How to Survive and Thrive in a Real-Time World
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COLLATERAL YVES MERSCH Infrastructures can What a central bank alleviate a looming sees infrastructure collateral shortage doing for consumers How to survive and thrive in a real-time world ISO 20022 needs harmonization, not Lisa-Landsdowne Higgins : A mindset open to differentiation change Contents Introduction p.7 Deepening and widening our Juliette Kennel, head of market infrastructures at SWIFT, spells out collaboration with market the many different ways in which SWIFT is expanding and deepening infrastructures its commitment to the sector. Articles Former Federal Reserve COO Christine Cumming looks back on INFLUENTIAL PEOPLE 35 years at the heart of financial deregulation and innovation, risk p.10 Farewell Christine Cumming management and operational resilience. Sergey Putyatinskiy and Maria Ivanova of the NSD in Moscow STRATEGIC INITIATIVES explain why Russia sees ISO 20022 as the foundation of a modern p.22 The challenges and rewards payments and securities market infrastructure. of an ISO 20022 pioneer Ted Leveroni (DTCC), Andrea Tranquillini (globeSettle) and Jean- ROUNDTABLE Robert Wilkin (Clearstream) explore how market infrastructures can p.31 What market infrastructures help collateral managers. can do for collateral managers RBC vice president and SWIFT board member Lisa Lansdowne- INFLUENTIAL PEOPLE Higgins argues that no banking business today can rival payments p.52 Mindset open to change for interest and opportunity. Isabelle Olivier of SWIFT finds that T2S, the single European settlement KEY PERSPECTIVES platform which launched this summer, creates opportunities as well p.64 European CSDs are still as threats for European CSDs. authors of their own destiny KEY PERSPECTIVES Shuji Kobayakawa (Bank of Japan), Steve Ledford (TCH), p.76 What needs to be done Chris Hamilton (APCA), Hays Littlejohn (EBA CLEARING) and to make real-time retail Craig Tillotson (Faster Payments) give their perspectives. payments a reality? STRATEGIC INITIATIVES The journey towards a full integrated capital market in South-East p.80 The emerging single market in Asia has begun, says Paul Gwee, Secretary General of the ASEAN Bankers Association. South-East Asia STRATEGIC INITIATIVES Yves Mersch, a member of the Executive Board of the ECB, p.96 Innovation in European retail describes why the European central bank supports a real-time retail payments infrastructure for Europe. payments Andrew White outlines why the proliferation of local interpretations of STRATEGIC INITIATIVES the ISO 20022 messaging standard is undermining the purpose and p.104 Everybody benefits from value of the standard. standardizing the ISO 20022 standard The MIRS resiliency service developed for central banks by SWIFT RISK & REGULATION will become even more valuable as adoption spreads, thinks Kjetil p.116 Pioneering MIRS Heltne of Norges Bank. Banks need to transform the way they think, work and invest if they STRATEGIC INITIATIVES are to retain their customers, writes Mark Buitenhek, global head of p.122 Payments are all about the transaction services at ING. customer experience Natasha de Terán, head of corporate affairs at SWIFT, says the RISK & REGULATION concentration and contagion risks of CCPs require more convincing p.130 CCP risk is a borderless answers from international regulators. question in need of a global answer Carlo Palmers and Elie Lasker, senior market managers, real-time KEY PERSPECTIVES payments, at SWIFT, share what they have learned about real-time p.138 Sharing what SWIFT has retail payments systems. learned about RT-RPS MI Forum sessions p.150 Ask not what infrastructures Banks and infrastructures are competing but mutually supportive can do for their users but parts of the network that makes up the financial eco-system, what users can do for writes Frank Van Driessche of SWIFT. infrastructures p.162 The truly resilient John Hagon describes how CLS draws on the experience of other infrastructure is not afraid to industries to ensure the FX settlement infrastructure maintains its learn from other industries reputation for operational resilience. p.170 Safety and speed are not The momentum towards real-time retail payments 24/7, 365 days a alternatives year is unstoppable, and checks and controls must adapt to the new realities, says Liz Oakes of KPMG. p.176 Blockchain has the power Customer demands, regulation and disruptive technologies are asking to resolve the paradox of questions of infrastructures attuned to safety-first, according to Virginie infrastructural innovation O’Shea of Aite Group. Market Infrastructures Forum magazine / Issue3 Publisher SWIFT Editor Avenue Adèle 1 B-1310 La Hulpe Dominic Hobson Tel: +32 2 655 31 11 [email protected] Fax: +32 2 655 32 26 Head of Market Infrastructures, SWIFT SWIFT BIC: SWHQ BE BB http://www.swift.com/ Juliette Kennel [email protected] Disclaimer SWIFT publishes MI Forum Magazine for information purposes Design only. Any personal views expressed in MI Forum Magazine are Bim Hjortronsteen the contributors’ own and do not necessarily reflect the views of [email protected] SWIFT or its members. SWIFT © 2015. All rights reserved. Introduction: Deepening and widening our collaboration with market infrastructures Welcome to the third edition of MI Forum magazine. The publication is one measure of the importance SWIFT attaches to market infrastructures, not just because they are valuable customers, but because they serve the whole community and underpin every transaction that takes place in the payments and securities industries. This issue also marks the third anniversary of the establishment of a team dedicated to market infrastructures at SWIFT. In that time, both our users and the Board have become convinced that SWIFT should not only maintain its focus on market infrastructures, but deepen it. This publication offers a glimpse at some of the ways in which we are doing that. The financial market infrastructures frameworks launched by the Association (FMIs) that are so essential to both the of Southeast Asian Nations (ASEAN). payments and securities industries are undergoing significant structural changes. With 79 Real Time Gross Settlement The integration of FMIs at the regional level (RTGS) systems and over half of the 150 was pioneered in Europe with the creation central securities depositories (CSDs) in of TARGET2 (T2), and more recently the world now on our platform, SWIFT the Single Euro Payments Area (SEPA) is not merely a witness to structural and TARGET2-Securities (T2S). Those change, but a facilitator of it. In fact, infrastructural initiatives have led the way as systemically important institutions, for the Integrated Latin American Market what FMIs want first and foremost from (MILA), the Southern African Development SWIFT is that it maintain the highest Community (SADC) and also, as this standards of operational excellence issue of MI Forum magazine records, and availability on their behalf. Our the financial and banking integration classic messaging services are proving easily adaptable to new uses, such as After a slow start, ISO 20022 is now firmly We have begun to build the RT-RPS are both profiled in this issue, are certainly collateral management. Our store-and- established among FMIs, as the Russian infrastructure for the New Payments examples of such people. But then so, in forward capabilities provide reassurance CSD, the National Settlement Depository Platform in Australia (NPP). This is their different way, is everybody who has and flexibility. Above all, amid mounting (NSD), notes in this issue. However, the exciting for SWIFT, not just because it contributed to or been interviewed in this anxiety about cyber-security, SWIFT growing success of ISO 20022 is due is a new business for us, but because issue. provides FMIs with the highest levels of we believe the underlying technology in large part to its open status, and an Engaging with the people who want to security and resilience. we are building for Australia has the unfortunate side-effect of this openness make a difference to the payments and potential to be redeployed in other is the risk of a proliferation of multiple securities industries will be an integral part geographies and markets. SWIFT continues to invest in versions in the marketplace. But, as of our strategy over the next five years. enhancing its services Andrew White writes in this issue, FMIs That is why we are devoting so much At SWIFT, collaboration with our clients is space to RT-RPS in this magazine, with more than a buzzword. We already host But in an age of sweeping structural have now recognized this risk, and have contributions on the subject from both a regular joint meetings with our clients’ change and fast-evolving competitive started work to harmonize the use of the practitioner (Mark Buitenhek, global head staff, and we are now experimenting with and security threats, SWIFT cannot meet ISO 20022 standard: at Sibos Singapore, of transaction services at ING) and a exchanging employees to improve our these expectations without continuing to they will jointly sign a charter to commit to regulator, (Yves Mersch, a member of the understanding of what it is actually like to innovate and invest in new technology and a consistent use of ISO 20022. Executive Board of the European Central be a SWIFT customer. services. This is why we have developed Bank (ECB)), as well as through a series new messaging and integration services This magazine is of course also a way RT-RPS opens new business of interviews with leading figures in the for T2S users; introduced a new payments to share knowledge, information and possibilities far beyond payments payments industry, and a question-and- risk management service for central banks understanding with our clients. It is based answer summary of our own thinking on called SWIFTScope; formed the SWIFT- on the belief that, the more we share, the This is the kind of work that SWIFT is the topic. for-India joint venture; delivered an ISO well placed to facilitate. As Kjetl Heltne more effectively we will work together.