MiFID is coming and SWIFT is ready

Message standards in place to enable community to meet obligations

The European Commission's Markets in Financial Instruments Directive (MiFID) becomes law in November 2007 and will have a profound impact on the securities industry. SWIFT now has fully MiFID-compliant message standards that the community can rely upon as it sets out to meet the requirements laid out in the Directive.

Fulfilling the demands of the gap analysis

Following the completion of a gap analysis carried out by SWIFT in close conjunction with key stakeholders in the industry, messages have been modified to ensure MiFID compliance. These will be live in the Standards Release annual maintenance on 27 October 2007.

Meeting market regulator requirements

Consultations with SWIFT's customers also identified a gap in the message suite. One of the MiFID requirements is to report transactions to market regulators, which impacts all EU/EEA firms trading securities listed on an EU/EEA regulated market. By the end of the business day after the trade, it obliges them to report transactions using a set of 23 data fields specified in the MiFID legislation to the relevant market regulator. In some cases, regulators may request more information than this and/or extend the scope of reporting requirements.

SWIFT has now delivered a set of four new messages to provide investment firms with a standard format for reporting across all EU and EEA markets. Developed in accordance with the UNIFI (ISO 20022) methodology, the process went from scoping to completion in less than three months.

Martin Sexton, Managing Director, London Market Systems Ltd notes, "MiFID necessitates the use of industry standards. The new regulatory reporting message suite offers an opportunity to satisfy the transaction reporting requirements of the Directive."

On course for UNIFI (ISO 20022) compliance

To complete the formal process, the messages have now been submitted to ISO (International Organization for Standardization) and they are on course for approval as compliant UNIFI (ISO 20022) messages in the coming months.

Keith Berrett, Executive Director at Morgan Stanley & Co International, and one of the key contributors, comments, "Every party involved in the flow should benefit from the creation of a standard message for reporting transactions. It will remove the need to maintain different schemas dependent upon who the information is being sent to and from, or what the instrument is. It will make design, support and maintenance easier and cheaper for all of us as and when the standards are adopted. The structure and content of the proposed new messages have been designed and reviewed by a very broad cross section of market experts, so they are generic enough that they can be used more widely than just for MiFID compliance."

Helping take-up in the community

As an ISO standard, the new messages will be useable over any network. SWIFT will support the standard on the SWIFT network itself and will drive adoption by offering investment firms, regulators and reporting intermediaries the opportunity to pilot the messages over SWIFT's file transfer service - SWIFTNet FileAct - during the second half of 2007.

"We are delighted that the June 2007 Board admitted regulators into the SWIFT community," comments Richard Young, Market Reform Manager at SWIFT, "as this enables them to receive reporting over SWIFT directly from investment firms or via intermediaries."

Whilst meeting MiFID obligations is a priority, this is seen as just a first step. Young continues, "The standard can be extended to become the universal transaction reporting standard, and our intention is to offer services over SWIFT to support transaction reporting in all relevant financial markets over time."