Implementing SWIFT messaging for re- · PDF fileSWIFT for Re-registration ... Alliance Lite....

Implementing SWIFT messaging for re-registration

Wed 9th June 2010

AgendaWelcome & opening: Malcolm Small, TISASWIFT in the funds space; what the messages do; implementation processWhat is it about re-registration – Stephen Mohan, CofundsMaking a success out of SWIFT and STP – Alastair Doggett, FidelityExperiences of implementation – John Wallis, BBHThe process of implementation – Chris Lambert, Logica

2

AgendaPanel session: Origo – Michael Roe Calastone – Dan Llewellyn Sungard – Paul Murphy Altus – Ben Cocks Bravura – Trevor Brown

Closing remarks – David Dalton-Brown, Barclays Wealth/TISA and representative from SWIFT

3

SWIFT for Re-registrationEnabling Success for the UK Funds Community

SWIFT/TISA Implementation EventJune 2010, London

5

SWIFT in the Re-registration SpaceSolution Exists NowNo development needed

Comprehensive Market Practice(Inc TISA, SMPG & IMA)

Low Costs Messaging(Eur 0.056 per transfer message)

Many SWIFT Access OptionsCost from Free Upwards

All messages are ISO (Open, free, supported, global)

Support from Key Partners(BBH, Calastone, Origo, Altus, Logica, Bravura)

Banks

InvestmentManagers

Corporates

InsuranceCompanies

FundSupermarkets

Trustees/Administrators

Brokers

Aggregators

Software Companies

Custodians

Hedge Funds

Huge Community – 9,300 Institutions, 209 Countries

Distributors Market Infrastructures

7

“SWIFT is now the trusted brand sitting at the heart of the platforms’ & fund managers’ strategy to more effectively distribute multi asset class products & provide enhanced, value add services their global client base”

800 Funds Clients: Part of SWIFT’s 3.8 Billion Msg Community

ISO Messages for:

•Account opening•Order placement •Reconciliation•Price report•Transfers/Switches•Cash Forecast•Corporate Actions •Payments

8

Some of our UK Community

Platforms Service Providers Fund Managers

9

Regulatory Pressure

Industry Buy-In

Secure Network

ISO 20022 Messages

Solution

Relevant Expertise

Collaborative Community

All Success Factors In Place

SWIFT for Re-registration

What the messages do,

Katrina Greenslade9 June 2010

Background: Standards Development ProcessWhat is ISO 20022?

11

Standards consults with Community expertsCapture business modelWho has the information

& who needs the informationBusiness validation

groups approve

All information captured in UML models and stored in the Standards repositoryMessage schemas are

generatedISO 20022 approval &

registration

UHB Online PDF/HTMLSchemas ISO20022.orgWeb query tool on

iso20022.org

12

Re-registration Solution Components

Transfer of account or portfolio- Taxed wrapped products - Unwrapped portfolio accounts - Residual Cash & Cash Assets

Transfer of Stock - Re-registration with the Fund manager, Asset register or TPA- Both cash & stock

ISO 20022 XML messages Available on SWIFTNet Supported by Global market practice

13Transfer Presentation 13

Portfolio & Stock Transfer Process Summary

Old plan manager- Ceding Party

New plan manager- Acquiring Party

Request for Portfolio information1

Portfolio transfer instruction3

Portfolio transfer confirmation 4

Portfolio information 2

Client

Fund Manager / Asset Register- Record keeper

6

6Transfer In Confirmation

5Transfer Out Instruction

Transfer Out Confirmation

14Transfer Presentation 14

Portfolio & Asset Transfer Message Summary

Old plan manager

New plan manager

Portfolio transfer instruction2

Portfolio transfer confirmation 6

Client

Fund Manager / Asset RegisterFund Manager /

Asset RegisterFund Manager / Asset Register

Fund Manager / Asset Register

Fund Manager / Asset Register

Request for Portfolio information1

Portfolio information 1

Cost Model Scenario

Participant Message Type Number of Messages sent

Cost @0.056Eur

Acquiring Manager

Request for Portfolio information

1 0.056 cents

Acquiring Manager

Portfolio Transfer Instruction

1 0.056 cents

Cedingmanager

Portfolio Information 1 0.056 cents

Cedingmanager

Transfer out for each Asset

5 0.28 cents

Cedingmanager

Portfolio Transfer Confirmation

1 0.056 Cents

Fund Manager / Registrar * 5

Transfer Out Confirmation

1 each (5 managers)

0.28 cents

Fund Manager / Registrar * 5

Transfer In Confirmation 1 each (5 managers)

0.28 cents

Total cost 6 Types of message 19 messages 1.064 Euro

15

16

Next steps to automation…What tools do we have to help?

16

Partners

Consulting Services Training

Connectivity

SDK Test Tools

David SinghJune 9th 2010

TISA Event June 9th 2010

SWIFTNet Connectivity

SWIFT for Re-registration

SWIFTNet Infrastructure Components

• SWIFTNet Infrastructure• Integration• Business Application

18TISA Event June 9th 2010

• Network connectivity• Security• Communications software• Messaging software

SWIFTNet Infrastructure Components

• SWIFTNet Infrastructure• Integration• Business Application


• Messaging software adaptors• Middleware

Options for Oconnecting to SWIFTNet

Alliance LiteSimplified, Internet based, secure connectivity, more business oriented

Apps

SWIFTNetUsers

Internet

* Prices for average 200 messages/day20

Indirect connectivitySWIFTNet infrastructure owned and operated by third party Apps

SWIFTNetUsers Shared infra

provider

VPN

Direct connectivitySWIFTNet infrastructure owned and operated by the customer Apps

Users

VPN SWIFTNetInternet


Options for connecting to SWIFTNet


Apps

SWIFTNetUsers

Internet

* Prices for average 200 messages/day

Easy and light

One-time-

Yearly10.2 KEUR

21


SWIFTNetUsers Shared infra

provider

VPN

Outsource

One-time1.5 KEUR

+ provider cost

Yearly7.7 KEUR

+ provider cost


Users


Flexibility and control

One-time22-44 KEUR

Yearly10-14KEUR


Alliance Lite• For small financial institutions• Easy to order, install and use• Internet based with SWIFT security• GUI and AutoClient, FIN and FileAct enabledPricing• Fixed fee recurring 10.2 KEUR

or pay-as-you-go 2.4 KEUR + 1 EUR per message

22


Apps

SWIFTNetUsers

Internet


Alliance Lite connectivity

Alliance Kit (Essentials)• Contains BIC code, User Handbook and BIC directory access• Connectivity via Service Bureaux• Provider specific offering for connectivity and services• Directory with providers on swift.comPricing• Purchase 1.5 KEUR, recurring 2.7 KEUR +

service provider fees + messaging traffic

23


SWIFTNetUsers Service Bureau

VPN


Indirect connectivity

Alliance Kits (Entry or Access)• Bundles all the components you need• One order, one shipment, one invoice• Install SWIFT components in your premises

Pricing• Purchase 22-44 KEUR, recurring 10-14 KEUR + messaging traffic

VPNVPN

24


Users


Direct connectivity


SWIFT products for direct connectivity


Network connectivitySecurityCommunications softwareMessaging softwareIntegration

Alliance Connect Bronze, Silver, Gold SWIFTNet PKI, Certificates, HSMs Alliance Gateway Alliance Access Adaptors: File, MQHA, SOAP; Alliance

Integrator, Standards Developer Kit

&uestionsAnswers


What is it about re-registration?

Stephen MohanCofunds Limited

28

Agenda

• The language of transfers & re-registration

• What Cofunds does today

• The issues with platform to platform re-registration

• How to resolve these issues

29

Glossary

• Plan transfer:– When a client’s ISA wrapper is transferred from one plan

manager to another• Cash transfer:

– Assets are sold and money transferred to us or to another party. What we allow today for ISA transfers off the platform.

• Re-registration in: – Fund holdings are not sold but transferred in-specie from

another party to us • Re-registration out

– Fund holdings are not sold but transferred in-specie from Cofunds to another party

• Platform to platform re-registration– The re-registration of assets between third party nominees

30

What Cofunds does today

Transfer On

In-Specie

Transfer On

Cash

Transfer Off

In-Specie

Transfer Off

CashUnwrapped Funds

ISA Funds

Funds in a SIPP Wrapper

Funds in a Bond Wrapper (nobody can do this)

31

Cofunds transfer volumes

Number of Customers Jan 10 Feb 10 Mar 10

Cash transfer in 1978 2889 3538

Re-registration transfer in 1984 2176 2877

Cash transfer out 855 1089 1342

Re-registration transfer out 147 138 278

32

Client issues: Platform to platform re-registration

Issue Standard re-registration Platform to platform re-registration

Contract completion 80% of clients re-register from a single FM: provides uniform process for confirmation and clearance of issues

Registration likely to be from multiple FMs –leads to an inconsistent approach to provision of data and allocation of distribution income

Valuation 20% of valuations will miss in-flight transactions

40% of valuations will miss in-flight transactions

Distributions 10% of clients experience ‘missed’ distributions – identified during XD reconciliation

Dependent on underlying funds, but significant number of clients expected to miss at least one distribution – identified during XD reconciliation

Client Inconvenience Minimal, as should only be timing differences

Missed distributionsLengthy process to complete re-registration contractIncreased potential for errors due to additional handoff with old plan manager (OPM)Increased potential for FM to open ‘designated’ accounts – causes items to be missed from reconciliation control processes as not all FMs provide details of designated accounts

33

What is the problem for Retail Operations of re-registering on platform to platform? (1)

Starting position, but A, B & C all want to move to Cofunds

Fund Manager

FNW CofundsA B CMr A: 100 units

Mr B: 150 units

Mr C: 275 units

…

Mrs Z: 475 units

Total: 17, 457 units

FNW: 17, 457 units

Cofunds: 16,743 units

…

Mrs AZ: 400 units

Total: 16,743 units

34


Fund Manager


Mr B: 150 units

Mr C: 275 units

…

Mrs Z: 475 units


FNW: 17, 457 units


…

Mrs AZ: 400 units

Total: 16,743 units

Dear Cofunds,I authorise you to re-register all my units from

FNW.Mr C


FNW.Mr B


FNW.Mr A

Dear FNW,We have authority to transfer assets from Mr APlease tell us what assets he has.

CofundsDear Cofunds,

I authorise you to re-register all my units from FNW.

Mr A

Dear Fund Manager,We have

authority to transfer 100 units

from FNWCofunds

Total: 16,950 units

Dear FNW,We have authority to transfer assets from Mr BPlease tell us what assets he has.

Cofunds Dear Cofunds,I authorise you to re-register all my units from FNW.

Mr B

Dear FNW,We have authority to transfer assets from Mr CPlease tell us what assets he has.


Mr C



from FNWCofunds



from FNWCofunds

How do all the parties get told?

35


Fund Manager


Mr B: 150 units

Mr C: 275 units

…

Mrs Z: 475 units


FNW: 17, 457 units


…

Mrs AZ: 400 units

Total: 16,743 units


FNW.Mr C


FNW.Mr B


FNW.Mr A




Mr A

Dear Cofunds:

Mr A: 100 units

FundsNetwork



from FNWCofunds

Total: 16,950 units

So, until Cofunds puts their assets onto its

register, the clients now appear to have lost

these assets!!



Mr B



Mr C

Dear Cofunds:

Mr B: 150 units

FundsNetwork

Dear Cofunds:

Mr C: 275 units

FundsNetwork



from FNWCofunds



from FNWCofunds

How do all the parties get told?

36


Now all we have to do is to ensure that we assign the correct assets to the correct client.

Fund Manager


Mr B: 150 units

Mr C: 275 units

…

Mrs Z: 475 units


FNW: 17, 457 units


…

Mrs AZ: 400 units

Total: 16,743 units

16, 950 units

17,268 units

Dear Cofunds,We have

transferred 250 units from FNW

Fund Manager

Dear FNW,We have

transferred 250 units to Cofunds

Fund ManagerDear FNW,We have


Fund Manager

Total: 16,950 units



Fund Manager

It is fairly normal to have the shapes

come back different from those requested

37



Mr C


FNW has to link A, B & C to D & E to confirm F

Fund Manager


Mr B: 150 units

Mr C: 275 units

…

Mrs Z: 475 units


FNW: 17, 457 units


…

Mrs AZ: 400 units

Total: 16,743 units

16, 950 units

17,268 units

Dear FNW,We have


Fund ManagerDear FNW,We have


Fund Manager

Total: 16,950 units



Mr B

BC




Mr A

F

D

E

A

38


Cofunds has to reconcile A, B, C, D, E, F, G, H & I to J & K before doing L

Fund Manager


Mr B: 150 units

Mr C: 275 units

…

Mrs Z: 475 units


FNW: 17, 457 units


…

Mrs AZ: 400 units

Total: 16,743 units

16, 950 units

17,268 units

Total: 16,950 units

A B CDear Cofunds,I authorise you to re-register all my units from

FNW.Mr A

A


FNW.Mr B

B


FNW.Mr CC

Dear Cofunds:

Mr C: 275 units

FundsNetwork

Dear Cofunds:

Mr B: 150 units

FundsNetwork

Dear Cofunds:

Mr A: 100 units

FundsNetwork FD EDear Fund Manager,We have


from FNWCofunds



from FNWCofunds



from FNWCofunds

G H I



Fund Manager



Fund ManagerJ K

Mr A: 100 units

Mr B: 150 units

Mr C: 275 units


L

39

ISAs add to the complexity …

• Current year ISAs must be transferred in full• Current year subscription amounts and date of first

subscription need to be transferred over for ISA reporting

• Dates of transfers should be agreed by both managers• Agreement over distributions and reclaim of tax, ensures

reclaims are not duplicated• Multi fund transfers could leave confusion as to when the

plan is transferred and who has the reporting requirements– a bigger issue for those that straddle tax year end

40

… and there are plenty of other reasons for there to be differences & problems

• FNW* & the Fund Manager may not have agreed their asset positions

• There may be a distribution in train • There may be in-flight transactions• FNW may refuse to tell us how many assets each client has• There may be some delays from FNW, increasing the

chances of a distribution• There will be 3 or 4 FMs and 6 or 7 funds per end customer

& hundreds of customers per bulk client transfer• A transferred shape from the FM can be over more than

one day’s requests from Cofunds.

So there is a very high chance of reconciliation errors

* FNW is used here solely as a representative of another platform: the issues are not peculiar to any one platform

41Experience suggests a 20 week resolution time

Does stock match?

The reconciliation is then a nightmare

Clients distribution adjusted

4 weeks

44

4-8 weeksidentification

Investigation

No

1100% No client info

EFM

4 weeks

1Who is nominee?

40%

Incorrect distribution XD Rec

identification

4-6 weeks

4

4 weeks

OPM

Who is client?100%2

Manual

10% of time EFM & OPM disagree!

4 4

100% 80%

Designated A/C created

420%

4 Written request sent to EFM to

merge into main account

54

20%

EFM Stock info sent

May refuse to

tell us!

Keying error

3

2%3

1%Confirm true

position: correct units 98%

No further action required

But 40% miss in-flight and start again!

Cofunds system updated

Client Detail

Electronic2

2

22

4 weeks

5

Update month end reconciliation

5

42

How can the industry resolve this?

• Legislation to enable stock transfers without signature –this is in place

• Fund managers need to agree to reconcile stock positions on a daily, not monthly, basis

• A single, electronic communication methodology and common market practice is required across the fund management and platform community– The industry has accepted ISO20022 as the standard– TISA owns the industrywide coordination of delivery

There are a few, expensive steps and the whole industry needs to adopt them

43

Important information

• Produced by Cofunds Limited Authorised and regulated by the Financial Services Authority.

• This presentation is not to be reproduced, copied or made available to others. The information contained herein including any expressions of opinion or forecasts have been obtained from sources believed to be reliable, but is not guaranteed as to the accuracy or completeness and does not constitute advice or a personal recommendation.

• For professional advisers only.

44

How can the industry resolve this?

• Legislation to enable stock transfers without signature –this is in place

• Fund managers need to agree to reconcile stock positions on a daily, not monthly, basis

• A single, electronic communication methodology and common market practice is required across the fund management and platform community– The industry has accepted ISO20022 as the standard– TISA owns the industrywide coordination of delivery

There are a few, expensive steps and the whole industry needs to adopt them

Making a success out of SWIFT and STP

9th June 2010

Alastair Doggett – B2B Development Manager

46

FIL Potted History

Commenced trading over the SWIFT FIN interface in November 2002

Commenced production trading over SWIFTNet Funds in April 2006

High percentage of orders automated

Majority of orders received over SWIFT are now SWIFTNet Funds messages

Extended automation across multiple business areas – Luxembourg

Far East

UK Onshore

UK Institutional DC

Dublin Cash Funds

100% of SWIFT traffic from Far East and DC clients is over SWIFTNet Funds

Active with 30 SWIFTNet Funds counterparties

Constant focus on migrating FIN users to SWIFTNet Funds

47

Business Advantages

Security, reliability, guaranteed delivery, non-repudiation

Messages designed for Funds industry

Cope with sudden increase in business volumes with no additional headcount

Ability to automate further business processes – Account Maintenance, Transfers

All new SWIFT developments and markets are utilising SWIFTNet Funds

SWIFTNet Funds messages are readable and easy to interpret

Industry works together to agree standards and business practises

Internal automation opportunities

48

Implementation Considerations

SWIFT connection – in-house, bureau, Lite

SWIFTNet Funds sign-up – use an expert

Agree and document format

Message processing – in-house, Integrator, transformation service

Counterparty test management

Plan and test for message failures – Nacks, Rejections

Plan for the annual upgrade – check contents in Q1, implement Q4

©2010 Brown Brothers Harriman & Co. Confidential & Proprietary. Not to be reproduced without the explicit consent of BBH & Co. "BBH & Co." is a registered service mark of Brown Brothers Harriman & Co. "BBH" is a service mark of Brown Brothers Harriman & Co.

Experiences of implementationDarren Savery


Experiences of implementation

I. Introduction

II. Benefits

III. Implementations Stages

IV. Realised Value


Infomediary – Single Messaging Hub

3

Infomediary’s hosted financial messaging infrastructure delivers immediate efficiencies

while setting a foundation of operational liquidity and light infrastructure

BEFORE AFTER


Benefits

Scalability

RiskManagement

EfficiencyCompliance


Implementation Stages

Trepidation

Fear

Panic

Worrying Quietness….


Implementation Stages

Planning Needs Develop Testing Implement Post-Implement


Realised Value

Client Satisfaction

CompetitiveDifferentiation

Productive Resource

Utilisation

Client Onboarding


Infomediary – Single Messaging Hub

8

Infomediary’s hosted financial messaging infrastructure delivers immediate efficiencies

while setting a foundation of operational liquidity and light infrastructure

BEFORE AFTER

The accompanying material is intended as a brief overview of current issues under discussion or consultation and points of

interest. We will be happy to discuss any issue, whether or not mentioned above, with you. Please contact a BBH

representative. The enclosed information may contain compilations or excerpts of industry sources that have not been

independently verified and may also be subject to change. This information is not offered as financial, investment, tax or

legal advice nor should it be construed as a recommendation to invest or not to invest in any instrument or security. The

services of an appropriate professional should be sought in connection with such matters. Any information in connection

with an investment is intended for informational or illustrative purposes and is not to be construed as an offering of any kind.

BBH makes no representations or warranty as to the accuracy or completeness of the information provided. Accordingly,

BBH shall not be liable for any inaccurate or incomplete information.

(Copyright ©2010 by Brown Brothers Harriman & Co.)


Experiences of implementation

Implementing Re-RegistrationSWIFT/TISA Re-registration event , 9 June 2010

Chris Lambert, Logica

Implementing Re-Registration

No. 29 June 2010 Implementing Re-Registration

Will it happen?

What will change?

What does it mean for me?

What do I have to do?


Will it happen?

Industry

• Culmination of a decade of industry changes• Legal & technical solutions exist• Industry-wide consensus achieved• Target date laid down

• YES – IT WILL HAPPEN !

My firm

• Compliance requirement• Big impact Lots to do• Plenty of “known unknowns”• Tight timescales

• DON’T WAIT – GET HELP & GET STARTED !



What will change?


• More transfers Better client service More clients• Initial implementation costs Ongoing admin savings• Future automation opportunities Future savings• Stay compliant Avoid client & FSA issues

Business model

• Client & Counterparty “paperless” agreements• Counterparty “service level” & “”indemnity” agreements

Business relationships

• Automation, monitoring & exception handling

Business processes


What will change?


• Messaging interface SWIFT bureau / network• Software changes messages database• Security, validation, audit trail etc.

IT Systems

• “Reasonable steps” – authenticity of instructions• Request/response & end-to-end transfer times

Compliance




• Planning & consultancy• Implementation & support

Budget

• When to be ready – for pilot, or live?• How to connect to SWIFT – direct or via bureau?• How much to automate – simple, complex and/or exceptions?• Who to test with & when?

Decisions

• Customer brochures, forms, Ts & Cs etc • Counterparty “Service Level Agreements”, indemnities etc.

Legal & Compliance




• Message entry & response• Complex message format (XML) & Complex market practice rules• Implies Back Office integration, and/or “Transfers” manual workstation

• Transfer tracking• 19 messages (plus payments) per ave. re-reg. complex to monitor• Implies Back Office integration, and/or “Transfers” workflow system

• Testing – internal & end-to-end

IT Changes

• Cross-department plan & milestones• Cross-industry coordination, e.g. testing• Change control – internal & external• Resourcing – internal / vendor / outsource• START PLANNING NOW !

Project management


What do I have to do?


Roll out

Pilot Clients Counterparties Full market

Implementation

Business Internal IT Bureau / Network connection Legal & Compliance

Decisions

Scope Timescales Connectivity Partners

Information

TISA Market Practice Group IMA SWIFT Vendors

Implementing Re-RegistrationSWIFT/TISA Re-registration event , 9 June 2010

Chris Lambert

Lead Consultant, Financial Messaging, Logica

[email protected] 020-7446 1462

mailto:[email protected]�

Dakota House25 Falcon Court

Preston Farm Business ParkSTOCKTON-ON-TEES

TS18 3TX

01642 [email protected]

Implementing SWIFT messaging for re- · PDF fileSWIFT for Re-registration ... Alliance Lite....

Documents

Transcript of Implementing SWIFT messaging for re- · PDF fileSWIFT for Re-registration ... Alliance Lite....