clearing and collateral management solutions
DESCRIPTION
SWIFT BNL Forum 2012TRANSCRIPT
06/09/2012
1
• CCP Clearing for Cash Equities Markets
• Bilateral Collateral Management
• Triparty Collateral Management
SWIFT Messaging Solutions
Our aim is to support clients with costs, risks and regulation -
anchored by Industry standards & community
CCP Clearing Bilateral
Collateral Management
Supporting tools
Triparty Collateral
Management
2
Supporting the communication
requirements of CCPs &
GCM/ICM/DCM for cash
markets,
Flow coverage from trade
management to risk &
collateral management,
supports interoperability
Provides an end to end
electronic messaging
solution around collateral
processes
Cross asset & cross
segment solution,
complementary with
downstream settlement
processes
Underpinned by global ISO
Standards & Value Added
Services (ie Testing &
migration, training … )
Life-cycle of a Triparty
transaction: Matching to
settlement
Complies with Regulatory
requirements
Provides real time instruction,
status& position reporting
Implemented by more than 150
institutions globally
Benelux forum Clearing & Collateral Mngt May 2012
06/09/2012
2
Agenda
• SWIFT CCP Clearing Solution
• Messaging solution description & flows
• Ongoing projects
• SWIFT Collateral Management offering
– Bilateral collateral management
• Messaging solution description & flows
– Triparty collateral management
• Messaging solution description & flows
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CCP Clearing Solution
06/09/2012
3
Changes in the Financial markets
• Uncertainty in the financial markets, changing landscape of
trading venues and CCPs, arise of new business models,
interoperability discussions, structural changes in the clearing
business….
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Managing Operational
Complexity & Risk in a
Changing Financial
Landscape
Key Challenges : Clearing member’s problem statements
External challenges
•Changing landscape • Fragmented infrastructures
• Inter-operability
• New CCPs (ex. Poland , Spain, CEE)
•Heterogeneous practices and environment • Lack of global technical standards
• Differing business practices (buying rules, buyer protection …)
Internal challenges
• More stringent risk monitoring and collateral management rules
requiring real time information
• Significant flow of information to manage (gross market executions, net
settlement, collateral
• Business expansion requiring time to market deliveries •In Europe : Poland, Hungary …
•And Beyond : Brazil, Singapore, Australia …
Source: SIBOS 2011 Clearing Session (BNP Paribas input)
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06/09/2012
4
ISO 20022 Clearing Project
Standards Working Group Participants
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• The Industry participants launch a working group in 2008 to standardize clearing
space in Europe.
New CCP Clearing Messaging Solution
• New messaging solution based on ISO 20022 methodology
• Servicing the communication and standardisation requirements of Clearing houses and
GCM/ICM/DCM for cash markets (FI & equities)
Benelux forum Clearing & Collateral Mngt May 2012
Clearing
Member Firm
Clearing
House 1
…
Clearing
House 2
Clearing
House n
Trade management
Position management
Settlement management
Risk & Collateral
management
Others ie Buy-in etc
Non -Clearing
Members 1
Non -Clearing
Members 2
Non -Clearing
Members n
…
Reports
Rec
Statements
8
06/09/2012
5
Interest
Processing Assignment of trade
to CCP
Trade
Management
9
Position
Management
Settlement
Management
Risk &
Collateral
Management
Others
CCP Life Cycle
Trade
Management
Position
Management
Settlement
Management
Risk & Collateral
Management
Others Interest Processing
Trade Leg
Notification
Trade Leg
Statement
Trade Leg
Notification
Cancellation
Net Position
Margin Report
Margin Call Request
Margin Call Response
Settlement Obligation
Report
Securities
Transaction Pending
Report
Bank To Customer
Account Report
Bank To Customer
Statement
Collateral Proposal
Collateral Proposal
Response
Collateral Substitution
Request
Collateral Substitution
Response
Collateral Substitution
Confirmation
Collateral
Management
Cancellation Request
Collateral
Management
Cancellation Status
Collateral Valuation
Report
Default Fund
Contribution
Report
Buy-in
Notification
Buy-in Response
Buy-in
Confirmation
Interest Payment
Statement
SWIFT Messages
CCP Clearing Messaging Solution
Benelux forum Clearing & Collateral Mngt
May 2012
What’s new in standardised clearing space
KDPW
CCP OTC derivatives
Q4 2012
Cash market
Live 2013
LCH.Clearnet
SA Risk & collateral
management
OSLO Clearing CCP CEE
AT, CZ, HU, Estonia
Live Q2 2012
EuroCCP
EMCF
LCH
Benelux forum Clearing & Collateral Mngt May 2012 10
06/09/2012
6
Benelux forum Clearing & Collateral Mngt May 2012 11
Bilateral Collateral Management Solution
Bilateral Collateral Management Solution
Benelux forum Clearing & Collateral Mngt May 2012
• Provides an end to end
electronic messaging
solution around collateral
processes
• Cross asset & cross
segment solution,
complementary with
downstream settlement
processes
• Enables monitoring &
mobilisation of collateral in
the business chain
• Development based on ISO
20022 methodology
• Complementary to Clearing solution, addressing the communication needs of CCP to GCM and
NCMs
• Collateral management solution is ready for Piloting as of November 2011.
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06/09/2012
7
Initiation of
underlying deal
Margin Call
Initiation
13
Deal
Closing
Collateral
Negotiation
Dispute
Notification
Collateral
Substitution Reporting
Interest
Processing
Collateral Management Process
Margin Call Collateral Proposal Dispute Substitution Reconciliation Interest Processing
Margin Call
Request
Margin Call
Response
Collateral Proposal
Collateral Proposal
Response
Margin Call Dispute
Notification
Collateral Substitution
Request
Collateral Substitution
Response
Collateral Substitution
Confirmation
Collateral
Valuation Report
Interest Payment
Request
Interest Payment
Response
Interest Payment
Statement
SWIFT Messages
Generic messages : Collateral Management Cancellation Request, Collateral Management Cancellation Status
Bilateral Collateral Management Messaging Solution
Benelux forum Clearing & Collateral Mngt
May 2012
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Triparty Collateral Management Solution
06/09/2012
8
Mathcing &
Collateralisation
Status
Initiation of
underlying deal
Margin Call
Initiation &
Status
15
Deal
Closing
Exposure and
Collateral
Mark-To-
Markets
Reporting Claim
Return
Collateral Management Process
Margin Call &
Status
MTM & Collateral
Valuation
Status update Reporting Claim
MT527:
Triparty Collateral
Instruction
MT569:
Triparty Collateral and
Exposure Statement
MT558:
Triparty Collateral
Status Advice
MT569:
Triparty Collateral
and Exposure
Statement
MT527:
Triparty Collateral
Instruction
MT558:
Triparty Collateral
Status Advice
SWIFT Messages
Triparty Collateral Management Messaging Solution
• Life-cycle of a Triparty transaction: From matching to settlement
• Complies with Regulatory requirements ( US FED)
• Provides real time instruction, status and collateral position reporting
• Implemented by more than 150 institutions globally, facilitates single-window approach
through Standards and SWIFTNetwork
Benelux forum Clearing & Collateral Mngt
May 2012
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Thank you