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ISO 20022. Introduction to ISO 20022 – Universal financial industry message scheme. Agenda. ISO 20022: Value proposition The standard The actors The registration process The Repository ISO 20022 registration platform Cross industry harmonisation - PowerPoint PPT Presentation
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Slide 1
Introduction to ISO 20022 – Universal financial industry message scheme
ISO_20022_LV_v98
ISO 20022
Slide 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_v98
Slide 3
The ISO 20022 value proposition (1/5)
Objective To enable communication interoperability
between financial institutions , their market infrastructures and their end-user communities
ISO_20022_LV_v98
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, CIDX, etc.
Slide 4 ISO_20022_LV_v98
The ISO 20022 value proposition (2/5)
Proposed solutionA single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives
ISO 20022
Slide 5 ISO_20022_LV_v98
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
Slide 6 ISO_20022_LV_v98
The ISO 20022 value proposition (4/5)
RosettaNet
TWIST
Proprietary format
SWIFTIFX
EDIFACT 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 types42 interfaces = n * (n-1)
OAGi
Source: John Mersberg, IBM Corporation
Growth adds exponential complexity and expense…
Slide 7 ISO_20022_LV_v98
The ISO 20022 value proposition (5/5)
SWIFT
Canonical Message Model(i.e. ISO 20022)
14 interfaces = n * 2
Proprietary format
RosettaNet
TWIST
IFX
EDIFACT
OAGi
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
Standardized implementation reduces cost, time to effect change and improves overall performance…
ISO aims at long term convergence, while facilitating short term coexistence…
Slide 8
ISO 20022Illustrating business modelling
All institutions have their own sets of data objects
…and groups them into ‘syntax-neutral’ message models, which...
Order
DateDate
XML ISO 15022
… can be ‘transformed’ in message formats in the desired syntax
FIX
ASN.1
ISO standardizes common data objects…
Account
Order
Date
ISO_20022_LV_v98
Slide 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_v98
Slide 10
The ISO 20022 recipeMain ingredients (2/2):
ISO_20022_LV_v98
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
Slide 11
The eight parts of ISO 20022
Part 1: Metamodel
Part 2: UML profile
Part 3: Modelling
Part 4: XML schema generation
Part 5: Reverse engineering
Part 6: Message transport characteristics
Part 7: Registration
Part 8: ASN.1 generation
ISO_20022_LV_v98
Copies can be obtained from www.iso.org
Slide 12
ISO 20022: The actors (1/2)
ISO_20022_LV_v98
Submitting organisations
Could be
Communities of users or organisations that want to develop ISO 20022 compliant messages to support their financial transactions
ANBIMAASFBerlin GroupBIANCBI ConsortiumChina UnionPayClearstream
CLSEPASOrgEPCEuroclearFFIFISDFPL
FpMLIFXISITCNBBOAGiOmgeoSC7/TG1
SWIFTUN/CEFACTTWISTUK Payments Council4CB etc.
Slide 13 ISO_20022_LV_v98
ISO 20022: The actors (2/2)
Registration Management Group, RMG– Overall governance, court of appeal
– Approve business justifications for new standards
– Create Standard Evaluation Groups (SEGs)
Standards Evaluation Groups, SEGs– Represent future users in specific financial areas
– Validate candidate message standards
– Approve change requests
Registration Authority, RA– Ensure compliance
– Maintain and publish ISO 20022 Repository
Technical Support Group, TSG– Assist RMG, SEGs, RA and submitting organisations
Slide 14 ISO_20022_LV_v98
ISO 20022 The registration process (1/3)
Submittingorganisation
Financial industry group or standards body
Business justification
Business justification
RMGProject approval & allocation to a SEG
SEGBusiness validation
RAOfficial registrationand publication
Repository
Dictionary
CatalogueOptional pilot testingor first implementers
www.iso20022.org
RMG
monitors
Submitting organisation
& users
Submitting organisation
& RA
Development & provisional registration
Slide 15 ISO_20022_LV_v98
ISO 20022 The registration process (2/3)
Submittingorganisation
Financial industry group or standards body
Business justification
Business justification
RMGProject approval & allocation to a SEG
SEGBusiness validation
RAOfficial registrationand publication
Repository
Dictionary
CatalogueOptional pilot testingor first implementers
www.iso20022.org
RMG
monitors
Submitting organisation
& users
Submitting organisation
& RA
Development & provisional registration
Candidate ISO 20022 messages
ISO 20022 messages
Slide 16
Users CRs Users introduce Change Requests to the RA
Submitting organisation
Submitting organisation prepares ‘Maintenance Change Request’ with each CR implementation
SEGSEG screens Change Requests (CRs)
SEG SEG approval/rejection
Submitting organisation
& RA
Development of new versions
SEGValidation of new versions
RA Registration and publication Repository
Dictionary
Catalogue
By June 1
By July 7
By August 21
By October 1
By December 1
By February 1
April-May
Timing
ISO 20022 registration process (3/3)Yearly maintenance process
First implementers
ISO_20022_LV_v98
Submitting organisation
& users
Slide 17
ISO 20022 - The Financial Repository
Data Dictionary
– Business Concepts
– Message Concepts
– Data Types
Business Process Catalogue– Financial business process modelsFinancial business process models
– Financial business transactions, including messagesFinancial business transactions, including messages
– XML or ASN.1 message schemasXML or ASN.1 message schemas
ISO_20022_LV_v98
www.iso20022.org
Slide 18
ISO 20022
ISO 20022 Registration Platform
ISO_20022_LV_v98
Continuing with today’s agenda…
Slide 19
ISO 20022 - The Deployment
Approval of the international standard
Selection of the Registration Authority
Set-up of the www.iso20022.org
Creation of Registration Management Group
Creation of the first Standards Evaluation Groups
Registration and publication of first ‘ISO 20022 messages’
ISO_20022_LV_v98
Ongoing: promotion to developers (standardizers, industry bodies) and users (vendors, end-users)
Slide 20
ISO 20022 How does it fit into the ISO structure?
ISO_20022_LV_v98
ISO Technical Committee TC68Financial Services
ISO 20022RMG
SEGPayments
SEGSecurities
RA
SEGFX
RMG members nominated by P-member countries and A-liaison organisations
TSG & SEG members nominated by all member countries and liaison organisations
SC7Banking
SC4Securities
SC2Security
SEGTrade Services
TSG
SEGCards
Slide 21
ISO 20022 Registration Management Group (RMG) Members - 61 senior managers from:
– 20 countries: AT, AU, BR, CA, CH, CN, DE, DK, FI, FR, GB, IT, JP, KR, NL, NO, SE, SG, US, ZA.
– 9 liaison organisations: ECB, EPC, Euroclear, FPL, FpML, IFX, ISITC, SWIFT, VISA
Convener: Gerard Hartsink, CLS (NL); Vice-convener: Bob Blair, JPMorgan Chase (US); Secretary: Cynthia Fuller, X9 (US)
Meetings: twice a year Key decisions:– Creation of five SEGs: Payments and Securities in 2005, Trade
Services and Forex in 2006, Cards & Related Retail Financial Services in 2008
– Approval of 45 development projects
ISO_20022_LV_v98
Slide 22
ISO 20022 – The Payments SEG (1/3) Members – 58 experts
– 16 countries: AT, AU, CH, DE, DK, FI, FR, GB, IT, JP, KR, NL, NO, SE, US, ZA
– 5 liaison organisations: ECB, Euroclear, IFX, ISITC, SWIFT Convener: Susan Colles, BAML Capital Partners (US); Vice-convener:
Bob Blair, JP Morgan Chase (US); 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)
Under evaluation: Extended remittance advice (IFX/OAGi) Next: Cash management (SWIFT), Cash lodgement and withdrawal (NBB),
Real time payments & Account switching (Payments Council Ltd - UK)
ISO_20022_LV_v98
Slide 23
ISO 20022 – The Payments SEG (2/3)
ISO_20022_LV_v98
Payments Payments Credit
transfers
Covering instruments such as:
Direct debits
Cheques
Covering actors such as:
Private & corporate customers
Financial institutions
Central banks
Clearing houses &
RTG systems
Slide 24 ISO_20022_LV_v98
PaymentsPayments
Including business areas such as:
Communications between the
ordering customer and its
bank, etc.
Interbank transfers via
correspondent banking or ACHs, high
value payments, low value bulk
payments, RTGS, etc.
Account opening,
standing orders, transaction and
account information, advices &
statements from …
Payment initiation
Clearing & settlement
...the account servicing
institutions to account owners,
including reporting from the financial institution…
…to the ordering & beneficiary customers,
reconciliation, exceptions & investigations
handling.
ISO 20022 – The Payments SEG (3/3)
Cash Management between various actors:
Slide 25
ISO 20022 – The Securities SEG (1/3) Members – 56 experts
– 16 countries: BR, DE, DK, FI, FR, GB, IE, JP, LU, NL, NO, SE, SG, US, ZA– 7 liaison organisations: Clearstream, ECB, Euroclear, ISDA/FpML, ISITC,
FPL, SWIFT Convener: Kevin Wooldridge, Standard Logic (GB); Vice-convener: Amod
Dixit, Standard Chartered (SG); Secretary: Mireia Guisado-Parra, SWIFT Approved: Investment funds (SWIFT), Transaction regulatory reporting
(SWIFT), Proxy voting (SWIFT), Issuer’s agents communication for CA (Euroclear), FPP report (SWIFT) , Corporate actions (SWIFT), Settlement & reconciliation (SWIFT), Post-trade (SWIFT/Omgeo), Total portfolio valuation report (ISITC/SWIFT)
Under evaluation: Pre-trade/trade (SWIFT/FPL), CCP Clearing (FPL/SWIFT), Collateral Management (FPL, ISDA/FpML, ISITC, SWIFT)
Next: Alternative funds (SWIFT), Target2-Securities (SWIFT/Bundesbank on behalf of 4CB), Investment Fund Prospectus (ANBIMA), SSI for Securities, Payments & FX (ISITC, Omgeo, FPL)
ISO_20022_LV_v98
Slide 26
ISO 20022 – The Securities SEG (2/3)
ISO_20022_LV_v98
Securities Securities Equities
Covering instruments such as:
Funds
Fixed income
Covering actors such as:
Investment managers, distributors,
transfer agents, fund
administrators
Broker / dealers
Regulators
Stock exchanges,
ETC providers
Deriva-tives
Clearing houses, CCPs
CSDs, ICSDs
Market Data
Providers
Custodians
Service bureaux
Slide 27
ISO 20022 – The Securities SEG (3/3)
ISO_20022_LV_v98
Including business areas such as:
Account opening,
standing orders, transaction and
account information, advices &
statements, queries &
investigations
Income, corporate actions,
market data, proxy votingCollateral,
repos, securities lending & borrowing
Custody
Collateral management
Trade Initiation,
pre-trade
Trade, post-trade
Clearing &
settlement
Securities Securities
Securities Issuance
Slide 28
Looking at the advantages ISO 20022 brings over ISO 15022
ISO 20022: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
ISO_20022_LV_v98
Syntax independent business modelling is key to the ISO 20022 standard !
Slide 29
Members – 25 experts
– 10 countries: AU, CA, CH, CN, FR, GB, NO, SE, US, ZA
– 3 liaison organisations: FPL, ISITC, SWIFT
Convener: Ram Komarraju, CLS (US); Vice-convener: vacant; Secretary: Steve Gunn, CLS (GB)
Kick-off meeting: in September 2006
Approved: Forex notifications (CLS)
ISO_20022_LV_v98
ISO 20022 – The FX SEG (1/3)
Slide 30
ISO 20022 – The FX SEG (2/3)
ISO_20022_LV_v98
Foreign eXchangeForeign eXchangeSpot
Covering instruments such as:
Forward
Swaps
Covering actors such as:
Investment managers
Hedge funds
Dealers
Custodians
CLS and CLS
settlement members
Currency Options
Industry associations
(ISDA)
Application providers
Money brokers
Trading portals,
matching services providers
Slide 31 ISO_20022_LV_v98
ISO 20022 – The FX SEG (3/3)
Including business areas such as:
Clearing and Settlement, including
netting and related
reporting
Post-trade:confirmation,
matching, assignment,
novation, etc.
Notification of trades to third parties
Pre-trade: IOI,
quotes, etc.
Trigger events, option
exercises
Trade: order,
execution, allocation, affirmation,
etc.
Foreign eXchange Foreign eXchange
Slide 32
Members – 32 experts
– 14 countries: AU, CA, CH, DE, DK, FI, FR, GB, IS, IT, JP, NL, US, ZA
– 1 liaison organisation: SWIFT Convener: Tapani Turunen, Tieto (FI) Vice-convener: Peter
Potgieser, RBS (NL); Secretary: Jim Wills, 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)
Under evaluation: none Next: Factoring Services (ASF), Invoice Tax Report (FFI & Tieto)
ISO_20022_LV_v98
ISO 20022 The Trade Services SEG (1/3)
Slide 33
ISO 20022 The Trade Services SEG (2/3)
ISO_20022_LV_v98
Trade ServicesTrade Services
Documentary credit
…and services such as:
Open Account Trading
Reconciliation (A/R, A/P),
remittance data
Purchase order,
transport documents
Guarantee
Invoice financing
e-Invoicing
EBPP
Covering products…
Collection
Letter of credit
Slide 34
ISO 20022 The Trade Services SEG (3/3)
ISO_20022_LV_v98
Including actors such as:
Trade facilitators: chambers of
commerce, insurance co, freight forwarders,
carriers, customs, factoring co
Associations providing rules
and master agreements
(eg IFSA, ICC)
Private and corporate customers
(treasurers)
Application providers
Financial Institutions
Trade Services Trade Services
Risk management
entities
Slide 35
ISO 20022 – The Cards & Related Retail Financial Services SEG (1/3) Members – 29 experts
– 14 countries: AT, CA, CH, DE, FI, FR, GB, JP, KR, NL, SE, US, ZA
– 3 liaison organisations: IFX, Mastercard, SWIFT
Convener: William Vanobberghen, Groupement des Cartes Bancaires (FR); Vice-convener: vacant; Secretary: Reinhard Herwig, SRC (DE)
Kick-off meeting: on 23-24 October 2008 Approved: CAPE – Acceptor to Acquirer and Terminal Management
(EPASOrg)
Under evaluation: none Next: Acquirer to Issuer Card Messages (TC68/SC7/TG1), ATM interface
for transaction processing and ATM management (IFX Forum/EPASOrg)
ISO_20022_LV_v98
Slide 36
ISO 20022 – The Cards & Related Retail Financial Services SEG (2/3)
ISO_20022_LV_v98
Card issuer
Cards and RetailCards and RetailCovering instruments…
…and actors such as:
Card holder
Acceptor (merchant, retailer)
Acquirer
Intermediary agent
Card scheme
Hard- and Software providers
Debit card
Prepaid card
Charge and credit card
Slide 37
ISO 20022 – The Cards & Related Retail Financial Services SEG (3/3)
ISO_20022_LV_v98
Including business areas such as:
POI messages for payments, administrative
and device related services
Similar messages transacted on
internet or from mobiles or other personal devices
Transactions between
acquirers and card issuers
ATM processes such as
authorization, processing, ATM
management and inventory
Transactions between merchants and acquirers,
and cardholders and issuers that support authorization,
clearing, reversal, chargeback, dispute
processing, etc.
Slide 38
ISO 20022 – Technical Support Group
Members – 25 experts
– 10 countries: BR, CN, DE, FI, FR, GB, JP, KR, NL, US
– 4 liaison organisations: Euroclear, FPL, Mastercard, SWIFT
Convener: vacant; Vice-convener: Anthony Coates, Londata (GB); Secretary: vacant
Kick-off meeting: on 23-24 October 2008
Mission: help RMG, RA, SEGs and Submitting Organisations with technical matters
ISO_20022_LV_v98
Slide 39
Continuing with today’s agenda…
ISO_20022_LV_v98
ISO 20022
Cross-industry harmonisation
Slide 40 ISO_20022_LV_v98
Harmonising across all industries with UN/CEFACT
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
United Nations/CEFACT – Centre for trade facilitation and e-business
Slide 41
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_v98
Harmonisation between ISO and UN/CEFACT
Slide 42 ISO_20022_LV_v98
Continuing with today’s agenda
Interoperability within
the financial industry
ISO 20022
Slide 43
All institutions have their own sets of data objects
…and groups them into ‘syntax-neutral’ message models, which...
Order
DateDate
ASN.1 FpML
… can be ‘transformed’ in message formats in the desired syntax
FIX
XML
ISO standardizes common data objects…
Account
Order
Date
ISO_20022_LV_v98
Using ISO 20022 modelling to reach interoperability
Slide 44 ISO_20022_LV_v98
Card payments
ISO 20022 compliance at model level
Repository
Dictionary
Catalogue
Payments clearing & settlement
ISO 20022 message models
ISO 20022 Dictionary
ISO 20022 ASN.1 syntax ISO 20022 XML syntax
physical message representation
Slide 45 ISO_20022_LV_v98
Card payments
Repository
Dictionary
Catalogue
Payments clearing & settlement
ISO 20022 message models
ISO 20022 Dictionary
other syntax ISO 20022 syntax
ISO 20022 compliant
ISO 20022 compliant ‘using a domain specific syntax’
physical message representation
ISO 20022 compliant
ISO 20022 compliance at model level
Slide 46
“Investment Roadmap” for ISO, FIX, XBRL and FpML syntaxes
ISO_20022_LV_v98
Download the Investment Roadmap and related FAQ
The Investment Roadmap is maintained by the Standards Coordination Group including the following organisations:
Slide 47
Interoperability in the customer-to-bank payment domain
ISO_20022_LV_v98
Let us look at a concrete example from payments area: a customer may need to adapt to the format of the banks…
Customer A
Bank A
Bank B
Bank C
Proprietary format
SWIFTMT 101
IFX format
Slide 48 ISO_20022_LV_v98
…or banks may need to accept many formats…
Bank AProprietary format
IFX formatCustomer A
Customer C
Customer B
SWIFTMT 101
Interoperability in the customer-to-bank payment domain
Slide 49 ISO_20022_LV_v98
SWIFT MT
The reverse engineering produces a canonical ISO 20022 message model
Proprietary
TWIST OAGi
IFX
Interoperability in the customer-to-bank payment domain
ISO 20022 Core Payment Kernel model
Slide 50 ISO_20022_LV_v98
Adopting ISO 20022 facilitates convergence and co-existence
IFX
MT 101
Interoperability in the customer-to-bank payment domain
ISO 20022
Core Payment
Kernel
Core Payment
Kernel
IFX
MT 101