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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 registration bodies registration process the Repository The deployment of UNIFI 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)_v18

  2. Agenda • UNIFI (ISO 20022): • value proposition • the standard • registration bodies • registration process • the Repository • The deployment of UNIFI • Cross industry harmonisation • Interoperability within the financial industry • Q & A UNIFI_(ISO_20022)_v18

  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)_v18

  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)_v18

  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)_v18

  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)_v18

  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)_v18

  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)_v18

  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)_v18

  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)_v18

  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)_v18

  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 ACORD Clearstream CLS Euroclear FED FIX FpML IFX ISITC ISTH MDDL OAGI Omgeo SWIFT TWIST 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)_v18

  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 UNIFI_(ISO_20022)_v18

  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 Business validation & technical assessment SEG Official registration RA Publication Repository Dictionary Catalogue UNIFI - The registration process (1/3) www.iso20022.org UNIFI_(ISO_20022)_v18

  15. Financial industry groups & standards bodies 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 Business validation & technical assessment SEG Official registration RA Publication Repository Dictionary Catalogue UNIFI - The registration process (2/3) Candidate UNIFI messages UNIFI messages www.iso20022.org UNIFI_(ISO_20022)_v18

  16. UNIFI - The registration process (3/3)  Business justification UNIFI Registration Management Group UNIFI Standards Evaluation Groups UNIFI Registration Authority ISTH MDDL UNIFI Financial Repository  Business models FpML UNIFI Users Securities SWIFT Data Dictionary  Candidate UNIFI messages FIX  UNIFI messages Payments Business Process Catalogue ISO WGs TBG5 www.iso20022.org UNIFI_(ISO_20022)_v18

  17. UNIFI – The Repository 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)_v18

  18. The deployment of UNIFI Continuing in today’s agenda UNIFI (ISO 20022) UNIFI_(ISO_20022)_v18

  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)_v18

  20. SC2 Security SC4 Securities SC6 Retail SC7 Core banking UNIFI RMG WG4 UNIFI Review RA SEG Securities SEG SEG Payments UNIFI – How does it fit into the ISO structure? ISO Technical Committee TC68 Financial Services RMG members nominated by P-member countries and A-liaison organisations SEG members nominated by all member countries and liaison organisations UNIFI_(ISO_20022)_v18

  21. UNIFI – Registration Management Group • Members -47 senior managers from: • 17 countries: AT, AU, CA, CH, DE, DK, FI, FR, GB, JP, KR, LU, NL, NO, SE, US, ZA. • 9 liaison organisations: Clearstream, ECBS, Euroclear, FIX, FpML, ISITC, SWIFT, TWIST, UN/CEFACT/TBG5. • Convener: Sandy Throne, DTCC (US); Vice-convener: Gerard Hartsink, ABN Amro (NL) • Meetings:Jan 2005, Sep 2005, Jan 2006, May 2006 • Key decisions: • Creation of a Payments and a Securities SEGs • Creation of Trade Services SEG in 2006 • Approval of first 13 projects (Business Justifications) UNIFI_(ISO_20022)_v18

  22. UNIFI – The Payments SEG (1/3) • Members – 30 experts • 13 countries: AT, AU, CH, DE, DK, FI, FR, GB, NL, NO, SE, US, ZA • 4 liaison organisations: Euroclear, IFX, SWIFT, UN/CEFACT/TBG5 • Convener: Len Schwartz, ABN Amro (NL); Vice-convener: Bob Blair, JPMorganChase (US) • Kick-off meeting in June 2005 • Approved: C2B payment initiation (SWIFT/ISTH) • Under evaluation: Exceptions and investigations (SWIFT), Direct Debits (SWIFT) • Next: Interbank credit transfers (SWIFT), Cash management (SWIFT/ISTH) UNIFI_(ISO_20022)_v18

  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)_v18

  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)_v18

  25. UNIFI – The Securities SEG (1/3) • Members – 39 experts • 12 countries: CA, CH, DE, DK, FR, GB, LU, NL, NO, SE, US, ZA • 7 liaison organisations: Clearstream, ECBS, Euroclear, ISDA/FpML, ISITC, MDDL, SWIFT • Convener: Karla McKenna, Citigroup (US); Vice-convener: Didier Hermans, European Banking Federation (BE) • Kick-off meeting in June 2005 • Approved: Investment Funds (1) (SWIFT) • Under evaluation: Pre-trade/trade (SWIFT) • Next: Investment Funds (2) (SWIFT), Total Net Asset Value Statement (ISITC), Proxy voting (SWIFT), Issuer’s agent communication for CA (Euroclear) UNIFI_(ISO_20022)_v18

  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)_v18

  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)_v18

  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)_v18

  29. Cross industry harmonisation Continuing in today’s agenda UNIFI (ISO 20022) UNIFI_(ISO_20022)_v18

  30. 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 modeling and a central repository of core components Ultimate goal is that UNIFI provides the financial portion of the UN/CEFACT repository UNIFI_(ISO_20022)_v18

  31. 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 will pursue technological alignment • Real submission from UNIFI to UN/CEFACT UNIFI_(ISO_20022)_v18

  32. 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) MDDL ebXML Registry/ Repository UNIFI Financial Repository FpML Business Requests Securities SWIFT Core Components Data Dictionary TBG17 Harmo- nisation FIX Message Models Payments Common Business Processes Business Process Catalogue ISO WGs TBG5 www.iso20022.org UNIFI_(ISO_20022)_v18

  33. Interoperability within the financial industry - securities Continuing in today’s agenda UNIFI (ISO 20022) UNIFI_(ISO_20022)_v18

  34. 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)_v18

  35. 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)_v18

  36. 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)_v18

  37. 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)_v18

  38. 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)_v18

  39. Interoperability within the financial industry - payments Continuing in today’s agenda UNIFI (ISO 20022) UNIFI_(ISO_20022)_v18

  40. Working towards interoperability and convergence Bank A IFX format Proprietary format Bank B Customer A SWIFT MT 101 Bank C Let’s look at one concrete example from payments area: a customer may need to adapt to the format of the banks… UNIFI_(ISO_20022)_v18

  41. 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)_v18

  42. 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)_v18

  43. 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)_v18

  44. www.iso20022.org uestions & Answers iso20022ra@iso20022.org UNIFI_(ISO_20022)_v18

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