investment funds (SWIFT), Transaction regulatory reporting (SWIFT), Proxy voting (SWIFT)  Under evaluation: Pre-trade/trade (SWIFT)  Next: Total portfolio valuation statement (ISITC), Issuer’s agents communication for CA (Euroclear), Post-trade (Omgeo), Registration & holder identification (Euroclear), Market claims & automatic transformations (Euroclear), Corporate actions (SWIFT), Settlement & reconciliation (SWIFT), Securities issuance (Euroclear), Triparty collateral management (SWIFT), Fund processing passport report (SWIFT) UNIFI – The Securities SEG (1/3)

26 Slide 26 UNIFI_(ISO_20022)_v32 Securities Equities covering instruments such as: Funds Fixed income covering actors such as: Investment managers, distributors, transfer agents, fund administrator s Broker / dealers Regulators Custodians Stock exchanges, ETC providers Deriva- tives Clearing houses, CCPs CSDs, ICSDs Market Data Providers Service bureaux UNIFI – The Securities SEG (2/3)

27 Slide 27 UNIFI_(ISO_20022)_v32 including business areas such as: Account opening, standing orders, transaction and account information, advices & statements, queries & investigations Income, corporate actions, market data, proxy voting Collateral, repos, securities lending & borrowing Securities management Custody Collateral management Initiation, pre- trade Trade, post- trade Clearing & settlemen t Securities UNIFI – The Securities SEG (3/3)

28 Slide 28 UNIFI_(ISO_20022)_v32 UNIFI (ISO 20022):  Builds on the ISO data dictionary concept and registration infrastructure, but strengthens the monitoring by the industry  Uses a more robust, syntax independent development methodology based on UML modelling of business processes and transactions  Uses XML as the syntax for the actual physical messages  Has a wider scope than ISO 15022, which is only for securities messages  Is in line with directions taken by other industries (UN/CEFACT) Looking at the advantages UNIFI (ISO 20022) brings over ISO Syntax independent business modelling is key to the UNIFI (ISO 20022) standard !

29 Slide 29 UNIFI_(ISO_20022)_v32  Members – 26 experts –11 countries: AU, CA, CH, DE, FR, GB, NL, NO, SE, TR, US –3 liaison organisations: FPL, ISITC, SWIFT  Convener: Ludy Limburg, ABN Amro (NL); Vice-convener: Tony Smith, JP Morgan Chase (UK); Secretary: Joshua Derrick, SWIFT  Kick-off meeting: in September 2006  Approved: Forex notifications (CLS) UNIFI – The FX SEG (1/3)

30 Slide 30 UNIFI_(ISO_20022)_v32 Foreign eXchange Spot covering instruments such as: Forward Swaps covering actors such as: Investment managers Hedge funds Dealers Custodians CLS and CLS settlement members Currenc y Options Industry association s (ISDA) Applicatio n providers Money brokers Trading portals, matching services providers UNIFI – The FX SEG (2/3)

31 Slide 31 UNIFI_(ISO_20022)_v32 including business areas such as: Clearing and Settlement, including netting and related reporting Post-trade: confirmation, matching, assignment, novation, etc. Notification of trades to third parties Pre- trade: IOI, quotes, etc. Trigger events, option exercises Trade: order, execution, allocation, affirmation, etc. Foreign eXchange UNIFI – The FX SEG (3/3)

32 Slide 32 UNIFI_(ISO_20022)_v32  Members – 23 experts –12 countries: AU, CH, DE, DK, FI, FR, GB, IS, IT, NL, US, ZA –2 liaison organisations: ISITC, SWIFT  Convener: Katja Lehr, IFSA (US); Vice-convener: Dominique Pierre Barthares, BNP Paribas (FR); Secretary: Jim Wills, SWIFT  Kick-off meeting: in September 2006  Approved: Invoice Financing Request (ACBI), Trade Services Management (SWIFT)  Next: e-Invoice (UN/CEFACT/TBG5) UNIFI – The Trade Services SEG (1/3)

33 Slide 33 UNIFI_(ISO_20022)_v32 Trade Services Collection covering products… Letter of credit Documentar y credit …and services such as: Open Account Trading EBPP Reconciliation (A/R, A/P), remittance data Purchase order, transport documents Guarante e Invoice financing Pre/post- shipment financing & factoring e-Invoicing, EBPP UNIFI – The Trade Services SEG (2/3)

34 Slide 34 UNIFI_(ISO_20022)_v32 including actors such as: Trade facilitators: chambers of commerce, insurance co, freight forwarders, carriers, customs, factoring co Associations providing rules and master agreements (eg IFSA, ICC) Risk managemen t entities Private and corporate customers (treasurers ) Application providers Financial Institutions Trade Services UNIFI – The Trade Services SEG (3/3)

35 Slide 35 UNIFI_(ISO_20022)_v32 Continuing with today’s agenda Cross-industry harmonisation UNIFI (ISO 20022)

36 Slide 36 UNIFI_(ISO_20022)_v32  Created in 1997 to improve world-wide co-ordination of trade facilitation across all industries  Focusing on international standards for electronic transactions (e.g., ebXML venture with OASIS)  Promoting technology neutral business modelling and a central repository of core components Harmonising across all industries with UN/CEFACT Ultimate goal is that UNIFI provides the financial portion of the UN/CEFACT repository United Nations/CEFACT – Centre for trade facilitation and e-business

37 Slide 37 UNIFI_(ISO_20022)_v32  2004: –TC68, TBG5 and SWIFT sign a cooperation agreement to investigate alignment in line with the objectives of the ‘MoU on e-Business’ –A workplan is agreed between the signatories  2005: –Recommendation for alignment of methodologies –Trial submission from UNIFI to UN/CEFACT  2006: –WG4 takes over technological alignment  2007: –First official submission from UNIFI to UN/CEFACT  2008: –Customer-to-bank payment components harmonised and accepted in UN/CEFACT core component library Harmonisation between ISO and UN/CEFACT

38 Slide 38 UNIFI_(ISO_20022)_v32 ISTH Omgeo CLS SWIFT Euroclear ISITC ACBI Core Components Common Business Processes Data Dictionary Business Process Catalogue UN/CEFACT Registry/ Repository UNIFI Financial Repository UNIFI Registration Management Group UN / CEFACT (All Industries) UNIFI Registration Authority UNIFI Users Business Requests Message Models TBG17 Harmo- nisation Long term convergence goal A single ISO-UN/CEFACT approach UNIFI Standards Evaluation Groups Securities Payments Trade Services Forex

39 Slide 39 UNIFI_(ISO_20022)_v32 Continuing with today’s agenda Interoperability within the financial industry - securities UNIFI (ISO 20022)

40 Slide 40 UNIFI_(ISO_20022)_v32 Messages Indication Quotation Order Execution (Pre-)Allocation Confirmation Settlement Reconciliation ISO Trade ISO FIX Two overlapping standards to support the end-to-end transaction FIX

41 Slide 41 UNIFI_(ISO_20022)_v32 Executing Party Trade Counterparty Ordering Party Trade Counterparty Ordering Party Execution (FIX) Order (FIX) Execution (FIX) Order (ISO 15022) Execution (ISO 15022) Order (FIX) Order (ISO 15022) Execution (ISO 15022) Working towards co-existence and convergence

42 Slide 42 UNIFI_(ISO_20022)_v32 Single Order Single Execution UNIFI New Order - single Execution Report MT 502 MT 513 FIXISO Order Execution Working towards co-existence and convergence

43 Slide 43 UNIFI_(ISO_20022)_v32 FIX Order to buy/sell Security Quantity Limit price Expiry date Account USD Executed quantity Executed price Execution date Settlement date ORDER EXECUTION 32 = = 110; 15 = USD 75 = YYYYMMDD 64 = YYYYMMDD 54=1 22 = 4; 48 = 38 = = 112; 40 = = YYYYMMDD 1 = myAccount ISO :22F::BUSE//BUYI :35B:: :36B::ORDR//UNIT/1000 :90B::LIMI//ACTU/USD112 :98A::EXPI//YYYYMMDD :97A::CASH//myAccount :36B::CONF//UNIT/750 :90B::DEAL//ACTU/USD110 :98A::TRAD//YYYYMMDD :98A::SETT//YYYYMMDD Working towards co-existence and convergence UNIFI Side/BUYI ISIN/ OrderQuantity3/Quantity Order3/OrderPrice/Price1 OrderExpiryDate AccountIdentification ExecutedTradeQuantity ExecutedTradePrice TradeDate SecuritiesSettlement1/Date

44 Slide 44 UNIFI_(ISO_20022)_v32 Executing Party Trade Counterparty Ordering Party Trade Counterparty Ordering Party Execution (FIX) Order (FIX) Execution (FIX) Order (ISO 15022) Execution (ISO 15022) Order (FIX) Order (ISO 15022) Execution (ISO 15022) Execution (FIX) Order (FIX) Execution (FIX) Order (UNIFI) Execution (UNIFI) Order (FIX) Order (UNIFI) Execution (UNIFI) Working towards co-existence and convergence

45 Slide 45 UNIFI_(ISO_20022)_v32 Continuing with today’s agenda Interoperability within the financial industry - payments UNIFI (ISO 20022)

46 Slide 46 UNIFI_(ISO_20022)_v32 Working towards interoperability and convergence Let us look at one concrete example from payments area: a customer may need to adapt to the format of the banks… Customer A Bank A Bank B Bank C Proprietary format SWIFT MT 101 IFX format

47 Slide 47 UNIFI_(ISO_20022)_v32 …or banks may need to accept many formats… Bank A Proprietary format IFX format Customer ACustomer CCustomer B SWIFT MT 101 Working towards interoperability and convergence

48 Slide 48 UNIFI_(ISO_20022)_v32 SWIFT MT UNIFI Core Payment Kernel model The reverse engineering produces a canonical UNIFI message model and ‘convergence tables’ Proprietary TWIST OAGi IFX Working towards interoperability and convergence

49 Slide 49 UNIFI_(ISO_20022)_v32 Adopting UNIFI facilitates convergence and co-existence IFX MT 101 Working towards interoperability and convergence UNIFI Core Payment Kernel Core Payment Kernel IFX MT 101

50 Slide 50 UNIFI_(ISO_20022)_v32 & & uestions A nswers


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