Independent advisory group giovannini barrier 1 meeting 1
Download
1 / 47

Independent Advisory Group Giovannini Barrier 1 Meeting 1 - PowerPoint PPT Presentation


  • 101 Views
  • Uploaded on

Independent Advisory Group Giovannini Barrier 1 Meeting 1. July 19th, 2005. Agenda. The Independent Advisory Group What is it & why do we need one? What is it going to do & when? Barrier 1 What progress has been made so far? What is there still left to do? Agreement of terms

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Independent Advisory Group Giovannini Barrier 1 Meeting 1' - diamond


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Independent advisory group giovannini barrier 1 meeting 1 l.jpg

Independent Advisory GroupGiovannini Barrier 1Meeting 1

July 19th, 2005


Agenda l.jpg
Agenda

  • The Independent Advisory Group

    • What is it & why do we need one?

    • What is it going to do & when?

  • Barrier 1

    • What progress has been made so far?

    • What is there still left to do?

  • Agreement of terms

  • Focus on the Network Layer

    • Standards

    • Security

    • Service

  • Any other business


Agenda3 l.jpg
Agenda

  • The Independent Advisory Group

    • What is it & why do we need one?

    • What is it going to do & when?

  • Barrier 1

    • What progress has been made so far?

    • What is there still left to do?

  • Agreement of terms

  • Focus on the Network Layer

    • Standards

    • Security

    • Service

  • Any other business


Independent advisory group what is it why do we need one l.jpg
Independent Advisory Group:What is it & why do we need one?

  • Responses emphasised importance of original key principles:

    • Leverage

    • Open

    • Neutral

    • Inclusive

  • Feedback identified creation of an independent advisory group as a way of maintaining principles

  • Business not technology focus

  • Maintain congruency with G30


Independent advisory group what is it why do we need one5 l.jpg
Independent Advisory Group:What is it & why do we need one?

  • CESAME group meeting 10th June concurred with suggestion to form IAG

  • Membership criteria:

    • CESAME member

    • Respond to the consultation

    • 4 exceptions

  • Independent chair

  • Independent observer


Independent advisory group what is it why do we need one6 l.jpg
Independent Advisory Group:What is it & why do we need one?


Independent advisory group what will it do when l.jpg
Independent Advisory Group:What will it do & when?

  • Ratify

    • Where consultation provides conclusive direction

  • Recommend

    • Where consultation results are unclear

  • Meetings scheduled:

    • 19th July

    • 3rd August

    • 23rd August

    • 12th September


Agenda8 l.jpg
Agenda

  • The Independent Advisory Group

    • What is it & why do we need one?

    • What is it going to do & when?

  • Barrier 1

    • What progress has been made so far?

    • What is there still left to do?

  • Agreement of terms

  • Focus on the Network Layer

    • Standards

    • Security

    • Service

  • Any other business


Barrier 1 2003 giovannini report states l.jpg
Barrier 1:2003 Giovannini Report states...

  • Barrier 1

    « National differences in the information technology and interfaces used by clearing and settlement providers should be eliminated via an EU wide protocol. SWIFT should ensure the definition of this protocol through the Securities Market Practice Group. Once defined, the protocol should be immediately adopted by the ESCB in respect of its operations. This barrier should be removed within two years from the initiation of this project. »


Barrier 1 progress l.jpg
Barrier 1: Progress

  • 2004, Market research

  • 2005, Market consultation:

    • Paper published 5th January, 2005

    • Consultation closed 15th April, 2005

  • 70 physical responses

  • Responses from 21 out of 25 EU countries

  • Responses from 30 countries globally


Barrier 1 progress eu response statistics l.jpg
Barrier 1:Progress: EU Response statistics

  • 74% from EU organisations

    • 56% from FI’s

    • 23% from Infrastructures

    • 21% from miscellaneous(Central Banks, Consultancies etc)

  • 29 Institutions & FI ‘clubs’ (e.g. ISITC Europe)

  • 2 ICSD’s

  • 64% of EU CSD’s

  • 50% EU Equity Exchanges

  • 1 Clearing House


Barrier 1 what is there still left to do l.jpg
Barrier 1:What is there still left to do?

  • Independent advisory group formed July 05

  • Summary of consultation responses July 05

  • Pre-publication of protocol model Q4 05

  • Final publication Q1 06


Agenda13 l.jpg
Agenda

  • The Independent Advisory Group

    • What is it & why do we need one?

    • What is it going to do & when?

  • Barrier 1

    • What progress has been made so far?

    • What is there still left to do?

  • Agreement of terms

  • Focus on the Network Layer

    • Standards

    • Security

    • Service

  • Any other business


Agreement of terms protocol definition l.jpg
Agreement of terms:‘Protocol’ - Definition

  • Technical protocol

    « Any agreement that governs the procedures used to exchange information between co-operating entities»

  • Diplomatic protocol

    « A code of conduct prescribing how those taking part should behave»

BEST PRACTICE


Agreement of terms standard definition l.jpg
Agreement of terms:‘Standard’ - Definition

  • Standard

    • « something established by authority, custom or general consent as a model or example »

    • « a rule for the measure of quality »

    • « regularly and widely used »

    • Uniform and well established by usage and widely recognised as acceptable »

LEVERAGE


Agreement of terms standards l.jpg
Agreement of terms:‘Standards’

Treasury

Payments

EPC/ECBS

EACT

CHIPS

IGTA

TCH

RosettaNet/PMP

IFSA

TWIST

NACHA

OAGi

FpML

IFSA

ISTH

W3C

X12

OMG

Fedwire

ISDA

TC68/SC6&7 CEFACT/ TBG5

TC68/SC4&7

IFX

ISO/TC68

UNIFI - ISO 20022

UN/CEFACT

FIX

TC68/SC4 WG8 & WG11

Bolero

CEFACT/ TBG15

BMA

OASIS

SMPG

e-bMoU

FISD/MDDL

IIBLP

IFSA

SIA

EAN/UCC

G30

ISSA

Acord

ISITC-IOA

ICC

Insurance

Giovannini

UNCITRAL

Securities

Trade Finance


Agreement of terms syntax definition l.jpg
Agreement of terms:‘Syntax’ - Definition

  • Syntax

    • « the way in which elements are put together to form a message »

INTEROPERABILITY


Agreement of terms protocol standard syntax proposed ratification l.jpg
Agreement of terms:‘Protocol, Standard & Syntax’ - proposed ratification

  • End to end STP can be achieved via interoperability of agreed standards (inc market practices) within a best practice protocol

  • Interoperability achieved through the adoption of a single data dictionary


Agreement of terms protocol scope definition l.jpg
Agreement of terms:‘Protocol scope’ - Definition

  • Scope defined in the consultation paper as:

    • All post trade processes

    • All traded instruments

    • All participants


Agreement of terms protocol scope all post trade processes l.jpg
Agreement of terms:‘Protocol scope’ - All post trade processes

Institutional (buy) Side

Street (sell) Side

Trade Date

Order

IMI

B/D

B/D

Trade

Space 1

Pre-trade

/ Trade

Exchange

IMI: Investment Manager

B/D: Broker Dealer

VMU: Virtual Matching Utility

GC: Global Cust

SC: Sub-Cust

SA: Settlement Agent (Clearer)

CCP: Central Counterparty

ICSD: (Int‘l) Central Securities Depository

1

VMU / ETCP

CCP

Space 2

Post Trade /

Pre-Settlement

Trade Date + X

2

GC

SC

SA

SA

Space 3

Clearing &

Settlement

(I)CSD

3

Non Trade Related Activity

Space 4 - Custody Services


Agreement of terms protocol scope all traded instruments l.jpg
Agreement of terms:‘Protocol scope’ - All traded instruments

  • Giovannini Reports 1 & 2 refer to securities & derivatives:

    • Equities

    • Fixed Income

    • Derivatives (Exchange traded)

  • Giovannini 1 also includes Clearing & Settlement process flows for Derivatives (Chart 2.6)


Agreement of terms protocol scope all participants l.jpg
Agreement of terms:‘Protocol scope’ - All participants

Institutional (buy) Side

Street (sell) Side

Trade Date

Order

IMI

B/D

B/D

Trade

Space 1

Pre-trade

/ Trade

Exchange

IMI: Investment Manager

B/D: Broker Dealer

VMU: Virtual Matching Utility

GC: Global Cust

SC: Sub-Cust

SA: Settlement Agent (Clearer)

CCP: Central Counterparty

ICSD: (Int‘l) Central Securities Depository

1

VMU / ETCP

CCP

Space 2

Post Trade /

Pre-Settlement

Trade Date + X

2

GC

SC

SA

SA

Space 3

Clearing &

Settlement

(I)CSD

3

Non Trade Related Activity

Space 4 - Custody Services


Agreement of terms protocol scope consultation responses l.jpg
Agreement of terms:‘Protocol scope’ - Consultation responses

  • 59 responses in total Agree

    • 14 EU FI 8 – 57%

    • 16 FI EU rep orgs 8 – 50%

    • 10 EU C&S Infrastructures 6 – 60%

    • Total (inc above) 32 – 54%

  • Disagreements:

    • Too narrow 10 – 17%

    • Too broad 10 – 17%

    • Phasing required 17 – 29%


Agreement of terms protocol scope consultation responses24 l.jpg
Agreement of terms:‘Protocol scope’ - Consultation responses

  • Too narrow, should include:

    • Pre-trade/trade 3 responses

    • Geographic Europe 3 responses

    • Market data 2 responses

  • Too broad, should not include

    • Interfaces & networks 4 responses

  • Total (agree + too narrow) = 42 responses (71%)


Agreement of terms protocol scope proposed ratification l.jpg
Agreement of terms:‘Protocol scope’ - Proposed ratification

  • The scope is appropriate to the definition of a communication protocol for C&S and asset servicing activity

  • Phasing by Participant/sector


Agreement of terms protocol framework definition l.jpg
Agreement of terms:‘Protocol framework’ - Definition

Participant B

Participant A

Data

Data

2

5

8

1

4

7

SECURITY

STANDARDS

SERVICES

3

6

9

Messaging

Messaging

Network

Network


Agreement of terms protocol framework consultation responses l.jpg
Agreement of terms:‘Protocol framework’ - Consultation responses

  • 53 responses in total Agree

    • 15 EU FI 14 – 93%

    • 12 FI EU rep orgs 9 – 75%

    • 10 EU C&S Infrastructures 8 – 80%

    • Total (inc above) 42 – 82%

  • Disagreement

    • Should only include Layer 1, Data


Agreement of terms protocol framework proposed ratification l.jpg
Agreement of terms:‘Protocol framework’ - Proposed ratification

  • The proposed 9 element framework correctly frames a potential communication protocol


Agreement of terms interoperability l.jpg
Agreement of terms:‘Interoperability’

  • Interoperability

    • Participants?

    • Standards/syntaxes?

    • Network?

  • G30: Clearly refers to participant & standards/ syntaxes interoperability*

  • Giovannini: less clear but refers to interoperability of users, payment instruments & standards/syntaxes**

* Global Clearing & Settlement Plan of Action, 2003

** Giovannini Second Report, 2003


Agenda30 l.jpg
Agenda

  • The Independent Advisory Group

    • What is it & why do we need one?

    • What is it going to do & when?

  • Barrier 1

    • What progress has been made so far?

    • What is there still left to do?

  • Agreement of terms

  • Focus on the Network Layer

    • Standards

    • Security

    • Service

  • Any other business


The network layer l.jpg
The Network Layer:

Participant B

Participant A

Data

Data

SECURITY

2

5

8

3

6

9

STANDARDS

SERVICES

1

4

7

Messaging

Messaging

Network

Network


The network layer element 7 network standards l.jpg
The Network Layer:Element 7: Network Standards

  • G30: IP

  • Consultation paper: IP (based on discussions with COLT & Equant)

  • Most end devices (PC, Servers etc) communicate /route using IP

  • There is no "Best Practice" for building or operating IP networks, each has its own rules but if interoperability between networks is not a requirement, IP implementation is academic


The network layer element 7 proposed ratification l.jpg
The Network Layer:Element 7:Proposed ratification

  • The minimum acceptable network standard is the implementation of IP for communication and routing


The network layer element 8 network security l.jpg
The Network Layer:Element 8: Network Security

  • G30: “Security should be set at a level that satisfies business & regulatory requirements and that meets the needs of all stakeholders in the industry”

  • Barrier 1 Consultation paper: Secure private network (VPN) plus data encryption using a strong standard algorithm

    • Network encryption vs message encryption

    • Message validation or not


The network layer element 8 network security policing l.jpg
The Network Layer:Element 8: Network Security - ‘Policing’

  • 51 responses in total Agree

    • 14 EU FI 12 – 86%

    • 12 FI EU rep orgs 8 – 67%

    • 9 EU C&S Infrastructures 7 – 78%

    • Total (inc above) 37 – 73%

  • Disagreement

    • 12 respondents (24%) explicitly disagreed that network standards should be policed


The network layer element 8 network security policing36 l.jpg
The Network Layer:Element 8: Network Security - ‘Policing’

  • Validate against std structure 26 - 51%

  • Report violation to sender 10 - 20%

  • Stop traffic 8 - 16%

  • Optional 13 - 25%


The network layer element 8 proposed ratification l.jpg
The Network Layer:Element 8:Proposed ratification

  • Security, at either the network or the messaging layer, must be set at a level that satisfies business & regulatory requirements


The network layer element 9 network service l.jpg
The Network Layer:Element 9: Network Service

  • Is service a commercial differentiator between network providers?

  • Is a minimum level of service required?

    • Performance - inc. provisioning & implementation times, availability, restore time etc

    • Resilience - diversity, contingency etc (Fed, ECB, FSA guidelines already exist – Leverage)

    • Management – maintenance, fault identification & rectification etc


The network layer network service consultation responses l.jpg
The Network Layer:Network Service - Consultation responses

  • 49 responses in total Agree

    • 15 EU FI 14 – 93%

    • 11 FI EU rep orgs 7 – 64%

    • 9 EU C&S Infrastructures 8 – 89%

    • Total (inc above) 39 – 80%

  • Disagreement

    • 7 respondents (14%) explicitly disagreed that network standards are required


The network layer network service consultation responses40 l.jpg
The Network Layer:Network Service - Consultation responses

  • 24x7 Agree

    • EU FI 6 – 40%

    • FI EU rep orgs 3 – 27%

    • EU C&S Infrastructures 2 – 22%

    • Total (inc above) 15 – 31%

  • 99.999% availability Agree

    • EU FI 5 – 33%

    • FI EU rep orgs 2 – 18%

    • EU C&S Infrastructures 2 – 22%

    • Total (inc above) 11 – 22%


The network layer element 9 proposed ratification l.jpg
The Network Layer:Element 9:Proposed ratification

  • Service must satisfy business & regulatory requirements for performance, resilience and network management


Agenda42 l.jpg
Agenda

  • The Independent Advisory Group

    • What is it & why do we need one?

    • What is it going to do & when?

  • Barrier 1

    • What progress has been made so far?

    • What is there still left to do?

  • Agreement of terms

  • Focus on the Network Layer

    • Standards

    • Security

    • Service

  • Any other business


The next meeting is l.jpg
The next meeting is…..

  • 3rd August at 11.00am

  • The subject will be the messaging or interface layer


Aob time permitting l.jpg
AoB – Time permitting

  • Accreditation

    • Do we need accreditation of Messaging/Network suppliers?

    • If yes, who should provide the accreditation service?


Communication solution providers accreditation consultation responses l.jpg
Communication solution providers:Accreditation - Consultation responses

  • 53 responses in total Agree

    • 14 EU FI 13 – 93%

    • 12 FI EU rep orgs 9 – 75%

    • 9 EU C&S Infrastructures 6 – 67%

    • Total (inc above) 43 – 81%

  • Disagreement

    • 5 respondents (9%) explicitly disagreed that accreditation


Communication solution providers accreditation consultation responses46 l.jpg
Communication solution providers:Accreditation - Consultation responses

  • Who should accredit?

    • Independent organisation 20

    • SWIFT 9

    • Regulator 2

    • ECB 2

    • ISO 3

    • EU 2

    • Self certification 5

    • Market forces 10


Communication solution providers accreditation proposed ratification l.jpg
Communication solution providers:Accreditation - Proposed ratification

  • Accreditation of messaging/network providers is required

  • This activity should be carried out by ______

  • _______ should determine the accreditation process based on the criteria laid out in the Giovannini protocol