Swift
Issue 23 - November 2006
SWIFT signs up five for managed funds messaging review
Michael Bailey, Investment & Technology
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) used the SIBOS conference to unveil five Australian participants in a so-called ‘value review’ of its new investment fund messaging standards, while delivering a broadside to its front-end standards competitor, the IWL/Coin alliance.
SWIFT has contracted funds managers Vanguard Investments and Barclays Global Investors, administrator National Custodian Services (NCS), platform BT Wrap, and fellow hub hopeful Ausmaq, with all parties signing an agreement to progress implementation of the standards, known as SWIFTNet Funds, within their organisations.
Adam Wilson of SWIFT’s commercial division said some of the participants were already using the messages to communicate between internal divisions, paying particular tribute to NCS as a “leader” in terms of adoption.
SWIFT tried and failed three years ago to spur industry take-up of its managed fund messages in the ISO 15022 format, however the new messages are in an updated format known as ISO 20022, and in addition to the ordering, confirmation and holding statement transactions formatted by its predecessor, also cover account openings, transaction statements, NAV reporting, cash flow reporting, communication reporting and transfers.
The new standards are also written in modern ‘extensible mark-up’ (XML) language, for which Wilson says there is a “groundswell of enablement” throughout the industry.
Vanguard’s head of information technology, Phil Roe, said the index manager already used the SWIFT network for the settlement of transactions with custodians, as well the automation of corporate actions processing, and said the building of an additional service into its SWIFT gateway was not a logistical challenge.
He said the value review would compare the potential savings and efficiencies from adoption of SWIFTNet funds with those from the enhancement of other parts of Vanguard’s operations, such as unit registry and unit pricing.
“[SWIFTNet] seems like a great idea to us, there’s obviously a lot of time to be saved and errors to be reduced from not having to re-enter transaction data from faxes, or build expensive proprietary interfaces. It’s just a matter of getting a critical mass of counterparties involved so you don’t end up with partial STP,” Roe said, adding he was heartened by SWIFT claims that another five parties were close to agreeing to value reviews.
SWIFT’s Wilson admits that Ausmaq might be seen as a strange participant in this initial value review, given it has competing managed fund hub infrastructure. However, Wilson said its messages obeyed the ISO 20002 and XML protocols, and there were “many synergies” between the organisations.
“I understand connectivity to them is cheaper for a funds manager than it is with us, especially for the smaller managers, and working together will allow their local traffic to connect to our end-points at the big end of town and globally,” he said.
The 40 organisations already live with the SWIFTNet standards globally include regional heavyweights HSBC Securities Services and managers ING and Fidelity, between their respective Hong Kong and Singapore offices.
Wilson said the global orientation of the SWIFT messaging standards were a “distinct advantage” over local alternatives like the IWL/Coin alliance, which is developing its own standards to allow advisors to connect automatically to platforms’ existing websites, rather than their actual backoffice engines.
“They are looking at inward-looking, proprietary messages which the users have to pay for, whereas SWIFT messages are global and free to use,” Wilson said.