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Central Securities Depositories, ISO Standards and SWIFT Automation today and for the future

Central Securities Depositories, ISO Standards and SWIFT Automation today and for the future. Edward de Courcy-Ireland Regional Manager - Securities. 4 th November 2006. Agenda. SWIFT update. Securities Market Infrastructures using SWIFT. ISO Standards. SWIFT - September 2006.

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Central Securities Depositories, ISO Standards and SWIFT Automation today and for the future

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  1. Central Securities Depositories, ISO Standards and SWIFTAutomation today and for the future Edward de Courcy-Ireland Regional Manager - Securities 4th November 2006 20061019_AECSD

  2. Agenda SWIFT update Securities Market Infrastructures using SWIFT ISO Standards 20061019_AECSD

  3. SWIFT - September 2006 2.5 billion messages per year 7,940 customers 208 countries Average daily traffic 11.2 million messages Peak day of 13.1 million messages, 29 Sep 2006 Availability of SWIFTNet 99.999% 20061019_AECSD

  4. FIN Messaging Traffic Growth 20061019_AECSD

  5. 1992 2003 1991 1993 1994 1995 1996 2000 2001 2002 2004 1997 1998 1999 Pricing and traffic Harnessing economies of scale Price (EURcent/msg) Traffic (Millions of messages) 50 2500 Traffic 45 2000 40 35 1500 30 25 1000 20 Price 15 500 10 5 0 20061019_AECSD

  6. Agenda SWIFT update Securities Market Infrastructures using SWIFT ISO Standards 20061019_AECSD

  7. Securities strategic priorities (set by the industry) Market space Strategic priorities Equity and fixed income Pre-trade / Trade Succeed in Pre trade /Trade messaging Be the messaging platform of choice for market infrastructures Drive Industry towards Standards convergence Post Trade /Pre-settlement Platform of choice for Post-trade / Pre-set. Clearing and Settlement Grow traffic in Clearing and Settlement and Custody services Custody Services Investment funds Become messaging platform of choice for the Funds industry 20061019_AECSD

  8. A world without SWIFTDifferent Standards, Messaging & Connectivity User Market Infrastructures 20061019_AECSD

  9. Single Window from SWIFTReusing Standards, Messaging and Connectivity User Market Infrastructures 20061019_AECSD

  10. Infrastructure outsources Physical network Infrastructure outsources Messaging & network Focusing on core values Outsourcing connectivity to specialist Messaging Mechanisms Messaging Mechanisms Messaging& Network Vendor Network Network Vendor Securities Market InfrastructuresOutsource Messaging & Network Infrastructure has full vertical implementation Messaging Mechanisms Physical Network 20061019_AECSD

  11. SWIFT’s messaging services Financialinstitutions Infrastructures and service providers SWIFTNet FIN SWIFTNet InterAct SWIFTNet FileAct SWIFTNet Browse 20061019_AECSD

  12. Securities Market Infrastructures – SWIFTNet FIN 20061019_AECSD

  13. Banking Market Infrastructures Eurosystem (TARGET2) Fiji Finland France Georgia Germany Ghana Greece Guatemala Hong Kong Hungary Ireland Italy Jordan Kenya Kuwait Latvia Lebanon Lesotho Luxemburg Malta Mauritius Namibia Netherlands New Zealand Norway Oman Pakistan Palestine Philippines Romania Russian Federation Singapore Slovenia South Africa Spain Sri Lanka Sweden Switzerland Tanzania Thailand Trinidad and Tobago Tunisia Uganda United Kingdom United States Venezuela Zambia Zimbabwe Central African States West African States Albania Algeria Angola Australia Austria Azerbaijan Bahamas Bahrain Barbados Belgium Bosnia and Herzegovina Botswana Brazil Bulgaria Canada Chile CLS Croatia Denmark East Caribbean Egypt EBA (EURO1/STEP1) ECB (TARGET) High-Value Payments Countries Live 67 Implementation 8 Planning 8 20061019_AECSD

  14. Agenda SWIFT update Securities Market Infrastructures using SWIFT ISO Standards 20061019_AECSD

  15. SWIFTNet FIN:Settlement & Reconciliation Process CSD Trade Date Settlement Date MT 540-3 Settlement Instruction MT 537 Pending Transactions MT 548 Status of Instruction MT 535 Statement of Holdings MT 536 Statement of Transactions MT 544-7 Confirmation of Settlement CSD participant 20061019_AECSD

  16. SWIFTNet FIN:CA Message flow - non elective event Stock Exchange/CSD Ex Date RecordDate PaymentDate Announcement MT 564 Notification of Entitled Position MT 564 Notification of Announcement MT 566 Confirmation of account activity CSD participant 20061019_AECSD

  17. SWIFTNet FIN:CA Message flow - elective event Stock Exchange/CSD Ex/ Record Date Announcement of offer DeadlineDate Receipt of new shares Response period MT 565 Instruction MT 567 Status of Instruction MT 566 Confirm of account activity MT 564 Notification of Offer MT 564 Notification of Ex date Entitlement MT 564 Notification Entitlement Calculation CSD participant 20061019_AECSD

  18. SWIFTNet FIN:Post-trade pre-settlement matching (model I) CSD MT 540-3 Settlement Instruction MT 540-3 Settlement Instruction Matching utility MT 515 Trade confirmation MT 515 Trade confirmation MT 509 Trade status Receiver Deliverer 20061019_AECSD

  19. SWIFTNet FIN:Post-trade pre-settlement matching (model II) CSD Matching engine MT 540-3 Settlement Instruction MT 540-3 Settlement Instruction MT 548 Status of instruction Receiver Deliverer 20061019_AECSD

  20. Putting legacy (domestic standards) on file transfer on SWIFTNet (proprietary formats or ISO 15022 or ISO 20022) Putting legacy messaging on SWIFTNet (proprietary formats or ISO 15022 or ISO 20022) Proxy Voting Putting legacy screen-based access on SWIFTNet Typical usage by Securities Market Infrastructures of all SWIFTNet Messaging services FIN FileAct InterAct Browse Instructions Confirmations Status Statements CA reporting CA confirms Coll Mgmt ISO 15022 20061019_AECSD

  21. Securities market infrastructures –SWIFTNet InterAct, FileAct and Browse 20061019_AECSD

  22. Who is listening? • ECSDA (EU) • ACSDA (Americas) • ACG (APAC) • AECSD (CIS) • and you, the AMEDA • and a date for your diaries Boston October 1-5, 2007 20061019_AECSD

  23. UNDER DISCUSSION Accessing CSDs through SWIFT:Market needs • One standardised solution • Interfaces • Messaging • Security • Giovannini compliant and EU integration future proof • Complete range of communication channels • ISO compliant standards (15022 and 20022) • Uniform service (support, liability,…) • Value-added services 20061019_AECSD

  24. Thank you for your attention 20061019_AECSD

  25. Central Securities Depositories, ISO Standards and SWIFTAutomation today and for the future John Falk 19 October 2006 20061019_AECSD

  26. Back-up 20061019_AECSD

  27. UNDER DISCUSSION New SWIFTSolution:SWIFTNet CSDAccess CSD participants CSDs 1-by-1 messaging channel File transfer channel Operator-based access ISO 15022 ISO 20022 Potential added value: Notary functionCopy function to regulatorsMT/MX translation… ... Global solution – Giovannini compliant and EU Harmonisation aligned ... 20061019_AECSD

  28. Agenda SWIFT update Securities MIs using SWIFT EU C&S harmonisation New SWIFTSolution: SWIFTNet CSDAccess SN Kits: Connectivity for small users 20061019_AECSD

  29. SWIFT usage for local intermediaries • Local CSD, Central Bank & settlement agents • International Cash Correspondents • Global Custodians • International B/Ds 20061019_AECSD

  30. Making SWIFT cost-effective Services Security Messaging soft Special SN Kits for specific solutions Complete set-up Connectivity soft Network 20061019_AECSD

  31. Market Infrastructure CUGs:A closed community of users on SWIFT Service participant SWIFT user SWIFT user “Service Participants within a Closed User Group” Service participant SWIFT user Market infrastructure SWIFT member Service participant SWIFT user SWIFT user Through Closed User Groups, the administrator takes full control: which messaging options, which billing option, who has access, … 20061019_AECSD

  32. The SWIFT community banks found SWIFT - broker/dealers - central depositories & clearing institutions - exchanges securities market data providers 1973 1987 2004 travellers cheque issuers fund administrators 1988 2002 money brokers 1989 MA-CUGs 2001 - registrars & transfer agents - custody providers - trust or fiduciary services companies 1990 2000 securities MIs 1999 1992 - treasury counterparties - treasury ETC service providers investment managers 1998 1995 1996 • - payments MIs • proxy voting agencies • non-shareholding financial institutions trading institutions treasury securities ETC service providers 20061019_AECSD

  33. Exchange Order Trade Trade IM B/D B/D MU /ETCP CH /CCP CM CM GC SC SA SA (I)CSD Using SWIFT to communicate with securities market infrastructures Benefits for system owner Mission critical levels of > reliability, security and support Time to market is > short Low entrance barriers for > remote members Access to all types of domestic and international players > increased internationalisation of client activities Global standards ISO 15022, XML, FIX for > trading > clearing > settlement >custody 20061019_AECSD

  34. Exchange Order Trade Trade IM B/D B/D MU /ETCP CH /CCP CM CM GC SC SA SA (I)CSD Using SWIFT to communicate with securities market infrastructures Benefits for system member Technical standardisation: single window access to domestic and international systems through one interface > cost efficiency Mission critical levels of > reliability, security and support Business standardisation: ISO 15022, XML, FIX > Market Practice standardisation > straight-through processing > Real-time DVP > shorter settlement cycles > risk reduction 20061019_AECSD

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