27 September 2016

What’s new for CSDs

SWIFT is enhancing its value proposition for CSDs and their participants by developing a community offering, which includes standards, products and services combined with competitive commercial conditions.

CSDs are undergoing fundamental transformation, triggered by new business models, new regulatory requirements and regionalised initiatives as well as the adoption of ISO 20022. Historically, SWIFT’s market share of CSD messaging has varied widely. “There is no CSD that uses SWIFT exclusively,” explains Nadine Limbourg, senior marketing manager, market infrastructures, SWIFT. “They always maintain two messaging channels as a minimum. There are several CSDs around the globe where SWIFT has the bulk of messaging activity, but we are never the only option.”

Tomorrow’s session will cover both the adoption of a SWIFT channel and the appropriate implementation of ISO standards, both in ISO 15022 and 20022. “We aim to provide a SWIFT solution for every CSD, taking into account the specifics of the market, such as those countries in the T2S area,” says Limbourg.    

We aim to provide a SWIFT solution for every CSD that takes into account the specifics of the market. There will, for example, be adaptations for countries in the T2S area.

Nadine Limbourg, senior marketing manager, market infrastructures, SWIFT

Adopting ISO 20022    

Over the next few years, Limbourg anticipates that most CSDs will be ready to adopt the ISO 22022 standard. But given the flexibility inherent in the standard, implementation will need to be managed to support those banks interacting with multiple CSDs in order to avoid numerous tweaks and adaptations.

Like all market infrastructures, the majority of CSDs have a three-to-five year development plan, says Limbourg. As each one of these comes up for renewal, a move to ISO 20022 is likely to be incorporated.

Patrik Neutjens, director, ISO 20022 programme at SWIFT, offers the example of the Nordic markets. CSDs in these markets will, for different reasons, be reviewing their messaging platforms during the same 36-month period.

“All of them have decided to use this as the opportunity to prepare for ISO 20022,” he says. “Their first objective is to get rid of domestic standards. Some of them want to move to ISO 20022 as quickly as possible, whilst others will offer ISO 15022 and ISO 20022 side-by-side. We can help them onboard their community to the selected standard. In the process, we want to create a level playing field for everyone. The community offering will be a strong incentive as it will essentially take into account message usage by the CSD community as a whole.” The ISO 20022 Harmonisation Charter, unveiled at Sibos in Singapore, will play a central role in helping to ensure consistency of implementation. “An effective community approach needs to be consistent and transparent with a clear understanding of best practice,” says Neutjens. “The charter provides value in making that dynamic a reality.”

Both Limbourg and Neutjens stress that this new approach does not involve an all-or-nothing decision by a CSD and its community. “There will always be smaller participants that are not on SWIFT, who will continue to use the CSD’s proprietary channel,” says Neutjens. “But we want to attract those who are SWIFT-enabled to use our platform to their best advantage.  

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