CFETS Promotes Standardisation in the FX market

18 October 2019

Adoption of common standards in FX would improve data quality and remove inefficiencies

On 23 September 2019 at Sibos, China Foreign Exchange Trade System (CFETS) proposed the common adoption of international post-trade processing standards in the global FX market, following their earlier release of ISO 20022-based messages in China. Six market participants of China’s interbank FX market jointly endorsed this proposal, namely Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB), Shanghai Rural Commercial Bank (SRCB) and Yinzhou Bank. Adoption of common standards in the global FX market, which trades in 180 currencies and in large volumes, would iron out the areas that still create unnecessary costs, delays and risks.

Last month, CFETS launched the Working Group on Standardisation of Trade Confirmation in FX Market (hereafter referred to as the Working Group) with 36 major members of China’s FX market (including ICBC, ABC, BOC, CCB, SRCB and Yinzhou Bank). The main objectives of the Working Group are to promote post-trade processing standardisation and implement post-trade best practices outlined in the China FX Code, which covers areas such as trade confirmation, standard settlement instructions, and portfolio reconciliation.

In May 2016, CFETS developed and released ISO 20022-based messages for FX post-trade confirmation and trade capture. These cover five different messages for FX post-trade confirmation, including sending requests, withdrawing requests, modifying requests, checking status and returning status. In June 2019, CFETS released four specific standards for centralised trade confirmation, settlement account management, portfolio reconciliation and post-trade technology specification in China's interbank FX market. Going forward, CFETS will further collaborate with the Working Group to push forward standardisation of post-trade processing in the financial sector and explore opportunities for further usage of ISO standards.

SWIFT is pleased to see CFETS is making great progress in their harmonisation ambitions. SWIFT helps over 120 Securities Markets Infrastructures across the globe to automate and standardise their operations. In our efforts to support China’s development, we remain committed to support CFETS and the market participants to keep improving data quality of FX transactions using ISO 20022.

Lisa O’Connor, Managing Director, Capital Markets and Standards, APAC, SWIFT

Related

Standards

ISO 20022

First published in 2004, ISO 20022 is widely recognised as the standard of the future. As well as being flexible enough to work with the latest technology, ISO 20022 can also adapt to new technology as it emerges.

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