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ISO 20022. Introduction to ISO 20022 – Universal financial industry message scheme. ISO 20022 (UNIFI). Agenda. ISO 20022: value proposition the standard the actors the registration process the Repository ISO 20022 registration platform Cross industry harmonisation - PowerPoint PPT Presentation
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Slide 1 ISO_20022_LV_v40
ISO 20022 (UNIFI)
ISO 20022
Introduction to ISO 20022 – Universal financial industrymessage scheme
Slide 2 ISO_20022_LV_v40
Agenda
ISO 20022:
– value proposition
– the standard
– the actors
– the registration process
– the Repository ISO 20022 registration platform Cross industry harmonisation Interoperability within the financial industry Q & A
Slide 3 ISO_20022_LV_v40
The ISO 20022 value proposition (1/5)
ObjectiveTo enable communication interoperability between financial institutions, their market infrastructures and their end-user communities
Major obstacleNumerous overlapping standardisation initiatives looking at XML financial messages:
MDDL, FIX, FinXML, VRXML, RIXML, XBRL, FpML, IFX, TWIST,
SWIFT, RosettaNet, OAGi, ACORD, CIDX, etc.
Slide 4 ISO_20022_LV_v40
Proposed solution
A single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives
The ISO 20022 value proposition (2/5)
ISO 20022
Slide 5 ISO_20022_LV_v40
Convergence into ONE standard is the long term objective….
The ISO 20022 value proposition (3/5)
…but in the interim several standards need to coexist to enable quick response to competitive pressures and regulatory demands
Source: John Mersberg, IBM Corporation
Slide 6 ISO_20022_LV_v40
Growth adds exponential complexity and expense…
The ISO 20022 value proposition (4/5)
RosettaNet
OAGi
TWIST
Proprietary format
SWIFTIFX
EDIFACT 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 types42 interfaces = n * (n-1)
Source: John Mersberg, IBM Corporation
Slide 7 ISO_20022_LV_v40
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
RosettaNet
TWIST
SWIFTIFX
EDIFACT
Canonical Message Model(i.e. ISO 20022)
ISO 20022 aims at long term convergence, while facilitating short term coexistence…
14 interfaces = n * 2
Source: John Mersberg, IBM Corporation
The ISO 20022 value proposition (5/5)
OAGi Proprietary format
Slide 8 ISO_20022_LV_v40
ISO 20022 Illustrating business modelling
All institutions have their own sets of data objects
ISO standardises common data objects…
Account
Order
Date
…and groups them into ‘syntax-neutral’ message models, which...
Order
DateDate
XML ISO 15022
… can be ‘transformed’ in message formats in the desired syntax
FIX
EDIFACT
Slide 9 ISO_20022_LV_v40
The ISO 20022 recipe Major ingredients (1/2):
Modelling-based standards development
Syntax-specific design rules for XML
Reverse engineering approach
- Syntax-independent business standard- Validated by the industry
- Predictable and ‘automatable’- Protect standard from technology evolution
- Protect industry investment and ease interoperability- Prepare for future migration
Slide 10 ISO_20022_LV_v40
The ISO 20022 recipe Major ingredients (2/2):
Development / registration process
Repository on the ISO 20022 website
- Clearly identified activities and roles- Business experts and future users involved upfront- Technical experts involved when required
- Business Process Catalogue & Data Dictionary- Outside of official standard (maintained by
registration bodies)
www.iso20022.org
Slide 11 ISO_20022_LV_v40
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
Copies can be obtained from www.iso.org
Part 1:
Part 2:
Part 3:
Part 4:
Part 5:
Slide 12 ISO_20022_LV_v40
Communities of users or organisations that want to develop ISO 20022 compliant messages to support their financial transactions
Submitting organisations
Could beACBIClearstreamCLSEPAS
EuroclearFIXFpMLIFX
ISITCISTHMDDLOAGI
OmgeoSWIFT TWISTTBG5
Creation of a new set of ISO 20022 messages to support a specific transactionUpdate of existing ISO 20022 message sets to accommodate the evolution of the business
Reasons
ISO 20022 – The actors (1/2)
Etc.
Slide 13 ISO_20022_LV_v40
ISO 20022 – 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 ISO 20022 Repository
Technical Support Group, TSG – Assist RMG, SEGs, RA and submitting organisations
Slide 14 ISO_20022_LV_v40
ISO 20022 The registration process (1/3)
Submitter Financial industry group or standards body
Business justification
Business justification
RMGProject approval & allocation to a SEG
SEGEndorsement of scope and developers
Submitter & RA
Development & provisional registration
SEGBusiness validation
RAOfficial registrationand publication
Repository
Dictionary
CatalogueOptional pilot testingor first implementers
www.iso20022.org
RMG
monitors Submitter
& users
Slide 15 ISO_20022_LV_v40
ISO 20022 The registration process (2/3)
Submitter Financial industry group or standards body
Business justification
Business justification
RMGProject approval & allocation to a SEG
SEGEndorsement of scope and developers
Submitter & RA
Development & provisional registration
SEGBusiness validation
RAOfficial registrationand publication
Repository
Dictionary
CatalogueOptional pilot testingor first implementers
www.iso20022.org
RMG
monitors Submitter
& users
Candidate ISO 20022 messages
ISO 20022 messages
Slide 16 ISO_20022_LV_v40
ISO 20022Standards
Evaluation Groups ISTH
Omgeo
CLS
SWIFT
Euroclear
ISITC
ACBI
DataDictionary
BusinessProcess
Catalogue
www.iso20022.org
ISO 20022 FinancialRepository
ISO 20022Registration
Management Group
ISO 20022Registration
Authority
ISO 20022Users
Businessmodels
Candidate ISO 20022messages
Business
justification
ISO 20022messages
ISO 20022 The registration process (3/3)
Securities
Payments
Trade Services
Forex
Cards
Slide 17 ISO_20022_LV_v40
ISO 20022 – The Financial Repository
Data DictionaryData Dictionary - Business Concepts - Message Concepts - Data Types
Business Process CatalogueBusiness Process Catalogue - Financial business process models- Financial business transactions, including messages- XML message schemas
www.iso20022.org
Slide 18 ISO_20022_LV_v40
Continuing with today’s agenda
ISO 20022 registration platform
ISO 20022
Slide 19 ISO_20022_LV_v40
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 ‘ISO 20022 messages’
ISO 20022 - The deployment
Ongoing: promotion to developers (standardisers, industry bodies) and users (vendors, end-users)
Slide 20 ISO_20022_LV_v40
ISO 20022 – How does it fit into the ISO structure?
ISO Technical Committee TC68Financial Services
ISO 20022RMG
SEGPayments
SEGSecurities
RA
SEGFX
RMG members nominated by P-member countries and A-liaison organisations
TSG & SEG members nominated by all member countries and liaison organisations
SC7Banking
SC4Securities
SC2Security WG4
ISO 20022 Review
SEGTrade Services
TSG
SEGCards
Slide 21 ISO_20022_LV_v40
Members - 56 senior managers from:
– 19 countries: AT, AU, BR, 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 five SEGs: Payments and Securities in 2005, Trade Services and Forex SEGs in 2006, Cards & Related Retail Financial Services in 2008
– Approval of 35 development projects
ISO 20022 Registration Management Group
Slide 22 ISO_20022_LV_v40
Members – 42 experts
– 14 countries: AT, AU, CH, DE, DK, FI, FR, GB, IT, 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)
Approved: C2B payment initiation (SWIFT/ISTH), Interbank credit transfers and direct debits (SWIFT), Exceptions and investigations (SWIFT), B2C advice & statement (ISTH/ISITC)
Under evaluation: Payments maintenance 2009 (SWIFT, ISTH, ISITC)
Next: Change/verify account identification (GUF), E-mandates (SWIFT), Cash management (SWIFT), Creditor payment activation request (ACBI), Bank account management (SWIFT)
ISO 20022 – The Payments SEG (1/3)
Slide 23 ISO_20022_LV_v40
ISO 20022 – The Payments SEG (2/3)
Payments Payments Credit
transfers
covering instruments such as:
Direct debits
Cheques
covering actors such as:
Private & corporate customers
Financial institution
s
Central banks
Clearing houses &
RTG systems
Payment ‘factories’
Slide 24 ISO_20022_LV_v40
PaymentsPayments
including business areas such as:
Communications between the
ordering customer and its
bank, etc.
Interbank transfers via
correspondent banking or ACHs, high
value payments, low value bulk
payments, RTGS, etc.
Account opening,
standing orders, transaction and
account information, advices &
statements from …
Payment initiation
Clearing & settlement
Cash management between various actors:
...the account servicing
institutions to account owners,
including reporting from the financial institution…
…to the ordering & beneficiary customers,
reconciliation, exceptions & investigations
handling.
ISO 20022 – The Payments SEG (3/3)
Slide 25 ISO_20022_LV_v40
Members – 61 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: Chad Spitler, BGI
Approved: Investment funds (SWIFT), Transaction regulatory reporting (SWIFT), Proxy voting (SWIFT), Issuer’s agents communication for CA (Euroclear)
Under evaluation: Pre-trade/trade (SWIFT/FPL), Fund processing passport report (SWIFT), Proxy voting maintenance 2009 (SWIFT)
Next: Total portfolio valuation statement (ISITC), Post-trade (Omgeo/SWIFT), Registration & holder identification (Euroclear), Market claims & automatic transformations (Euroclear), Corporate actions (SWIFT), Settlement & reconciliation (SWIFT), Securities issuance (Euroclear), Triparty collateral management (SWIFT), Alternate funds (SWIFT)
ISO 20022 – The Securities SEG (1/3)
Slide 26 ISO_20022_LV_v40
Securities Securities Equities
covering instruments such as:
Funds
Fixed income
covering actors such as:
Investment managers, distributors,
transfer agents, fund administrator
s
Broker / dealers
Regulators
Custodians
Stock exchanges
, ETC providers
Deriva-tives
Clearing houses, CCPs
CSDs, ICSDs
Market Data
Providers
Service bureaux
ISO 20022 – The Securities SEG (2/3)
Slide 27 ISO_20022_LV_v40
including business areas such as:
Account opening,
standing orders, transaction and
account information, advices &
statements, queries &
investigations
Income, corporate actions,
market data, proxy votingCollateral,
repos, securities lending & borrowing
Securities managementCustody
Collateral management
Trade Initiation
, pre-trade
Trade, post-trade
Clearing &
settlement
Securities Securities
Securities Issuance
ISO 20022 – The Securities SEG (3/3)
Slide 28 ISO_20022_LV_v40
ISO 20022: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)
Looking at the advantages ISO 20022 brings over ISO 15022
Syntax independent business modelling is key to the ISO 20022 standard !
Slide 29 ISO_20022_LV_v40
Members – 26 experts
– 11 countries: AU, CA, CH, FR, GB, NL, NO, SE, TR, US, ZA
– 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)
ISO 20022 – The FX SEG (1/3)
Slide 30 ISO_20022_LV_v40
Foreign eXchangeForeign eXchangeSpot
covering instruments such as:
Forward
Swaps
covering actors such as:
Investment managers
Hedge funds
Dealers
Custodians
CLS and CLS
settlement members
Currency
Options
Industry association
s (ISDA)
Application
providers
Money brokers
Trading portals,
matching services providers
ISO 20022 – The FX SEG (2/3)
Slide 31 ISO_20022_LV_v40
including business areas such as:
Clearing and Settlement, including
netting and related
reporting
Post-trade:confirmation,
matching, assignment,
novation, etc.
Notification of trades to third parties
Pre-trade: IOI,
quotes, etc.
Trigger events, option
exercises
Trade: order,
execution, allocation, affirmation
, etc.
Foreign eXchange Foreign eXchange
ISO 20022 – The FX SEG (3/3)
Slide 32 ISO_20022_LV_v40
Members – 25 experts
– 12 countries: AU, CA, CH, DE, DK, FI, GB, IS, IT, NL, US, ZA
– 2 liaison organisations: ISITC, SWIFT Convener: Katja Lehr, IFSA (US); Vice-convener: Peter
Potgieser, ABN Amro (NL); 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)
ISO 20022 The Trade Services SEG (1/3)
Slide 33 ISO_20022_LV_v40
Trade ServicesTrade ServicesCollection
covering products…
Letter of credit
Documentary credit
…and services such as:
Open Account Trading
Reconciliation (A/R, A/P),
remittance data
Purchase order,
transport documents
Guarantee
Invoice financing
Pre/post-shipment financing
& factoring
e-Invoicing
EBPP
ISO 20022 The Trade Services SEG (2/3)
Slide 34 ISO_20022_LV_v40
including actors such as:
Trade facilitators: chambers of commerce,
insurance co, freight forwarders, carriers, customs, factoring
co
Associations providing rules
and master agreements
(eg IFSA, ICC)
Risk managemen
t entities
Private and corporate customers (treasurers
)
Application providers
Financial Institutions
Trade Services Trade Services
ISO 20022 The Trade Services SEG (3/3)
Slide 35 ISO_20022_LV_v40
Members – 22 experts
– 9 countries: AT, AU, CH, DE, FI, FR, GB, NL, SE
– 3 liaison organisations: IFX, Mastercard, VISA
Convener: Chris Starr, APACS (GB); Vice-convener: Sheri Brandon, RBS (NL); Secretary: Reinhard Herwig, SRC (DE)
Kick-off meeting: on 23-24 October 2008
Next: ATM interface for transaction processing and ATM management (IFX Forum), Card Payments Exchanges (EPAS Consortium)
ISO 20022 – The Cards & Related Retail Financial Services SEG (1/3)
Slide 36 ISO_20022_LV_v40
Card issuer
Cards and RetailCards and RetailDebit card
covering instruments…
Prepaid card
Charge and credit card
…and actors as:
Card holder
Acceptor (merchant, retailer)
Acquirer
Intermediary agent
Card scheme
Hard- and Software providers
ISO 20022 – The Cards & Related Retail Financial Services SEG (2/3)
Slide 37 ISO_20022_LV_v40
including business areas such as:
POI messages for payments, administrative
and device related services
Similar messages transacted on
internet or from mobiles or other personal devices
Transactions between
acquirers and card issuers
ATM processes such as
authorization, processing, ATM
management and inventory
Transactions between merchants and acquirers,
and cardholders and issuers that support authorization,
clearing, reversal, chargeback, dispute
processing, etc.
ISO 20022 – The Cards & Related Retail Financial Services SEG (3/3)
Slide 38 ISO_20022_LV_v40
Members – 22 experts
– 8 countries: BR, CN, FI, FR, GB, NL, US, ZA
– 4 liaison organisations: FPL, Mastercard, SWIFT, VISA Convener: Derek Lasalle, JP Morgan Chase (US); Vice-
convener: Paul Hojka, APACS (GB); Secretary: Kris Ketels, SWIFT
Kick-off meeting: on 23-24 October 2008
Mission: help RMG, RA, SEGs and Submitting Organisations with technical matters
ISO 20022 – Technical Support Group
Slide 39 ISO_20022_LV_v40
Continuing with today’s agenda
Cross-industry harmonisation
ISO 20022
Slide 40 ISO_20022_LV_v40
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
Harmonising across all industries with UN/CEFACT
Goal is to establish interoperability between ISO 20022 and UN/CEFACT repositories
United Nations/CEFACT – Centre for trade facilitation and e-business
Slide 41 ISO_20022_LV_v40
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 ISO 20022 to UN/CEFACT
2006:– WG4 takes over technological alignment
2007:
– First official submission from ISO 20022 to UN/CEFACT
– Project of submission from UN/CEFACT to ISO 20022 2008:
– Customer-to-bank payment components harmonised and accepted in UN/CEFACT core component library
Harmonisation between ISO and UN/CEFACT
Slide 42 ISO_20022_LV_v40
ISTH
Omgeo
CLS
SWIFT
Euroclear
ISITC
ACBI
CoreComponents
CommonBusiness
Processes
DataDictionary
BusinessProcess
Catalogue
UN/CEFACT Registry/Repository
www.iso20022.org
ISO 20022 FinancialRepository
ISO 20022Registration
Management Group
UN / CEFACT(All Industries)
ISO 20022Registration
Authority
ISO 20022Users
BusinessRequests
MessageModels
TBG5 Finance
and TBG17Harmo-nisation
A single ISO-UN/CEFACT approach
ISO 20022Standards
Evaluation Groups
Securities
Payments
Trade Services
Forex
Cards
Slide 43 ISO_20022_LV_v40
Continuing with today’s agenda
Interoperability within
the financial industry
ISO 20022
Slide 44 ISO_20022_LV_v40
Working towards interoperability and convergence
Let us look at one concrete example from payments area: a customer may need to adapt to the format of the banks…
Customer A
Bank A
Bank B
Bank C
Proprietary format
SWIFTMT 101
IFX format
Slide 45 ISO_20022_LV_v40
…or banks may need to accept many formats…
Bank AProprietary format
IFX formatCustomer A
Customer C
Customer B
SWIFTMT 101
Working towards interoperability and convergence
Slide 46 ISO_20022_LV_v40
SWIFT MT
ISO 20022 Core Payment Kernel model
The reverse engineering produces a canonical ISO 20022 message model and ‘convergence tables’
Proprietary
TWIST OAGi
IFX
Working towards interoperability and convergence
Slide 47 ISO_20022_LV_v40
Adopting ISO 20022 facilitates convergence and co-existence
IFX
MT 101
Working towards interoperability and convergence
ISO 20022
Core Payment
Kernel
Core Payment
Kernel
IFX
MT 101