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Busy fighting on these two fronts, the securities industry has
opened a third, at risk of becoming a major point of attention and
differentiation of markets in the coming years: replacement of the
ISO 15022 messaging standard with ISO 20022.
In addition to the new format’s use by the future T2S Pan-European settlement/delivery platform, certain players have already opted for a transition to this new format in areas other than settlement/delivery.
This is particularly the case with the funds industry. Although in
March the Swift Securities Committee suggested postponing the
final removal date of ISO 15022 messages, many players
(including France) have called for a quick end to the “MT/MX”
transitional period, i.e. coexistence of messages in ISO 15022
format with an ISO 20022 format. These reactions demonstrated
that the funds industry was mature enough to adopt the new
format and the rest; in June, the SWIFT Board ruled in favour of an end of migration to the “Swift Release 2015” accompanied by a
pricing system favouring the use of ISO 20022 formats.
The second shock wave comes from the other side of the Atlantic
with the announcement by DTCC, the US Depository Trust &
Clearing Corporation, of the launch of a pilot phase for corporate
actions processing with five local users who are among the
industry’s most significant players.
The objective is to incorporate issuer transaction announcements
at the DTCC level by encouraging issuers to use the ISO 20022
format through a protocol (called “XBRL”) already known by
companies, since they use it for their tax returns. Announcements
are then sent to intermediaries, who distribute them to the entire
chain of stakeholders downstream.
A gradual ramp-up will be carried out in order to shift from simple
distributions and reimbursements in 2012 to reorganisations in
2013. This pilot phase could allow the US to offer a three-year
migration window beginning in 2015.
For their part, Asia and Latin America favour investments on the
new ISO 20022 message format on some portion of messages
rather than investing in a standard whose days seem to be
numbered.
The major jolt for the European industry will be the launch of Target
2 Securities. It will force all Central Securities Depositories
connecting to it to be able to exchange Settlement/Delivery
messages in ISO 20022.
Therefore, the signs are there, and in order to reassure themselves,
some are hiding behind a short-term vision offered by the possibilities
of “MT/MX coexistence” and “MT/MX translator”. Such an approach
amounts to postponing a long-term industrial investment requiring
much more involvement. ISO 20022 is indeed the opportunity to approach not only messages but also treatments in the form of processes to make the most of all of the richness that ISO 20022 will offer in the future in order to meet the needs for industrialisation of complex treatments generating substantial operational risks.
While waiting for this opportunity to be tapped, a series of major jolts
is to be expected, from which the pivotal year will undoubtedly
emerge around 2014.
En attendant l’exploitation de ce filon, une série de secousses
majeures sont à prévoir dont l’année charnière se dessinera sans
doute aux alentours de 2014…
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