Carlo Palmers

1
UNIFI (ISO 20022)a global standard for the
financial industry
Global Payments Forum, Limerick 14 September
2006

• Carlo Palmers
• SWIFT Standards Department

2
Objectives
Why UNIFI (ISO 20022) ..
(and who, what, where, when and how)
Coexistence and migration in SWIFT MTs and MXs
An example standards for SEPA
3
UNIFI (ISO 20022) Building towards a common
approach
Treasury, FX, and OTC Derivatives
UNIFI ISO20022
TC68/SC67 CEFACT/ TBG5
TC68/SC47
TC68/SC4 WG8 WG11
CEFACT/ TBG15
4
UNIFI Major ingredients

• Modelling-based standards development

- Syntax-independent business standard -
Validated by the industry

• Syntax-specific design rules for XML

- Predictable and automatable - Protect
standard from technology evolution

• Reverse engineering approach

- Protect industry investment and ease
interoperability - Prepare for future migration
5
UNIFI Major ingredients

• Development / registration process

- Clearly identified activities and roles -
Business experts and future users involved upfront

• Repository on the ISO 20022 website

• - Business Process Catalogue Data Dictionary
• Outside of official standard (maintained by
• registration bodies)

www.iso20022.org
6
UNIFI (ISO 20022)Registration bodies
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UNIFI The actors
Submitting organisations
Communities of users or organisations that want
to develop UNIFI compliant messages to support
their financial transactions
Could be
ACBI ACORD Clearstream CLS
Euroclear FED FIX FpML
IFX ISITC ISTH MDDL
OAGI Omgeo SWIFT TWIST
Etc.
Reasons
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
8
UNIFI - Illustrating business modelling
9
UNIFI (ISO 20022)UML-to-XML conversion
UML (class diagram)
XML (schema)
10
UNIFI - The deployment

• Approval of the international standard ?
• Selection of the Registration Authority ?
• Set-up of www.iso20022.org ?
• Creation of Registration Management Group ?
• Creation of the first Standards Evaluation Groups
  ?
• Registration and publication of first UNIFI
  messages ?

Ongoing promotion to developers (standardisers,
industry bodies) and users (vendors, end-users)
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UNIFI (ISO 20022)Long term convergence goal
UNIFI Registration Management Group
UNIFI Users
UNIFI Standards Evaluation Groups
ISTH
UNIFI Registration Authority
UN / CEFACT (All Industries)
MDDL
ebXML Registry/ Repository
UNIFI Financial Repository
FpML
Business Requests
Securities
SWIFT
Core Components
Data Dictionary
TBG17 Harmo- nisation
FIX
Message Models
Payments
Common Business Processes
Business Process Catalogue
ISO WGs
TBG5
www.iso20022.org
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UNIFI (ISO 20022)Main drivers

• Improve quality
• Ensure end-to-end interoperability
• Support diversity (market practices)
• Improve STP
• Reduce ambiguity
• Increase business focus
• Reduce implementation costs ( TCO)
• Reduce impact of proprietary technology
• Increase automation capabilities
• Reduce impact of maintenance
• Improve time-to-market

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A typical business transaction impacted by the
standards landscape
?
EPC
?
X12
?
?
?
?
?
ISTH
?
IFX
Edifact
?
Swift
OAGi
FedWire
?
?
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Payments market UNIFI MX delivery dates
Ordering customersfinancial institution
Beneficiary customers financial institution
MT 1xx, 2xx
MT 9xx
UNIFI MX
Candidate UNIFI MX (under development) submission
ready date (SEG sequence)
MT 9xx
MT 9xx
MT 101
Ordering customer
Beneficiary customer
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Securities market equities and fixed
incomeUNIFI MX delivery dates
Seller
UNIFI MX
Corporate actions
Pre- settlement
Candidate UNIFI MX (under development) (submissio
n ready date)
ISO 15022 MT
Reconciliation
I/CSD
Settlement
Settlement
Reconciliation
Reconciliation
Custodian
Clearing agent
Issuersagent communication
Corporate actions
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Securities market funds overview
Old plan manager
PEP/ISA stock transfer May 06
Fund accountant
PEP/ISA cash transfer May 06
New plan manager
Price report
Transfer agent
Institutional investor
Cash forecast report
Investment manager
UNIFI MX
Candidate UNIFI MX submission ready date
ISO 15022 MT
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FX, loans/deposits, precious metals and OTC
derivatives
Ordering party
Trading party
Trading party
Settlement party custodian
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Trade services market
Sellers bank
Buyers bank
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Objectives
Why UNIFI (ISO 20022) ..
(and who, what, where, when and how)
Coexistence and migration in SWIFT MTs and MXs
An example standards for SEPA
20
Interoperability and coexistence Migration
framework
1999
2005

• Not immediately achievable
• Availability UNIFI standards
• Not immediately desired
• Legacy applications
• Recent investments (ISO 15022)

? Need for roadmap ? Need for intermediate
support (coexistence)
20??
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Interoperability and coexistenceThe challenge
How to ensure interoperability and STP despite
the use of different syntaxes in an E2E-
transaction?
Corporate
Inter-bank
Corporate
2
Ordering Bank
Beneficiary Corporate
3
1
1
Intermediary Bank (1)
Intermediary Bank (2)
1
2
2
Ordering Corporate
Receiving Bank
Ordering Bank
Receiving Bank
Inter-bank payment execution
Corporate cash reporting
Corporate payment initiation
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Interoperability and coexistence Identifying
gaps through reverse engineering
Analyse SWIFT MT messages
Coexistence Information
Formalised Translation Rules
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Interoperability and coexistence Defining
translation rules
Standardised data object level
Additional intermediate level
SWIFT MT Structure
AccountCashEntryDetails
Interim Transactionreport_942
SWIFT MT 942
AccountIdentification AccountIdentificationChoice
EntryReference String EntryAmount
CurrencyAndAmount EntryDate DateAndTimeChoice
EntryStatus EntryStatus1Code
AcctId AccountIdentification
20 25 61sub1 61sub2 61sub3 61sub4 61
sub5
StatementEntry
ValueDate DateTime EntryDate DateTime CreditDebi
tCreditDebitCode FundsCode String Amount
Decimal
If EntryAmount gt 99999999999999 then Error
(AmountTooBig)
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Interoperability and coexistence Potential
support for translation
Customer value
Central translation
Central service
Increasing complexity and value
Web service translation
Plug-in (translation API)
Interface solution
SWIFTAlliance
Qualification
Labelling
Test cases
Publication
Machine readable translation rules
Absolute minimum to deliver
Human readable translation rules
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Interoperability and coexistenceMigration roadmap

• Migration roadmap, driven by
• Business needs
• Industry initiatives
• SWIFTNet milestones
• Rolling plan on annual basis
• Migration and coexistence plans (3 years)
• Overview of all known milestones (complete)

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Key dates payments
Completed for every SWIFT market
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Migration roadmap payments
Migration window
MXs
Domain
MTs
Coex
2005
2006
2007
2008
2009
2010
gt2010
Direct debit
No
Direct debit
104, 107
Single credit transfer
Yes
Single credit transfer
103
20??
Exceptions investigations
No
Exceptions investigations
195, 196, 295, 296
2013 - 2015
Cash management
900, 910
Yes
Intraday reporting
Completed for every SWIFT market
Corp cash management
Yes
End of day reporting
940, 941, 942
2013
Cash management
950
Yes
2013 - 2015
Bulk credit transfers
No
Bulk payments
102
N/A
Yes
Financial institution transfers
2xx
No information available yet
N/A
Yes
FIN-copy
095, 096
No information available yet
110, 111, 112, 206, 256, 8xx
N/A
?
Cheques
No information available yet
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Migration roadmap - conclusions

• Migration roadmap must be based on
• E2E business transaction(s)
• Business transaction components
• Constraints
• Business transaction components must migrate
  without creating problems for any E2E business
  transactions that use them
• E2E transactions must migrate without impacting
  other E2E transactions that have components in
  common
• Coexistence support
• May be required to help customers dealing with a
  component in multiple business transactions
• Example Exceptions Investigations (for MT 595,
  596)

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Transaction list
Completed for each business area
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Objectives
Why UNIFI (ISO 20022) ..
(and who, what, where, when and how)
Coexistence and migration in SWIFT MTs and MXs
An example standards for SEPA
31
The contextSingle Euro Payments Area

• SEPA will eliminate barriers to the single
  market - European Commission
• Self-regulation response through EPC
• Defining common schemes
• Allowing competing clearing and settlement
  mechanisms
• Tight timelines
• In 2008 SEPA-compliant products should be
  available
• 2010 critical mass - irreversible

Slide 31
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Preparing for SEPA

• Standards
• Credit transfers
• Direct debits
• r transactions
• Exceptions and Investigations
• Cash management

• ISO 20022 UNIFI
• XML
• End-to-end
• Global

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What is available ??
July
Q3
ISO 20022 XML Standards (core)
ISO 20022 XML Standards (full)




Implemen-tation Guidelines

EPC

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SEPA - The challenge for banks
Settlement
Euro 1 (TARGET2)
TARGET2
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SEPA - SWIFT community and SWIFT working together
Payment schemes managed by EPC
Infrastructure
Clearing and settlement mechanisms
Intra Group
Bilateral / Multilateral
PE-ACH
SEPA - compliant ACH
Common schemes, multiple clearingand settlement
mechanisms
Slide 35
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And a few more things.
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Standards ConceptsSWIFT is currently looking at

• MX Maintenance
• 3 types, CUG driven, explicit versions
• Message granularity and framework
• 27 business areas, one function per message,
  common structures
• Character sets and language
• Basic Latin, no validation, unicode when agreed,
  text in English, unless agreed
• Flexibility and extensibility
• Temporary free text field

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uestions

Answers