Nybf2015.latam.showcase.final.9 mar2015

Spotlight on Latin America Business Forum – New York

3 March 2015 Fabian Banchiero Omar Lago-Rodriguez

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What’s the landscape?

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<SWIFT (Not just payments)

<Standards(ISO 20022)

>Manual Post-trade

>Systems (Domestic vs. International)

>Community Buy-in

< Local Presence

2 SWIFT Business Forum New York - 3 MArch 2015

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Major Trends

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Regionalization – MI space • MILA – integrating 4 key securities markets

• Latinclear – looking to do the same for Central America

• C. American RTGS created discussions around Latam RTGS

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Securities markets looking for efficiencies • Larger markets looking to implement best practices in post-trade

• Movement by MIs to ISO 20022

• Regulators creating the “compelling event” – i.e. Colombian Decree 1498

• Custodian expansion and new CSD entrants creating opportunity

SWIFT Business Forum New York - 3 MArch 2015

SWIFT Business Forum New York - 3 MArch 2015 4

Market Total

Focus Countries

Colombia Mexico Brazil Chile Peru

Payments 17.0% 49.5% 2.2% 51.6% 15.5% 10.9%

Securities 84% 74.1% -9.7% 159% 43.1% -57.7%

Total 26% 47.1% .5% 89.8% 17.8% 8.7%

FIN Growth Significant Latin America growth

FIN Average Daily volumes

Actual growth Year to Year 2013-2014


Clearer/

Settlement

agent/Custodian

Broker Asset Manager Central

depository

Asset Controller/Fund administrator/Liability controller

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2

Fax, phone, internet,

proprietary lines

Files, emails, spreadsheets

Proprietary

network

and

proprietary

standards

Proprietary

network

and

proprietary

standards

Central Bank

Securities post trade landscape The current landscape is fragmented and complex

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Clearing Member

(DCM or GCM)

Trading Member (eg

B/D) / Non Clearing

Member

Business flows – High level overview

CCP

Stock exchange Trading Member

(eg B/D)

CM (DCM or GCM)

Trading Trading

Investor (eg,

Investment Manager)

Investor (eg,

Investment Manager)

Trade Management

Risk management

Settlement & Cash management

Trade Management

Risk management

Settlement & Cash management

Central Matching Platform

(eg, OMGEO CTM)

CSD Settlement

Agent (Local

Custodian)

Trade Confirmation Trade Confirmation

Trade Notification

Settlement (if CCP

has no POA and

CM has a SA)

Settlement

Management (if

CCP has a POA)

Settlement (if CCP

has no POA and

CM has no SA)

Settlement (if CCP

has a POA and a

SA)

Settlement Settlement

Agent (Local

Custodian)

Settlement (if

CCP has no

POA and CM

has a SA)

Settlement (if CCP

has no POA and

CM has no SA)

Settlement (if CCP

has a POA and a

SA)

Settlement

Global

Custodian Global

Custodian

Settlement

Settlement Settlement

Settlement

Trade Confirmation

Trade Confirmation

Note: This flows description will vary depending on the type of asset classes


Case Studies


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Colombia´s Market infrastructure

SET-FX

FX trading

BVC Derivatives

Futures

BVC MEC

All fixed Income

BR SEN

Gov. Fixed

Income

BVC

Stocks

CDCC

FX CH

Trading

Systems

CRCC

Derivatives CH

BR DCV CSD

Gov. securities DECEVAL CSD

All securities

BVC

Stocks Clearing &

Settlement

systems

High Value

payment

systems

BR CUD

RTGS

BR CEDEC

Checks

BR CENIT

ACH

ACH Colombia

ACH Low value p.

systems


Overview & Solution

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Condor

• IMs and Trust Banks must separate their existing Custodian function

• Creates new Custodian entities in the local market – BNP, Citi, & Banco Itau are approved

• Regulators also looking to automate post trade flows, pushing ISO standards and market

best practice

• Leveraging SWIFT integration / translation / training services

IMs and Banks

MIs – Exchange,

Central Bank, CSD,

CCP

IMs and Banks

MIs – Exchange,

Central Bank, CSD,

CCP

New

Custodian

Entities

De

cre

e 1

498


Mexico Market Infrastructure

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Banco de Mexico)

(Central Bank)

Derivatives Clearinghouse

Commodities, Futures, Swaps

DNS (T+1)

CECOBAN (ACH Clearing House)

SPEI

Real Time Payments System

(Online clearing)

Settlement

Accounts

SIAC

Settlement for FI’s connected to the Central

Bank

RTGS

DOMI

Direct Debits (T+1)

TEF

ACH Transfers

(T+1)

CHECKS

Checks

(T+ 1) PROSA

CREDIT AND DEBIT CARDS

DNS (T+1)

DALI

Securities Clearinghouse

Government Securities

DNS (T,T+1)

FINANCIAL

INSTITUTIONS

BMV & INDEVAL

e-Global

CITI and BBVA CREDIT AND

DEBIT CARDS RTGS


Brazil Market infrastructure

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Banco Central do

Brasil

Derivatives Clearinghouse

Commodities, Futures,

Swaps

DNS (T+1)

CIP - Interbank Payments Clearinghouse

STR

Funds TransfersRT

GS

Settlement

Accounts

SELIC

Govt Securities

RTGS

SILOC

Funds Transfers

DNS (T+1)

SITRAF

Funds Transfers

Hybrid

COMPE

Checks DNS (T+ 1)

CETIP

Corp. bonds, swaps, other

DNS (T+1)

RTGS

Securities Clearinghouse

Government Securities

DNS (T,T+1)

FX Clearinghouse

Interbank FX Transactions

DNS (T,T+1,2)

CBLC

Stocks, Corp Bonds &

Options DNS (T,T+1,2)

RTGS

ANBIMA Galgo Project

RSFN

National Financial System Network

BM&F BOVESPA


Outcomes

What did we do?

• Promote thought leadership and offer community-friendly solutions • Understand regulatory changes

• Introduction of standards and best practices

• Workshops to understand flows and pain points

• Create a more local presence and support

• Research and offer appropriate solutions on a client-by-client and country-by-country

basis

What worked?

• Conducting technical analyses

• Phased approach to implement solutions for post-trade automation

• Working closely with regulators and market infrastructures (Central Banks & CSD’s)

What were/are the challenges?

• Unanimous buy-in from market participants

• Lack of standardization

• Lack of urgency

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Condor


Standards & Market Practice Initiatives


Standards and Market Practice Initiatives


Peru

Peru

Chile

Chile

Brazil

Brazil

Mexico

Mexico

Mexico

Colombia

Colombia

Colombia

Country

C2B Market Practice

Post Trade Automation

C2B Market Practice


L

ISO 20022


ISO 20022

C2B Market Practice


ISO 20022

C2B Market Practice


Initiative

Connectivity

Integration

Consultancy

Training

Facilitation

Products Services

Q&A

?


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Lunch

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Thank you


Economy & Finance

Nybf2015.latam.showcase.final.9 mar2015