Article about the benefits of automation in hedge funds trade processing

1. Standards
f orum
WHERE BUSINESS AND STANDARDISATION MEET MAy 2010
Newsletter
Content
01 — 03 The case for ISO 20022 07 T2S: a test case for ISO 20022 09 Standards Forum: upcoming events
04 SWIFT Standards in a changing 07 — 08 Bringing automation to 10 Reducing the costs of standards
world hedge funds implementation
05 You say potato, I say potahto 08 Reverse engineering: mission 11 — 12 SunGard capitalizes on processable
accomplished standards definitions
06 Defining roles in the standards
ecosystem
The case for ISO 20022
While segments of the The time for talking is almost over. After The funds case
holding Standards Forums in three SWIFT Standards’ work on the use of
financial services industry continents – and taking soundings from ISO 20022 in the European Central
are already benefiting multiple interested parties across the Bank’s TARGET2-Securities initiative
finance industry – SWIFT will present the remains a work in progress. Nevertheless,
from ISO 20022 in a organisation’s board with a strategy paper real-life examples of the benefits of
measurable way, an on standards coexistence in June. More is ISO 20022 already exist. SWIFTNet
industry-wide business at stake than how long MT messages will Funds offers tangible benefits today.
continue to carry financial communications Designed to automate funds distribution
case remains a work in around the globe. As well as being an using messages based on ISO 20022
progress. active developer and user of ISO 20022 standards, SWIFTNet Funds has brought
messages, SWIFT is also the registration new opportunities to deliver value to end-
authority for the standard, and as such customers, according to David Campbell,
its deliberations will set the tone for the securities product manager, investment
entire industry. In fact, the question of services, at technology vendor Fiserv.
how best to utilise ISO 20022 tests the
willingness of the finance industry to
put standards-based competition and
costly interoperability headaches behind
it, grasping the opportunity to deliver
value to customers via the automation of
transaction value chains from beginning to
end using a universal standard.
To proponents the benefits seem obvious.
But the extensive feedback gathered by
SWIFT has unveiled division, both across
geographies and product lines and within
institutions.

2. 2
Standards Forum
“One of our clients creates funds domiciled in Luxembourg
that they distribute through a technology hub in the US to
an Asian broker network. Automating that entire chain is
something that they couldn’t really do in the ISO 15022
world.”
David Campbell, Fiserv
“One of our clients creates funds domiciled she believes SWIFT has a vital role in
in Luxembourg that they distribute developing tools to make adoption as
through a technology hub in the US to simple and painless as possible. “Without
an Asian broker network. Automating a time-defined migration the reduced total
that entire chain is something that they cost of ownership (TCO) that ISO 20022
couldn’t really do in the ISO 15022 world,” can deliver will not be realised. But no one
explains Campbell. “By facilitating global says migration has to start tomorrow”,
distribution, ISO 20022 has allowed them she points out. “Migration can start once
to do business in an automated fashion market participants have indicated that the
that previously wasn’t possible.” migration supporting tools are available
and the actual end-date can be set for an
But Campbell acknowledges that, in appropriate time after that,” she suggests.
those areas of activity where existing
message standards are already in place, Clearstream was an early adopter of ISO
investment management firms are 20022-based SWIFT XML messages for
David Campbell, Fiserv
struggling to identify a solid business funds in 2007 and Mermigidis says that the
case for migrating to ISO 20022. “Firms Standards Developer Kit (SDK) introduced
may have their difficulties with ISO last year is the result of “lessons learned”
15022, but overall they’re comfortable by Clearstream in trying to help their
with it and it works,” he asserts. customers to benefit from a more effective
Campbell echoes the feelings of many approach to implementing and maintaining
financial institutions when he says new messages.
that the business case for investment
managers should be more robust to ISO 20022 for funds has demonstrated
compete with other priorities. “They’ve that with the right tools the technology
got a lot of other pressing matters to can be managed and have lower costs
worry about, especially if they’re in the of implementation and maintenance for a
OTC derivatives market, where the firm, but Mermigidis says the benefits to
weight of regulatory change is forcing the industry of wholesale adoption will be
them to make investment decisions now of a much higher magnitude because of
that they don’t want to make.” the potential for a universal standard to
Irene Mermigidis, senior vice president,
product management - core products at
Irene Mermigidis, Clearstream
Clearstream, recognises that factors such
as having to upgrade legacy IT platforms
to use ISO 20022 messages make some
financial institutions reluctant to commit to
migration by a fixed point in time. She is “Standards-based interoperability could be the answer to the
wary, however, of too long a coexistence industry-wide challenges of improving operational efficiency,
period – where ISO 20022 messages
run alongside ISO 15022. Rather than while reducing risk and the cost of technology.”
simply accepting that the complexities Irene Mermigidis, Clearstream
are too great to impose a rigid timetable,

3. 3
May 2010
“Standards are not competitive; they are there to support the
business. And it’s at the business level that people must be
convinced. Banks should be competing at the service level, not
on standards.”
Martine De Weirdt, SWIFT
accelerate momentum in interoperability methodology and the flexibility it offers
between financial institutions. “Standards in encompassing all business processes
for many years have been the prerogative in financial services. A technical solution
of technical groups and committees,” to map between coexistence standards
she asserts. “But standards-based introduces additional layers of processing
interoperability could be the answer to to be maintained and controlled.”
the industry-wide challenges of improving
operational efficiency, while reducing risk Martine De Weirdt, SWIFT’s head of
and the cost of technology.” coexistence, acknowledges more work
needs to be done to make the business
Lower processing costs for the industry case for ISO 20022 easier to grasp. But
will be a challenge, but can be achieved she suggests that talk of reduced STP
according to Mermigidis. In addition to rates, lower costs of development and
supplying the tools for migration, SWIFT maintenance for financial communication
must also provide the arguments that networks and greater interoperability
will help senior managers appreciate are, though important in their own right,
the potential of ISO 20022, she says. only elements of a much bigger picture.
“Traditionally, SWIFT has helped to “ISO 20022 offers a new foundation for
define standards, but then it was up competition,” she states. “Standards are
to each market participant to run its not competitive; they are there to support
own implementation project,” explains the business. And it’s at the business level
Mermigidis. “In the future, we will need that people must be convinced. Banks
all the support tools that would make should be competing at the service level,
implementation a no-brainer from a not on standards.”
technical and a management decision-
making perspective.” Having seen the impact of ISO 20022
on the ability of investment management
Limits to coexistence firms to establish competitive advantage
If the tools are not provided to win the through more efficient funds distribution,
technical, operational and business Fiserv’s Campbell believes that appealing
arguments and firms are left to chart their to competitive instincts will continue to
own timetable for migration, Mermigidis be a key factor. “The business case for
believes that extended coexistence could ISO 20022 will be made by members
become permanent, a situation that would of the community using the standard to
undermine the ability of ISO 20022 to add value and deliver a better service.
facilitate greater market harmonisation. “A For investment managers, for example,
prolonged period of one-to-one mapping the business case for migration could
between ISO 15022 and ISO 20022 would arise through the promise of a better
limit our ability to innovate and improve or additional service offered by their
while maintenance of two standards of custodian or broker counterparts,” he
different technology will increase cost,” predicts.
she says. “One-to-one mapping can
ease the migration, but we need to be in
a position to benefit from the ISO 20022

4. 4
Standards Forum
SWIFT Standards in a changing world
Three major shifts in the role of message standards in the finance
sector are driving change – and the need for a new strategy for
SWIFT Standards.
SWIFT has played a leading role in the
finance industry’s use and development Global versus local Don’t be a dummy!
of standards since it first started replacing The Securities Market Practice Group
telex messages in the 1970s. But as (SMPG) – which operates national SWIFT has created 10 simple questions
members of the SWIFT community ponder market groups coordinated by a global on ISO 20022 as a first draft of an ‘ISO
the progression from ISO 15022 to ISO steering committee – has also worked 20022 for dummies’ publication. The
20022, it is clear that the role of the SWIFT to strengthen linkages between global aim is to help members of the SWIFT
Standards team is evolving too. standards and local market practice. community look beyond the technical
“The key to this second challenge is message syntax issues to the wider
First, the nature of the work that SWIFT synchronisation,” says Marc Delbaere, strategic benefits of ISO 20022 as
is required to do in the standards field is head of strategy and architecture, a universal message standard. The
going “beyond messaging” says Jamie Standards, SWIFT. More than just effective publication is in production now so keep
Shay, head of Standards, SWIFT. Where project management, he believes SWIFT your eyes open for an update!
SWIFT once developed and maintained has a key role to play in ensuring that
standards on behalf of the community, message standards, market practices and
it is now being asked to undertake more business processes are monitored and
work relating to the business processes coordinated as much as possible. “This by the recent SWIFT Standards Developer
around the standards. SWIFT’s approach in turn,” he says, “will lower the cost of Kit (see page10).
to this challenge is to expand its frame implementing standards.”
of reference at the message syntax and “SWIFT Standards is recognised as a
business process management levels. End-to-end centre of competence for standards. But
The advantage of this approach is that a The third key development is the advent our experience and knowledge is now
greater understanding of standards and the of the end-to-end approach to standards, much broader. It is time to look beyond
structures around them will support efforts as facilitated by ISO 20022, that facilitates standards,” says Shay.
aimed at achieving interoperability and feedback from standards usage into the
therefore have knock-on benefits in terms of development chain. Not only does this
cost savings and operational efficiency. offer the opportunity to lower the cost of
implementing standards, it should also
Second, recent years have witnessed help to make a stronger business case for
a growing focus on the importance of investing in standards. Shay asserts the
aligning messages closely to their uses importance of standards initiatives adding
in specific markets while maintaining value while also addressing cost issues.
their compliance with global standards Placing emphasis on “consumability”, she
frameworks. The need to balance local observes that the era of weighty manuals
market practice with global considerations is now being replaced by a set of smarter
can be seen in the development of resources for implementing – and testing
payment messages to support SEPA. compliance with – standards, exemplified
“SWIFT Standards is recognised as a centre of
competence for standards. But our experience and
knowledge is now much broader. It is time to look
beyond standards.”
Jamie Shay

5. 5
May 2010
You say potato, I say potahto
SWIFT has facilitated
a global discussion on
ISO 20022 via Standards
Forum events held in
Hong Kong, New York
and London. But global
discussions continue to
have regional accents.
“Distinctions in discourse between the
New york and London Standards Forum
events reflect the challenges of building
consensus on the use of standards across
the worldwide financial services industry,”
says Keith Berrett, product manager, direct
custody & clearing, Citi.
Although attendees of the London event,
held on 4 February 2010, were drawn from
across Europe, most shared the conviction
that the case for ISO 20022 now needs to
be argued in terms of benefits to revenue
“The global community at large has to ask itself: does it really
and service. “In London, the vast majority think ISO 15022 can do everything we need? Personally, I
of attendees agreed that the biggest think we’re kidding ourselves if we think we can get by as we
barrier to progress was the lack of a clear,
well-understood and widely accepted are.”
business case,” says Berrett. “But in New Keith Berrett, Citi
york there was a greater diversity of views.
Even relatively late in the day, some New
york attendees were still questioning
whether we even needed ISO 20022. The T2S was in the back of a lot of peoples’ clearing house or market participant level,”
greater level of agreement in London was minds at the London event.” TARGET2- says Berrett.
beneficial because it provided a clear point Securities, the European Central Bank’s
of attack to move the issue forward.” planned single system for securities However, Berrett is not surprised that
settlement, which is scheduled to go the topic of ISO 20022 migration should
Berrett suggests that this divergence can live in 2013, will use ISO 20022 across continue to stir passions and acknowledges
be traced, to some extent, to differences in all its processes. As such, ISO 20022 is that differences of opinion do not
the development of market infrastructures already more tangible for many European necessarily follow regional lines. “Within a
on opposite sides of the Atlantic. In short, securities markets participants compared multifaceted market participant such as Citi
whereas Europe is still building a unified with their US counterparts. Moreover, there is not a single view on the necessity
securities infrastructure, the US is used to the more fundamental nature of the US or otherwise of ISO 20022,” he says.
a more streamlined approach. debate may be a comment on the stability
of the country’s post-trade environment. Berrett’s own position is unambiguous.
“In London, there was a greater “While the US has the Depository Trust & “The global community at large has to ask
acknowledgement that ISO 20022 is Clearing Corporation as a dominant post- itself: does it really think ISO 15022 can do
here on our doorstep and that ISO 15022 trade service provider, Europe is a cluster everything we need? Personally, I think we’re
doesn’t do everything that we need it to,” of markets without a single voice at the kidding ourselves if we think we can get by
Berrett explains. “This may be because regulatory, central securities depository, as we are. Something needs to change.”

6. 6
Standards Forum
Defining roles in the standards
ecosystem
Standards Forum Newsletter spoke to Ingrid Versnel,
head, payments and wealth management technology
and operations, Royal Bank of Canada and chair of
the Standards Committee of the SWIFT Board on
standards development both within SWIFT and across
the industry.
What is the engagement of the Board in the broader financial arena with respect find ways to allow the members of that
in SWIFT’s standards activity? to standards and whether that creates ecosystem to live in harmony with each
The Standards Committee, which I chair, opportunities for SWIFT to assist. At other and to interact efficiently when they
is a subgroup of the Board of Directors. the same time, if we identify a potential need to.
The Board has a number of dedicated conflict, where there may be other groups
committees whose primary purpose is working on similar issues, we look for
to create focus on a particular product ways to resolve it and prevent duplication
or function. The Standards Committee is of effort so we don’t end up with multiple
not technical; it is really about executive standards. Groups like the SAC give “I’ve heard the financial
direction. How do we help provide direction SWIFT the opportunity to reach out to the
services industry described
to the executive team at SWIFT on the one community and tap into people who have
hand and carry the message from SWIFT roles and responsibilities in other standards as an ecosystem of
back to the community on the other? setting organisations. communities. What we
I also chair the Standards Advisory Council Does the Standards Forum play a
need to do is find ways to
(SAC), through which we tap into experts similar role? allow the members of that
within the community to help provide The Standards Forum is about ecosystem to live in harmony
more technical oversight. I am currently communication principally. It is not only to
the only member of the Board of Directors inform the community about what SWIFT with each other .”
on that body. For example, SWIFT is is working on, but is the opportunity for Ingrid Versnel, RBC
working on ways to reduce total cost of SWIFT to listen to the needs and issues
ownership for its community; the SAC is of the community. That could span a
involved in reviewing how to reduce the variety of topics including how SWIFT
cost of the annual standards release. They should interact with other bodies involved
are a sounding board for the evolution of in creating standards. Furthermore, it is Is there an area that you believe is a
standards work done within SWIFT. an opportunity for SWIFT and other global priority for collaboration?
standards bodies to show the community I don’t think there is a single item that
We have people on the council from how they are working together to help the we would all agree is the most pressing
across various geographies, but also, financial community reduce cost and errors issue. That goes back to the ecosystem of
more importantly, from various disciplines. while increasing operational efficiency. communities. This is not a homogeneous
Some are in the securities business, environment. The financial services industry
some in payments and others represent Is there any consensus about the seeks to find ways to move information,
asset management entities. They help the approach to standards development transactions, data and value around the
standards team within SWIFT understand across these various bodies? globe. As we seek to find ways to facilitate
the feedback that’s being provided by the There is a sense that collaboration that process, there are varying needs
community and also help anticipate where is extremely important for all groups. within it. I think the single most important
issues may arise in terms of unexpected That’s not the same as consensus. I’m need is the understanding that the value
consequences. not sure that consensus is the ultimate created through standards for a single
goal. We need to recognise that there community cannot degrade value for the
How do the broader debates about is not a single global community and rest of the communities out there. We need
standards in the industry inform what therefore you cannot create a single global to get to the point where we can create
SWIFT does? consensus. I’ve heard the financial services standards for specific communities, while
The Standards team within SWIFT has a industry described as an ecosystem of making sure that they remain interoperable
mandate to understand what is happening communities. What we need to do is with the greater ecosystem.

7. 7
May 2010
T2S: a test case for ISO 20022 Bringing
automation to
hedge funds
Despite its reputation for
sophisticated portfolio
management and trading,
the hedge fund industry
remains dependent on
manual intervention for
much of its post-trade
processing. SWIFT aims
For a real life example of an ISO 20022 to help change that.
implementation, look no further than the close
SWIFT’s involvement in hedge fund
cooperation between SWIFT Standards, the European messaging is a result of the industry’s
Central Bank (ECB) and the four central banks recognition that it needs to address the
risks inherent in its traditional processes.
responsible for building TARGET2-Securities (T2S). “Given the risk profile of the industry,
the need for standardisation is all
the greater,” says Koen Vierendeels,
marketing manager fund services, SWIFT.
SWIFT Standards has had a key role To fulfil this role, SWIFT Standards has “That’s why a number of hedge fund
in the ECB’s project to build a single provided training to the central banks administrators came to us to ask if we
securities settlement system for Europe (Deutsche Bundesbank, which has been could develop specific messages for
and has been required to expand its remit given ultimate responsibility for delivering hedge funds transactions.”
considerably as the challenges of building this part of the T2S infrastructure, as well
a suitable messaging framework for a new as Banco de España, Banca d’Italia and SWIFT has, however, long had a range
cross-border market infrastructure have Banque de France) on the appropriate of message standards designed for the
unfolded. methodology, procedures and tool set for securities industry, including specific
developing ISO 20022 messages. SWIFT messages for mutual funds? Why could
Following the ECB and the Eurosystem’s Standards also reviews the central banks’ hedge funds not use those? “I see two
decision to use ISO 20022 messages business requirements for each set of new big reasons related to transactions that
across all its processes, SWIFT Standards messages and provides ongoing advice on only occur in the hedge fund industry,”
has worked on the implementation of request. Vierendeels explains. The first is the use
messages in three groups: first, existing of ‘side pockets’, a type of account used
ISO 20022 standard message types that The T2S project, due for completion and in hedge funds to separate illiquid assets
need adapting for use in T2S; second, new go live by 2013, will reach a significant from other more liquid investments.
ISO 20022 message types designed by milestone during March 2011 from a Specific information is needed to process
SWIFT Standards to meet the four central message standards perspective. The orders related to such accounts. Another
banks’ requirements, but which will also be impending publication of the T2S user is ‘equalisation’, an accounting process
used beyond T2S; and, third, T2S-specific detailed functional specifications will whereby players want to ensure that
messages developed by the central banks, contain details about message types the fee paid to investment managers
but with SWIFT Standards providing across all three pillars, including T2S- when they perform above expectations
technical and consultancy support. This specific messages. There is still a long is appropriately spread across the
support includes help to ensure that the way to go but, from a SWIFT Standards different investors. “This involves a lot of
messages designed by the central banks perspective, its expanded role in creating detailed calculation,” says Vierendeels.
– for purposes such as securities account a new message infrastructure for T2S “Administrators need to know when an
management, third-party reference data, has already provided both an opportunity investor has made an investment and
and query/response messages relating to to demonstrate its consulting skills in when he has redeemed his investment
settlement instructions – can pass through support of a strategically significant and all the information for the treatment
the ISO 20022 registration process as project and a test case for the flexibility of of equalisation has to be included in the
smoothly as when they are submitted. ISO 20022. confirmation messages.”

8. 8
Standards Forum
Reverse engineering:
mission accomplished
“Messages are already
available today for SWIFT Standards have completed the reverse
subscriptions, redemptions
engineering of ISO 15022 messages into ISO 20022.
and status reports. Once
hedge fund players are
comfortable with these, One of the barriers to efficiency in end- issues were identified by the Securities
to-end global securities processing, Market Practice Group (SMPG) and the
we will look at additional identified by the Giovannini Report two standards maintenance group and were
messages.” and half years ago, is the fact that not all tackled during the first year of the reverse
Koen Vierendeels, SWIFT central securities depositories (CSDs) have engineering work. The following year was
implemented ISO 15022. “Many are using dedicated to the modelling and creation of
proprietary standards,” says Alexandre the messages. “The project involved some
Today, he says, such information is Kech, head of securities & alternative 50 messages in all,” says Kech.
usually transmitted manually. “The hedge investment standards, SWIFT.
fund industry is mainly fax-based,” he The schemas and documentation have
points out. To rebuild trust with investors With the advent of ISO 20022, the now been approved by ISO and published.
unnerved by the crisis, hedge funds are attraction of implementing ISO 15022
keen to show greater transparency to messages began to diminish even though As far as implementation is concerned,
their end-investors. Using SWIFT for order the functionality inherent in the message a solution for corporate actions will be
processing helps to create visibility for set was important to the securities available on SWIFTNet as from November
investors on these transactions. “you get industry as a whole. “We proposed to 2010. In line with customer demand,
an audit trail, you get guaranteed delivery, these CSDs that they should implement settlement and reconciliation will follow in
and a clear standardised process,” ISO 20022 versions of the ISO 15022 2011.
Vierendeels comments. standards,” says Kech. “To that end, we
agreed to reverse engineer the ISO 15022 ”We have built translation rules to help
SWIFT project settlement, reconciliation and corporate middleware providers build mapping
SWIFT launched its hedge fund messaging action messages into ISO 20022.” tools between the standards and have
project in earnest in 2006. “We hired a published these in April,” says Kech. “We
consultant who helped us develop market That process has now been completed. also wanted to make sure that in ISO
practice for the hedge fund industry in “The industry wanted those ISO 20022 20022, there is a series of coexistence
collaboration with a global advisory group. messages to be functionally 1-to-1 rules that establish how certain fields
The market practice recommendations mappable to ISO 15022 – a kind of should be handled. There are some
produced through the SWIFT Hedge backwards compatibility and that’s what technical differences between the
Funds Harmonization Pilot (SHARP) were we did,“ says Kech. “We tried at the same standards and we have therefore created
finalised in 2008 and are in the process time to solve some of the issues that an interoperability and coexistence
of being signed off by all market players. existed in the 15022 messages,” he adds. framework.”
Agreement has now been reached with “It would have been strange to import
seven hedge fund users to begin testing these into ISO 20022.” A dozen such
the hedge fund messages resulting from
the initiative.
“We have built translation
“Messages are already available today for
subscriptions, redemptions and status rules to help middleware
reports,” says Vierendeels. SWIFT has providers build mapping
also developed a specific statement of
holdings message for hedge funds. While
tools between the standards
the crisis has introduced some delay in the and these will be published
project, he expects the first users to begin soon.”
deploying the messages in the second
half of the year. “Once hedge fund players Alexandre Kech, SWIFT
are comfortable with these, we will look at
additional messages,” he comments.

9. 9
May 2010
Standards Forum - Where business and standardisation meet
upcoming events
19 May 2010 25 – 29 October 2010
17 May 2010
Beijing, China Amsterdam, The Netherlands
Tokyo, Japan
Venue: Xindadu Hotel Venue: Sibos, Amsterdam Rai
Venue: Auditorium, Tokyo Bankers
Association Full day
Sibos is the world’s premier
1:00pm-5:00pm (By invitation only) financial services conference,
(By invitation only) exhibition and networking event.
The focus of this day will be on
The focus of this half-day education and information sharing Now in its seventh year, the
conference will be on providing regarding ISO 20022. The agenda Standards Forum at Sibos
up-to-date standards information will include: provides a unique opportunity
to the Japanese community, to network, learn about new
helping them to move forward A general introduction to ISO initiatives, share experiences
with the implementation of ISO 20022 and its various and gain new insights into
20022. The agenda will include: committees and sub- standardisation topics.
committees; what ISO 20022
Sharing best practices around messages have been or are The Standards Forum runs
ISO 20022 being developed and by which throughout Sibos week and offers
organisation; how the ISO a comprehensive and interactive
Reporting on the ISO 20022 20022 registration process programme of activities taking
meetings held the week before works; where is China place on a dedicated stand
in Tokyo participating within the Sibos exhibition. The
Standards Forum welcomes
Updates on coexistence, ISO 20022 registration and business people, standardisers,
interoperability, standards maintenance process in more implementers, vendors and
releases detail and the importance for decision makers alike.
China of being actively involved
ISO 20022 case study
The ISO 20022 message
More information: portfolio (payments) More information:
www.swiftcommunity.net/ www.sibos2010.com
events/177/detail The Peoples Bank of China will www.swiftcommunity.net/
participate in the event and will standardsforum
outline their stand on ISO 20022
adoption, share their experience
with ISO 20022 methodology Questions or comments?
and the technical implementation standards.forum@swift.com
of XML messages and discuss
their next steps for ISO 20022
adoption.
More information:
www.swiftcommunity.net/
events/178/detail

10. 10
Standards Forum
Reducing the cost of standards implementation
Two SWIFT initiatives “There has not up to now been any formalising third party practices and ultimately
machine-readable documentation on the making them available to the community
aim to help customers standards releases that developers could in a web- or machine-readable form,” says
avoid duplication of effort apply to their software coding,” says Moulson. This will involve capturing the
and save time and money Lindsay. “If that information is machine- practices and then publishing them.
consumable, it would free up resources
in the process. and reduce costs both for individual “Part of our strategy going forward is to
customers and across the community.” engage more with how standards are being
Standards are, above all, practical. If they used,” says Moulson. “We hope firstly to
look good in theory, but cannot be easily provide the information to our users in a
implemented, they are unlikely to achieve way that is consistent so they don’t have
de facto standard status. At the same
“There are different varieties to go to different sources; secondly where
time, once in use, they do not float above of market practice, some there are overlaps in the way a message
the market in a pure state, but are adapted more formal than others.” is customised – for example, common use
to the needs of the institutions using them. of a narrative field for a particular piece
Two initiatives aiming to ease the path of Adam Moulson, SWIFT of information – it may suggest a need to
application address the challenges related refine the standard itself in a future release.“
to core implementation on the one hand
and informal customisation on the other. Initial interest in the SDK is enthusiastic.
“We have just begun marketing and have
The first, launched at the Standards already signed up around 25 customers,”
Forum in Hong Kong, is the Standards says Lindsay. For those interested,
Developer Kit (SDK). One way of ensuring samples can be downloaded from the
that a critical mass of users is drawn to SDK community on swiftcommunity.net
implementing a particular standard is to while SWIFT’s new information portal for
ensure that barriers to entry are kept as low developers on swift.com, the Developer
as possible. “The SDK is one attempt to do Resource Centre, provides access to
just that,” says Stephen Lindsay, head of further information and online ordering.
standards automation, SWIFT. “For SWIFT
customers, who are already connected Market practice
to SWIFTNet, the principal barrier to The second initiative concerns the
entry for a new solution is the cost of practical application of standards. Once
implementation. The SDK aims to lower standards are in regular use, there are
that cost by providing standards definitions often informal rules applied by individual
Stephen Lindsay, SWIFT
in a machine-processable form.” institutions that govern their acceptance
of specific message types. “There are
Prior to SDK, application developers would different varieties of market practice,
need to consult the documentation in some more formal than others,” explains
the SWIFT User Handbook and, having Adam Moulson, head of standards
read through the material, they would implementation, SWIFT. “Market practice
code accordingly. “That is not a one- groups, for example, get together and
off process,” Lindsay points out. With formally and carefully define market practice
every annual standards release, existing for their community. At the end of that
implementations have to be reviewed. process they produce documentation.” But
there are other practices prevalent in the
market that might not be tagged as ‘market
“The SDK aims to lower practices’ and may even be specific to
particular institutions. “These are less
the cost of implementation formalised customisations of messages that
by providing standards are nevertheless a reality for the people who
definitions in a machine- have to implement them,” says Moulson.
processable form.” There are a number of different sets of these
Stephen Lindsay, SWIFT individual rules. “We’ve now embarked
on a proof of concept exercise aimed at Adam Moulson, SWIFT

11. 11
May 2010
Case study
SunGard capitalizes on processable
standards definitions
Through the integration of the SWIFT
SunGard is one of the world’s
leading software and IT services Standards Developer Kit, SunGard can offer
companies. SunGard serves quality-certified message definitions and powerful
more than 25,000 customers
in more than 70 countries, XML tools, while helping to reduce development
including the world’s 25 largest costs and time-to-market.
financial services companies.
SunGard provides software For the development of the latest release of their consolidated
and processing solutions
financial messaging solution, SunGard is pioneering the use
for financial services, higher
education and the public sector. of processable standards information provided in the SWIFT
SunGard also provides disaster Standards Developer Kit (SDK). The integration of the SDK
recovery services, managed IT has already helped streamline the development process, and
services, information availability is expected to deliver continuing time-to-market and quality
consulting services and business benefits.
continuity management software.
Benefits
Certified quality of message definitions Drivers much more rapidly and deliver these to
SunGard is an important provider of our customers sooner. And because the
Ability to use powerful XML tools to application software to the financial definitions are certified by SWIFT, we will
process MT messages industry. Its portfolio includes payments not be delivering an interpretation of the
and securities industry applications, standard, but the standard itself to the
Reduced development cost and time- and SWIFT messaging and connectivity benefit of our customers.”
to-market products. Providing support for SWIFT
and ISO standards in these products The SDK is used in two critical areas
Model-driven development enabled to requires significant investment in terms of Ambit Messaging Hub: it provides
generate a Graphical User Interface of both initial development and the definitions of MT messages for internal
(GUI) ongoing maintenance required to track the processing, as well as the source content
standards as they evolve. to generate graphical user interfaces.
Processable Definitions
For its most recent messaging product,
Ambit Messaging Hub, SunGard has A modern application, Ambit Messaging
chosen to use processable standards Hub takes full advantage of the XML
definitions from the SWIFT Standards capabilities available in today’s technical
Developer Kit (SDK), instead of creating platforms. Inside Ambit Messaging
and maintaining its own proprietary Hub, all messages, irrespective of their
definitions. Andrew Owens, R&D Director, native syntax, are maintained in XML
Messaging at SunGard, explains the form, which allows powerful standard
decision, XML technologies to be used for
transformation, enrichment, display,
“The main advantage for SunGard comes reporting and so on. Messages are
with future standards changes. We will be converted to their native syntax only when
able to take on changed message formats they are delivered to an external system.

12. 12
Standards Forum
Kurt Florus, Chief Architect for Messaging the necessary user-interface logic for pilot programme currently targeted for the
at SunGard adds, a message given a formal message third quarter of 2009. It is one component
definition, such as an XML schema. of SWIFT’s Standards Developer Kit,
The SDK MT/XML schema library provides a coherent set of resources aimed at
comprehensive XML definitions for MT In addition to the MT/XML Schema Library, supporting all phases of standards
messages and guidance on converting which defines MTs, the SDK also includes implementation, from analysis, through
between XML and the native MT syntax. enriched schemas for ISO 20022 (MX) to design, build, document and test.
Using the SDK allows SunGard to import messages, which extend the standard The Standards Developer Kit includes a
the definitions used for the internal schemas available from ISO to include full machine-readable repository of message
representation of MTs directly from textual names and descriptions for every meta-data, which can be consumed in a
SWIFT, the source of the standard, which message element. Both MT and enriched variety of forms.
guarantees that the definitions will be of MX schemas can be used as the source
high quality. for the generation of GUI definitions. Kurt Conclusion
Florus, Adam Moulson, Head of Implementation,
SWIFT Standards, concludes, “As an early
“Maintaining all messages, “The enriched MX schemas allow us to adopter of the SDK, SunGard has already
including MTs, in XML generate automatically rich and detailed realised significant benefits. But this is
GUIs for ISO 20022. These message just the start. We look forward to working
allows us to use standard definitions can be large and highly closely with SunGard and other partners
tooling for MT-MX complex; the model-driven approach to define the next advance in processable
transformations. The that the SDK enables, provides very standards from SWIFT, enabling greater
significant productivity advantages over accuracy and faster time-to-market for the
XML tools available today more traditional techniques, which involve benefit of our mutual customers.”
make it easy to visualize, manually creating screen definitions from
code, test and document published documentation.” About SWIFT
SWIFT is a member-owned cooperative
transformations, but they The Future that provides the communications
depend on both sides of the The first version of the SDK is already platform, products and services to
proving the value of processable standards connect over 8,500 banking organisations,
transformation being XML.” definitions to partners such as SunGard. securities institutions and corporate
Future releases will build on these customers in more than 200 countries.
capabilities to add more processable SWIFT enables its users to exchange
A further advantage is that, because the content for such common requirements as automated, standardised financial
MT/XML schema library is updated and testing and message validation. Andrew information securely and reliably, thereby
released by SWIFT simultaneously with Owens continues, lowering costs, reducing operational risk
the release of the annual MT standards and eliminating operational inefficiencies.
update, the time between the standard “Further significant savings for SunGard SWIFT also brings the financial community
being finalized and SunGard being able can be achieved by extending the SDK together to work collaboratively to shape
to ship definitions to its customers is to provide machine readable cross-field market practice, define standards and
significantly shortened. This is important, validation rules and smart test messages debate issues of mutual interest.
because the implementation window for for MT. This would significantly lower costs
MT standards releases is fixed, and end- of MT Standards changes to the point For more information, please contact your
users of products like Ambit Messaging where SunGard could simply run a set of SWIFT account manager or visit www.swift.
Hub prefer to receive technical definitions automated tests to check for accuracy com.
as soon as possible to enable the and correct implementation. We estimate For more information about SunGard’s
development of integration with back-office that extending the SDK in this way would implementation of the SDK, please contact
systems. reduce our MT related R&D costs by over ambitinfo@sungard.com.
50%.”
Graphical User Interface
Ambit Messaging Hub includes a Solution Overview – The Standards
Graphical User Interface (GUI) that allows Developer Kit
users to view and work with messages. The machine-readable standards
Ambit Messaging Hub takes a model- information used by SunGard will be
driven approach to GUI definition; the available to SWIFT customers and partners
product includes tools that can generate during 2009, following the completion of a
SWIFT © 2009