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Introduction to ISO 20022 – Universal financial industry message scheme

Introducing ISO 20022 as a universal financial message scheme for seamless communication across institutions, market infrastructures, and end-user communities. This standardization aims to overcome the challenges posed by multiple overlapping initiatives and offers a single approach for financial standards. The value proposition includes reducing complexity and costs, improving integration, and enabling quick responses to competitive and regulatory demands through a canonical message model. The ISO 20022 recipe emphasizes modelling-based standards development validated by the industry, syntax-independent business standards, and protection of industry investment for future migration. The registration process involves key actors like the Registration Management Group (RMG), Registration Authority (RA), and Technical Support Group (TSG) to ensure compliance and maintain the ISO 20022 Repository. This initiative promotes convergence into one standard while facilitating short-term coexistence to enhance interoperability and efficiency in the financial industry.

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Introduction to ISO 20022 – Universal financial industry message scheme

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  1. ISO 20022 Introduction to ISO 20022 – Universal financial industry message scheme ISO_20022_LV_v139

  2. 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 ISO_20022_LV_v139

  3. The ISO 20022 value proposition (1/5) Objective To enable communication interoperability between financial institutions , their market infrastructures and their end-user communities Major obstacle Numerous overlapping standardization initiatives looking at XML financial messages: MDDL, FIX, FinXML, VRXML, RIXML, XBRL, FpML, IFX, TWIST, SWIFT, RosettaNet, EPC, OAGi, ACORD, etc. ISO_20022_LV_v139

  4. The ISO 20022 value proposition (2/5) Proposed solution A single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives ISO 20022 ISO_20022_LV_v139

  5. The ISO 20022 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 ISO_20022_LV_v139

  6. The ISO 20022 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 ISO_20022_LV_v139

  7. The ISO 20022 value proposition (5/5) Standardized 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 EDIFACT SWIFT IFX Proprietary format Canonical Message Model (i.e. ISO 20022) OAGi 14 interfaces = n * 2 TWIST ISO aims at long term convergence, while facilitating short term coexistence… ISO_20022_LV_v139

  8. Date Account Order All institutions have their own sets of data objects Order Date …and groups them into ‘syntax-neutral’ message models, which... Date … can be ‘transformed’ in message formats in the desired syntax ASN.1 XML ISO 15022 FIX ISO 20022Illustrating business modelling ISO standardizes common data objects… ISO_20022_LV_v139

  9. The ISO 20022 recipeMain ingredients (1/2): • Modelling-based standards development • Syntax-independent business standard • Validated by the industry • Syntax-specific design rules for XML and ASN.1 • Predictable and ‘automatable’ • Protect standard from technology evolution • Reverse engineering approach • Protect industry investment and ease interoperability • Prepare for future migration ISO_20022_LV_v139

  10. The ISO 20022 recipeMain ingredients (2/2): • Development / registration process • Clearly identified activities and roles • Business experts and future users involved upfront • Technical experts involved when required • Repository on the ISO 20022 website • Business Process Catalogue & Data Dictionary • Outside of official standard (maintained by registration bodies) www.iso20022.org ISO_20022_LV_v139

  11. The eight parts of ISO 20022 Copies can be obtained from www.iso.org ISO_20022_LV_v139

  12. ISO 20022: The actors (1/2) Submitting organisations Communities of users or organisations that want to develop ISO 20022 compliant messages to support their financial transactions Could be ISO_20022_LV_v139

  13. ISO 20022: The actors (2/2) • Registration Management Group, RMG • Overall governance, court of appeal • Approve business justifications for new message standards • Approve new member entities • Create Standard Evaluation Groups (SEGs) and SubSEGs • Standards Evaluation Groups, SEGs and SubSEGs • Represent future users in specific financial areas • Validate new candidate messages and change requests • Registration Authority, RA • Ensure compliance • Maintain and publish ISO 20022 Repository • Technical Support Group, TSG • Assist RMG, SEGs, RA and submitting organisations ISO_20022_LV_v139

  14. Financial industry group or standards body Submitting organisation R M G m o n i t o r s Project approval & allocation to a SEG RMG Submitting organisation & RA Development & provisional registration SEG RA Repository Dictionary Catalogue ISO 20022 The registration process (1/3) Business justification Business justification Business validation Official registration and publication Optional pilot testing or first implementers Submitting organisation & users www.iso20022.org ISO_20022_LV_v139

  15. Financial industry group or standards body Submitting organisation R M G m o n i t o r s Project approval & allocation to a SEG RMG Submitting organisation & RA Development & provisional registration SEG RA Repository Dictionary Catalogue ISO 20022 The registration process (2/3) Business justification Business justification Candidate ISO 20022 messages Business validation ISO 20022 messages Official registration and publication Optional pilot testing or first implementers Submitting organisation & users www.iso20022.org ISO_20022_LV_v139

  16. SEG SEG SEG RA Repository Dictionary Catalogue ISO 20022 registration process (3/3)Yearly maintenance process Timing Users introduce Change Requests to the RA By June 1 Users CRs SEG screens Change Requests (CRs) By July 7 Submitting organisation prepares ‘Maintenance Change Request’ with each CR implementation Submitting organisation By August 21 By October 1 SEG approval/rejection Development of candidate new versions Provisional publication Submitting organisation & RA By December 1 Validation of new versions By February 1 Registration and publication By April-May First implementers Submitting organisation & users ISO_20022_LV_v139

  17. ISO 20022 - The Financial Repository • Data Dictionary • Business Concepts • Message Concepts • Data Types • Business Process Catalogue • Financial business process models • Financial business transactions, including messages • XML or ASN.1 message schemas www.iso20022.org ISO_20022_LV_v139

  18. Continuing with today’s agenda… ISO 20022 ISO 20022 Registration Platform ISO_20022_LV_v139

  19. ISO 20022 - The Deployment • Approval of the international standard  • Selection of the Registration Authority and set-up of the www.iso20022.org  • Creation of Registration Management Group • Creation of Standards Evaluation Groups  • Registration and publication of first ‘ISO 20022 messages’  • Approval of a new edition of the international standard  Ongoing: promotion to developers (standardizers, industry bodies) and users (market infrastructures, end-users, vendors) ISO_20022_LV_v139

  20. ISO 20022 Registration Management Group (RMG) • Members - 70 senior managers from: • 21 countries: AT, AU, BR, CA, CH, CN, DE, DK, FI, FR, GB, IN, IT, JP, KR, NL, NO, SE, SG, US, ZA. • 14 organisations: ACTUS, CFTC, Clearstream, DTCC, ECB, EPC, Euroclear, FPL, FpML, IFX, ISITC, MasterCard, SWIFT, VISA • Convener:James Whittle, Payments UK (GB); Vice-convener: Mike Tagai, JPMorgan Chase (JP); Secretary:Andre de Roy, Payments UK (GB) • Meetings:twice a year • Key decisions: • Creation of six SEGs: Payments and Securities in 2005, Trade Services and Forex in 2006, Cards & Related Retail Financial Services in 2008, Derivatives SubSEG in 2016 • Approval of ISO 20022 message development projects ISO_20022_LV_v139

  21. ISO 20022 – The Payments SEG (1/3) • Members – 58 experts • 19 countries: AU, AT, BR, CA, CH, CN, DE, DK, FI, FR, GB, IT, JP, NL, NO, SE, SG, US, ZA • 6 organisations: ECB, Euroclear, IFX, ISITC, MasterCard, SWIFT • Convener: Harri Rantanen (FI); Vice-convener: Peter Hoogervorst (SG); Secretary:Aurelie Steeno, SWIFT • Approved: C2B payment initiation (SWIFT/ISTH), Interbank credit transfers and direct debits (SWIFT), Exceptions and investigations (SWIFT), B2C advice & statement (ISTH/ISITC), Mandates (SWIFT) , Change/verify account identification (GUF), Bank account management (SWIFT), Creditor payment activation request (CBI Consortium), Cash account reporting request and notification (SWIFT), Bank Services Billing (TWIST/SWIFT), Authorities Financial Investigations (FFI), Stand-alone remittance advice (IFX/OAGi), Cross-border Transactions Currency Control Reporting (RU-CMPG), Financial Institution Direct Debit (SWIFT) • Under evaluation: none • Next:Cash management (SWIFT), Account switching (Payments UK), Mandate Status List (DBA), Payment Pre-Authorization (Early Warning Services), Payments Mandates – Supplement (SWIFT, SABS), Payments Status Request (SWIFT, EPC) ISO_20022_LV_v139

  22. ISO 20022 – The Payments SEG (2/3) Covering instruments such as: Payments Credit transfers Covering actors such as: Cheques Financial institutions Direct debits Clearing houses & RTG systems Private & corporate customers Central banks ISO_20022_LV_v139

  23. ISO 20022 – 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 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… ISO_20022_LV_v139

  24. ISO 20022 – The Securities SEG (1/3) • Members – 71 experts • 17 countries: BR, CA, CH, DE, DK, FI, FR, GB, IE, IT, JP, NL, NO, SE, SG, US, ZA • 9 organisations: ACTUS, CFTC, Clearstream, DTCC, ECB, Euroclear, ISITC, FPL, SWIFT • Convener:Axelle Wurmser, BNP Paribas (FR);Vice-convener: Charles-Raymond Boniver, RBC (CA); Secretary: Dominique Forceville, SWIFT • Approved:Investment funds (SWIFT), Transaction regulatory reporting (SWIFT), Proxy voting (SWIFT), Issuer’s agents communication (Euroclear), Corporate actions (SWIFT), Settlement & reconciliation (SWIFT), Post-trade (SWIFT/Omgeo), Total portfolio valuation report (ISITC/SWIFT), CCP Clearing (FPL/SWIFT), Collateral Management (FPL, FpML, ISITC, SWIFT), Money Market Statistical Reporting (ECB, Banque de France, Banco de España, Deutsche Bundesbank), Transparency of Holdings (Clearstream), SSI for Securities, Payments & FX (ISITC, Omgeo, FPL) • Under evaluation: Financial instruments and transactions regulatory reporting - MiFID II/MiFIR (ESMA) • Next: Target2-Securities (SWIFT/4CB), Securities Financing Transactions RegulatoryReporting (ESMA) ISO_20022_LV_v139

  25. ISO 20022 – The Securities SEG (2/3) Covering instruments such as: Securities Equities Service bureaux Covering actors such as: Fixed income Investment managers, distributors, transfer agents, fund administrators Broker / dealers Funds Custodians Regulators CSDs, ICSDs Stock exchanges, ETC providers Market Data Providers Clearing houses, CCPs ISO_20022_LV_v139

  26. ISO 20022 – The Securities SEG (3/3) Including business areas such as: Clearing & settlement Trade, post-trade Trade Initiation, pre-trade Securities Issuance Securities Custody Income, corporate actions, market data, proxy voting Account opening, standing orders, transaction and account information, advices & statements, queries & investigations Collateral management Collateral, repos, securities lending & borrowing ISO_20022_LV_v139

  27. Looking at the advantages ISO 20022 brings over ISO 15022 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 modelling of business processes and transactions • Uses XML or ASN.1 as the syntax for the actual physical messages • Has a wider scope than ISO 15022, which is only for securities messages Syntax independent business modelling is key to the ISO 20022 standard ! ISO_20022_LV_v139

  28. ISO 20022 – Derivatives SubSEG (1/3) • Members – 51 experts • 8 countries: BR, CA, CN, DK, FR, GB, JP, US • 10 organisations: ACTUS, CFTC, Clearstream, DTCC, ECB, Euroclear, FPL, ISDA/FpML, ISITC, SWIFT • Convener: Karel Engelen, ISDA/FpML;Vice-convener: Joe Halberstadt, SWIFT; Secretary: Courtney McGuinn, FPL • Approved:none • Under evaluation: Financial instruments and transactions regulatory reporting – Trade Repository Reporting (ESMA) ISO_20022_LV_v139

  29. ISO 20022 – Derivatives SubSEG (2/3) Covering instruments such as: Derivatives Listed Derivatives Covering actors such as: Market Infrastructures Investment managers, distributors, transfer agents, fund administrators Broker / dealers OTC Derivatives Custodians Regulators CSDs, ICSDs Confirmation, Execution platforms Market Data Providers Clearing houses, CCPs ISO_20022_LV_v139

  30. ISO 20022 – Derivatives SubSEG (3/3) Including business areas such as: Trade, post-trade, including post-trade events such as novation, termination, increase, amendment, option events, and external events such as index and basket changes. Initiation, pre-trade including RFQ and credit limit check, clearing eligibility, margin quote Derivatives Clearing & settlement Regulatory reporting including real-time and snapshot reporting Collateral management ISO_20022_LV_v139

  31. ISO 20022 – The FX SEG (1/3) • Members – 19 experts • 8 countries: CA, CH, CN, FR, GB, NO, US, ZA • 3 organisations: FPL, ISITC, SWIFT • Convener: Ram Komarraju, CLS (US); Vice-convener: Zaiyue Xu, CFETS (CN); Secretary: Joe Halberstadt (SWIFT) • Kick-off meeting: in September 2006 • Approved: Forex notifications (CLS), Post Trade Foreign Exchange Messages (CLS), FX Post-Trade Trade Capture and FX Post-Trade Confirmation (CFETS) • Under evaluation: none • Next: Post Trade Foreign Exchange – Supplement (CLS) ISO_20022_LV_v139

  32. ISO 20022 – 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 ISO_20022_LV_v139

  33. ISO 20022 – 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 ISO_20022_LV_v139

  34. ISO 20022 The Trade Services SEG (1/3) • Members – 27 experts • 12 countries: CA, CH, DE, DK, FI, FR, GB, IS, IT, JP, NL, US • 1 organisation: SWIFT • Convener: Tapani Turunen, Tieto (FI) Vice-convener:Peter Potgieser (NL); Secretary: David Dobbing (SWIFT) • Kick-off meeting: in September 2006 • Approved: Invoice Financing Request (CBI Consortium), Trade Services Management (SWIFT), Financial Invoice (UN/CEFACT TBG5), Demand Guarantees and Standby Letters of Credit (SWIFT), Factoring Services(ASF), Invoice Tax Report (FFI & Tieto) • Under evaluation:none • Next: none ISO_20022_LV_v139

  35. ISO 20022 The Trade Services SEG (2/3) Covering products… Trade Services Collection …and services such as: Reconciliation (A/R, A/P), remittance data Documentary credit Open Account Trading Letter of credit e-Invoicing EBPP Guarantee Purchase order, transport documents Invoice financing ISO_20022_LV_v139

  36. ISO 20022 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 ISO_20022_LV_v139

  37. ISO 20022 – The Cards & Related Retail Financial Services SEG (1/3) • Members – 30 experts • 15 countries: AT, CA, CH, CN, DE, DK, FI, FR, GB, JP, KR, NL, SE, US, ZA • 3 organisations: Mastercard, SWIFT, VISA • Convener: William Vanobberghen, Groupement des Cartes Bancaires (FR); Vice-convener: vacant; Secretary: Reinhard Herwig (DE) • Kick-off meeting: on 23-24 October 2008 • Approved: CAPE – Acceptor to Acquirer and Terminal Management (nexo A.I.S.B.L.), ATM interface for transaction processing and ATM management (IFX Forum/nexo A.I.S.B.L), Acquirer to Issuer Card Messages – version 1(TC68/SC7/TG1) • Under evaluation: Dispute Resolution in Cards Fee Collection (CUP) • Next:Payment Tokens Management Exchanges (nexo A.I.S.B.L & ISO TC68/SC7/TG1), Acquirer to Issuer Card Messages – version 2 (TC68/SC7/TG1) ISO_20022_LV_v139

  38. ISO 20022 – The Cards & Related Retail Financial Services SEG (2/3) Covering instruments… Cards and Retail Debit card Charge and credit card …and actors such as: Acceptor (merchant, retailer) Card holder Prepaid card Card issuer Hard- and Software providers Card scheme Acquirer Intermediary agent ISO_20022_LV_v139

  39. ISO 20022 – The Cards & Related Retail Financial Services SEG (3/3) Including business areas such as: Transactions between merchants and acquirers, and cardholders and issuers that support authorization, clearing, reversal, chargeback, dispute processing, etc. Transactions between acquirers and card issuers Similar messages transacted on internet or from mobiles or other personal devices ATM processes such as authorization, processing, ATM management and inventory POI messages for payments, administrative and device related services ISO_20022_LV_v139

  40. ISO 20022 – Technical Support Group • Members – 29 experts • 8 countries: BR, CN, CH, DK, FR, GB, JP, KR • 8 organisations: ACTUS, CFTC, Clearstream, DTCC, Euroclear, FPL, ISITC, SWIFT • Convener: Martin Walder (CH); Vice-convener:Anthony Coates (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_LV_v139

  41. Cross-industry harmonisation Continuing with today’s agenda… ISO 20022 ISO_20022_LV_v139

  42. 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 library of core components Goal is to establish interoperability between ISO 20022 and UN/CEFACT repositories ISO_20022_LV_v139

  43. Harmonisation between ISO and UN/CEFACT • 2004: TC68, TBG5 and SWIFT sign a MoU to investigate harmonisation • 2005: Trial submission from ISO 20022 to UN/CEFACT • 2006: ISO TC68/WG4 takes over technological alignment • 2007: Official submission from ISO 20022 to UN/CEFACT • 2008: Customer-to-bank payment components harmonised and accepted in UN/CEFACT core component library • 2009: The cooperation is placed under the umbrella of the ‘MoU on e-Business’ • 2010: Official submission of a financial e-invoice message from UN/CEFACT to ISO 20022 ISO_20022_LV_v139

  44. Interoperability within the financial industry Continuing with today’s agenda ISO 20022 ISO_20022_LV_v139

  45. Date Account Order All institutions have their own sets of data objects Order Date …and groups them into ‘syntax-neutral’ message models, which... Date Using ISO 20022 modelling to reach interoperability ISO standardizes common data objects… … can be ‘transformed’ in message formats in the desired syntax XML ASN.1 FpML FIX ISO_20022_LV_v139

  46. ISO 20022 compliance at model level Repository ISO 20022 Dictionary Dictionary Catalogue Payments clearing & settlement ISO 20022 message models Card payments physical message representation ISO 20022 ASN.1 syntax ISO 20022 XML syntax ISO_20022_LV_v139

  47. ISO 20022 compliance at model level Repository ISO 20022 compliant ISO 20022 Dictionary Dictionary Catalogue Payments clearing & settlement ISO 20022 message models Card payments physical message representation other syntax ISO 20022 syntax ISO 20022 compliant ‘using a domain specific syntax’ ISO 20022 compliant ISO_20022_LV_v139

  48. “Investment Roadmap” for ISO, FIX, XBRL and FpML syntaxes The Investment Roadmap is maintained by the Standards Coordination Group including the following organisations: Download the Investment Roadmap and related FAQ ISO_20022_LV_v139

  49. Interoperability in the customer-to-bank payment domain Bank A IFX format Proprietary format Bank B Customer A SWIFT MT 101 Bank C Let us look at a concrete example from payments area: a customer may need to adapt to the format of the banks… ISO_20022_LV_v139

  50. Customer A Customer B Customer C Interoperability in the customer-to-bank payment domain IFX format Proprietary format Bank A SWIFT MT 101 …or banks may need to accept many formats… ISO_20022_LV_v139

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