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UNIFI (ISO 20022)

UNIFI (ISO 20022). Introduction to ISO 20022 – UNIversal Financial Industry message scheme. UNIFI (ISO 20022). Agenda. UNIFI (ISO 20022): value proposition the standard the actors the registration process the Repository UNIFI registration platform Cross industry harmonisation

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UNIFI (ISO 20022)

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

  2. 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 UNIFI_(ISO_20022)_v32

  3. 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. The UNIFI value proposition (1/5) UNIFI_(ISO_20022)_v32

  4. 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) UNIFI_(ISO_20022)_v32

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

  6. The UNIFI value proposition (4/5) Growth adds exponential complexity and expense… • 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 EDIFACT RosettaNet IFX SWIFT Proprietary format OAGi TWIST 42 interfaces = n * (n-1) Source: John Mersberg, IBM Corporation UNIFI_(ISO_20022)_v32

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

  8. Date Account Order All institutions have their own sets of data objects ISO standardises common data objects… Order Date …and groups them into ‘syntax-neutral’ message models, which... Date … can be ‘transformed’ in message formats in the desired syntax EDIFACT XML ISO 15022 FIX UNIFI - Illustrating business modelling UNIFI_(ISO_20022)_v32

  9. The UNIFI recipe – Major ingredients (1/2): • 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 UNIFI_(ISO_20022)_v32

  10. The UNIFI recipe – Major ingredients (2/2): • 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 UNIFI_(ISO_20022)_v32

  11. UNIFI – The five parts of ISO 20022 International Standard: Overall methodology and format specifications for inputs to and outputs from the ISO 20022 Repository International Standard: Roles and responsibilities of the registration bodies Technical Specification: ISO 20022 modelling guidelines Technical Specification : ISO 20022 XML design rules Technical Specification: ISO 20022 reverse engineering Part 1: Part 2: Part 3: Part 4: Part 5: Copies can be obtained from www.iso.org UNIFI_(ISO_20022)_v32

  12. UNIFI – The actors (1/2) Submitting organisations Communities of users or organisations that want to develop UNIFI compliant messages to support their financial transactions Could be ACBI Clearstream CLS EPAS Euroclear FIX FpML IFX ISITC ISTH MDDL OAGI Omgeo SWIFT TWIST TBG5 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 UNIFI_(ISO_20022)_v32

  13. 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 UNIFI_(ISO_20022)_v32

  14. Financial industry group or standards body R M G m o n i t o r s Submitter Business justification Business justification Project approval & allocation to a SEG RMG Endorsement of scope and developers SEG Development & provisional registration Submitter & RA SEG RA Repository Dictionary Catalogue UNIFI - The registration process (1/3) Business validation Official registration and publication Optional pilot testing or first implementers Submitter & users www.iso20022.org UNIFI_(ISO_20022)_v32

  15. Financial industry group or standards body R M G m o n i t o r s Submitter Business justification Business justification Project approval & allocation to a SEG RMG Endorsement of scope and developers SEG Development & provisional registration Submitter & RA SEG RA Repository Dictionary Catalogue UNIFI - The registration process (2/3) Candidate UNIFI messages Business validation UNIFI messages Official registration and publication Optional pilot testing or first implementers Submitter & users www.iso20022.org UNIFI_(ISO_20022)_v32

  16. UNIFI - The registration process (3/3)  Business justification UNIFI Registration Management Group UNIFI Standards Evaluation Groups UNIFI Registration Authority ISTH Omgeo UNIFI Financial Repository Securities  Business models CLS UNIFI Users SWIFT Data Dictionary Payments  Candidate UNIFI messages Euroclear  UNIFI messages Business Process Catalogue ISITC Trade Services ACBI www.iso20022.org Forex UNIFI_(ISO_20022)_v32

  17. 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 www.iso20022.org UNIFI_(ISO_20022)_v32

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

  19. UNIFI - The deployment • Approval of the international standard • Selection of the Registration Authority  • Set-up ofwww.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) UNIFI_(ISO_20022)_v32

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

  21. UNIFI – Registration Management Group • 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_(ISO_20022)_v32

  22. UNIFI – The Payments SEG (1/3) • 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_(ISO_20022)_v32

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

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

  25. UNIFI – The Securities SEG (1/3) • 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_(ISO_20022)_v32

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

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

  28. Looking at the advantages UNIFI (ISO 20022) brings over ISO 15022 UNIFI (ISO 20022): • Builds on the ISO 15022 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) Syntax independent business modelling is key to the UNIFI (ISO 20022) standard ! UNIFI_(ISO_20022)_v32

  29. UNIFI – The FX SEG (1/3) • 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_(ISO_20022)_v32

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

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

  32. UNIFI – The Trade Services SEG (1/3) • 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_(ISO_20022)_v32

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

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

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

  36. Harmonising across all industries with UN/CEFACT United Nations/CEFACT – Centre for trade facilitation and e-business • 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 Ultimate goal is that UNIFI provides the financial portion of the UN/CEFACT repository UNIFI_(ISO_20022)_v32

  37. Harmonisation between ISO and UN/CEFACT • 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 UNIFI_(ISO_20022)_v32

  38. Long term convergence goal A single ISO-UN/CEFACT approach UNIFI Registration Management Group UNIFI Users UNIFI Standards Evaluation Groups UNIFI Registration Authority ISTH UN / CEFACT (All Industries) Omgeo UN/CEFACT Registry/ Repository UNIFI Financial Repository Securities CLS Business Requests SWIFT Core Components Data Dictionary Payments TBG17 Harmo- nisation Euroclear Message Models Common Business Processes Business Process Catalogue ISITC Trade Services ACBI www.iso20022.org Forex UNIFI_(ISO_20022)_v32

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

  40. ISO 15022 FIX FIX ISO 15022             Two overlapping standards to support the end-to-end transaction Trade Messages Indication Quotation Order Execution (Pre-)Allocation Confirmation Settlement Reconciliation UNIFI_(ISO_20022)_v32

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

  42. UNIFI Single Order Single Execution Working towards co-existence and convergence FIX ISO 15022 Order New Order - single MT 502 Execution Execution Report MT 513 UNIFI_(ISO_20022)_v32

  43. Working towards co-existence and convergence FIX UNIFI ISO 15022 Order to buy/sell Security Quantity Limit price Expiry date Account USD 54=1 22 = 4; 48 = <ISIN> 38 = 1000 44 = 112; 40 = 2 432 = YYYYMMDD 1 = myAccount Side/BUYI ISIN/<ISIN> OrderQuantity3/Quantity Order3/OrderPrice/Price1 OrderExpiryDate AccountIdentification :22F::BUSE//BUYI :35B::<ISIN> :36B::ORDR//UNIT/1000 :90B::LIMI//ACTU/USD112 :98A::EXPI//YYYYMMDD :97A::CASH//myAccount ORDER Executed quantity Executed price Execution date Settlement date 32 = 750 31 = 110; 15 = USD 75 = YYYYMMDD 64 = YYYYMMDD ExecutedTradeQuantity ExecutedTradePrice TradeDate SecuritiesSettlement1/Date :36B::CONF//UNIT/750 :90B::DEAL//ACTU/USD110 :98A::TRAD//YYYYMMDD :98A::SETT//YYYYMMDD EXECUTION UNIFI_(ISO_20022)_v32

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

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

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

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

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

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

  50. www.iso20022.org uestions & Answers iso20022ra@iso20022.org UNIFI_(ISO_20022)_v32

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