Larc2013 - Securities at SWIFT

Securities at SWIFT

Latin America Regional Conference

Cartagena, Colombia

Brett Lancaster

11-12 July 2013

v07

Securities at SWIFT Brett Lancaster

Managing Director – LARC Cartagena, Colombia

SWIFT

Connected

sell-side firms

96% penetration

by Market Cap

SWIFT

connected

buy-side firms

88% penetration

by AUM

SWIFT

connected AMER

securities firms

822 by

BIC code

5 Case

Studies

Agenda

4 SWIFT

Services

3 Latam

Securities

2

Strategy

1 Voice of the

Customer

3

Despite nervous recovery, clients tell us that the global

securities industry is still being shaped by the recent crisis

4

While firms are trying to recover and grow, they face

pressure from regulation, costs and need to improve STP

5

Voice of the Customer

Regulation

Growth Costs

Regulatory Overload

• Dodd Frank, EMIR, CSDR

• Reduced settlement lifecycle

• MIFID, CPSS-IOSCO, Basel III

• OFAC Sanctions

• …

• Drive for revenue growth

and/or extended reach into

new market segments

• Customer demand to create

shareholder value

• Fierce global competitors

• Internal demand to manage

costs and ‘do more with less’

• Continued drive to improve STP

rates and efficiency

• Drive for centralized architectures

• Need for standardization

5 Case

Studies

Agenda

4 SWIFT

Services

3 Latam

Securities

2

Strategy

1 Voice of the

Customer

6

In response, our strategy is evolution not revolution -

protect & grow the core adding value beyond messaging …

7

Strategy

Drive STP

and improve

operational

efficiency to

reduce

costs

Drive reach,

and growth

through

access to

new

segments

and markets

Help firms

meet

regulatory

requirements

Protect and grow the core & add value beyond messaging

Anchored by global standards and Market Infrastructures

Strategy

… whilst ensuring that the costs for core messaging are

systematically and relentlessly reduced

8

Strategy

5 Case

Studies

Agenda

4 SWIFT

Services

3 Latam

Securities

2

Strategy

1 Voice of the

Customer

9

• Community Highlights

• Latam Traffic Growth

SWIFT is working with the communities to drive STP,

standardization, reach and regulatory compliance

10

Mexico

Peru Colombia

Chile

Brazil

• Post-trade matching with local IMs and

BDs removing existing manual processes

• Support Indeval’s Intergloval Service

Bureau to help grow their market

connectivity to local BDs

• Connectivity for local MI to the

Central Bank, via SWIFT

• Enable communication of

Corporate Actions between

DTCC and local MI

• Market connectivity for OTC Derivatives

clearing, via SWIFT

• Connectivity to allow local pension funds to

settle at DTCC FundSERV and/or Euroclear

FundSETTLE, via SWIFT

• Connectivity of local MI to

global CSDs via SWIFT

• Post-trade matching with

local IMs and BDs

removing existing manual

processes

• ANBIMA Galgo and iMercado

• ISO 20022 standards

implementation

• Proprietary format translation

• Post-trade and matching

Supporting Latam Communities

Strong growth from Latam securities – driven by clearance

& settlement, statements, trade status and asset services

11

5 Case

Studies

Agenda

4 SWIFT

Services

3 Latam

Securities

2

Strategy

1 Voice of the

Customer

12

SWIFT has a number of products, services and/or initiatives

that are a strategic priority for its securities practice

13

Post Trade

Asset Servicing

Collateral Management

Sanctions Business

Intelligence

Standards Market

Infrastructures

Trade Repositories

Industry Groups ISITC, ISDA, SIFMA,

X9, CFTC Stds

SWIFT Services

5 Case

Studies

Agenda

4 SWIFT

Services

3 Latam

Securities

2

Strategy

1 Voice of the

Customer

14

1. Post Trade

2. Market Infrastructures

3. Trade Repositories

4. Collateral Management

SWIFT offers STP solutions for Post-Trade, Pre

Settlement through messaging and matching engine

15

Buy/Sell Order MT502

Execution Advise MT513

Allocation MT514

Market Confirmation MT518

Instruct Receipt / Delivery MT540-543

Settlement Confirmation MT544-547

Settlement Status MT548







Trading

Venue Investors

Custodian CSD

Investment

Manager

Broker

Dealer

Accord

Confirmation MT515

Affirmation Settlement

Instructions Matching Confirmation Allocation

Affirmation MT517

Post

Trade

Post Trade

~450 users

~2M matches pm

50 AMER securities and payments MIs use SWIFT

services. Activity is focused on growing cross-border reach

16

< 1k

< 25k

<100k

<500k

<2M

Monthly Volumes

EC CB RTGS

UY CB XB

CL CB RTGS

CA CPA HVP

CA CB HVP

US FRB Settle

US FRB XB

US World Bank XB

CO CB XB

US CB TBD

AR CB XB

US CME Dom

BR BCB XB

VE CB RTGS

AN CB XB

US CSD XB

MX Indeval XB

BB CSD HVP

BR BM&F XB

BR CBLC XB

US DTCC Settle

AR MERVAL Settle

DO CB RTGS

PY CB XB

PE CB XB

US ICE Dom

BO CB XB

KN CB HVP

SV CB RTGS

HT CB XB

US CME XB

US DTCC Post Trade

BS CB XB

CA CDS CA

CU CB XB

GT CB RTGS

JM CB XB

NI CB XB

AW CB XB

BB CB XB

GF CB XB

TT CB XB

US DTCC Settle

BZ CB XB

CR CB XB

HN CB XB

US CLS XB

US CLS Data

SR CB XB

US Omgeo Post Trade

CL CB RTGS

BS CB HVP

US CLS XB

BM CB XB

CL Combanc LVP+HVP

CL DCV Settle

TT CB HVP

CL CB TBD

CL Combanc TBD

US CME Dom

BR BM&F XB

US DTCC Settle

DO CB RTGS

US ICE Dom

US CME XB

US CLS XB

US DTCC Settle

US DTCC Loans

BR BCB RMA

CA CDS Settle

US DTCC CA

US DTCC CCP

US FRB LVP

US LCH XB

US DTCC CA

DO CEVALDOM CCP

HN CB HVP

UY CB HVP

BZ CB HVP

CL COMDER CCP

EC CB HVP

PY CB HVP

0.3

1.3

2.3

3.3

4.3

5.3

6.3

7.3

1980 1985 1990 1995 2000 2005 2010 2015

MIs

Market Infrastructures

To broaden the value to the community, we are

redefining our MI strategy

17

MI Gateway

MI Services

Best applies when: • Market events • Regulatory obligations, • Wholesale standards

migrations

New economic model • Lower cost • Bundled fees • Community pricing

New MI Gateway • Has smaller interface footprint • Allows traffic segregation • Provides an alternative to MQ

Service Bundling • Standards • Translation • Interoperability • MI Resiliency Service

Best applies when: • Many-to-many

connections • Global reach • New MI services / new

installations

Best applies where: • Senior relationships exist • Community market practice

MI Pricing

MIs

MIs

In response to OTC derivatives regulation, SWIFT is

providing connectivity solutions for Trade Repositories

18

1

2

3

4

5

Global regulation is enforcing mandatory reporting for all OTC derivatives – Dodd Frank / CFTC in U.S and EMIR / ESMA in E.U.

Impacts CDS, IRS, FX, Equity and Commodities. Firms need to report trade details, primary economic terms, confirmations and valuations

In U.S., one counterparty must report, but in the E.U. both counterparties must report

Trade Repositories are being implemented by UnaVista, DTCC, Regis-TR, CME Group and ICE

In response, SWIFT is providing connectivity between the firms and the major TRs for FpML and FIN derivative transactions, across all asset classes

TRs

Trade Repositories

SWIFT is supporting standardization for collateral

management - margin call, substitution & segregation

19

CM

SWIFT Collateral Management

SWIFT Initiatives

Standardised Market Practice

Impacts Margin Call Process

Regulatory Drivers

379 active users, 5.5M annual messages and 67% annual growth

Bilateral & Triparty messaging

ISDA, SIFMA, ISITC, CICF …

Timely and accurate margin call, substitution and segregation of collateral

Dodd Frank Title VII and EMIR - Expected to silo $2-4T of collateral

Collateral Management

Securities at SWIFT Brett Lancaster

Managing Director

Kindly complete the survey form upon exiting!

21

Lunch and Exhibition Hall