Introduction to ISO 20022 – Universal financial industry message scheme

1. Introduction to ISO 20022 – Universal financial industry message scheme

ISO 20022
Introduction to ISO 20022 –
Universal financial industry
message scheme
1
ISO_20022_LV_v187

2. Agenda

ISO 20022:
Value proposition
The standard
The actors
The registration process
The Repository
ISO 20022 registration platform
Cross industry harmonization
Interoperability within the financial industry
Q&A
2
ISO_20022_LV_v187

3. The ISO 20022 value proposition (1/5)

Objective
To enable communication interoperability between financial
institutions , their market infrastructures and their end-user
communities
Major obstacle
Numerous overlapping standardization initiatives looking at XML
financial messages:
MDDL, FIX, FinXML, VRXML, RIXML, XBRL, FpML, IFX, TWIST,
RosettaNet, OAGi, ACORD, etc.
3
ISO_20022_LV_v187

4. The ISO 20022 value proposition (2/5)

Proposed solution
A single standardisation approach (methodology, process,
repository) to be used by all financial standards initiatives
ISO 20022
4
ISO_20022_LV_v187

5. The ISO 20022 value proposition (3/5)

Convergence into ONE standard is the long term objective…
… but in the interim several standards need to coexist to enable
quick response to competitive pressures and regulatory demands
5
ISO_20022_LV_v187

6. The ISO 20022 value proposition (4/5)

Growth adds exponential complexity and expense…
EDIFACT
IFX
OAGi
TWIST
RosettaNet
Without common building
blocks:
SWIFT
Point-to-point connection
Data is mapped directly from
one application to another
Proprietary Costly, unsalable and difficult
format
to implement and maintain
Process, routing, rules logic
needs to be coded to specific
message types
42 interfaces = n * (n-1)
6
ISO_20022_LV_v187
Source: John Mersberg, IBM Corporation

7. The ISO 20022 value proposition (5/5)

Standardized implementation reduces cost, time to effect change and
improves overall performance…
RosettaNet
EDIFACT
IFX
OAGi
TWIST
Canonical message model =
True process integration
SWIFT
Reduced brittleness, faster to
respond to change
Canonical
Proprietary Shared message services –
Message Model
format
single/shared parser, message
(i.e. ISO 20022)
independent rules engine, etc.
Unified monitoring / audit trail
14 interfaces = n * 2
ISO aims at long term convergence,
while facilitating short term coexistence…
7
ISO_20022_LV_v187

8. ISO 20022 Illustrating business modelling

All institutions have
their own sets of
data objects
ISO standardizes common
data objects…
…and groups them into ‘syntaxneutral’ message models, which...
… can be ‘transformed’ in
message formats in the
desired syntax
ASN.1
XML
ISO 15022
FIX
ISO_20022_LV_v187
8

9. The ISO 20022 recipe Main ingredients (1/2)

Modelling-based standards development
Syntax-independent business standard
Validated by the industry
Syntax-specific design rules for XML and ASN.1
Predictable and ‘automatable’
Protect standard from technology evolution
Reverse engineering approach
Protect industry investment and ease interoperability
Prepare for future migration
9
ISO_20022_LV_v187

10. The ISO 20022 recipe Main ingredients (2/2)

Development / registration process
Clearly identified activities and roles
Business experts and future users involved upfront
Technical experts involved when required
Repository on the ISO 20022 website
Business Process Catalogue & Data Dictionary
Outside of official standard (maintained by registration
bodies)
www.iso20022.org
10
ISO_20022_LV_v187

11. The eight parts of ISO 20022

Part 1: Metamodel
Part 2: UML profile
Part 3: Modelling
Part 4: XML schema generation
Part 5: Reverse engineering
Part 6: Message transport characteristics
Part 7: Registration
Part 8: ASN.1 generation
Copies can be obtained from www.iso.org
11
ISO_20022_LV_v187

12. ISO 20022: The actors (1/3)

Submitting organizations
Communities of users or organizations that want to develop ISO
20022 compliant messages to support their financial transactions
Could be
ANBIMA
ASF
ASX
Banco de España
Bank of England
Banque de France
Banca d’Italia
Berlin Group
BIAN
CBI Consortium
CFETS
CFTC
China UnionPay
Clearstream
CLS
Danish Bankers Association
ISO_20022_LV_v187
Deutsche Bundesbank
DTCC
Early Warning Services
EPC
ESMA
Euroclear
European Central Bank
FED
FFI
FISD
FPL
FpML
IFX Forum
ISITC
KDPW
nexo A.I.S.B.L.
OAGi
Omgeo
Payments UK
PBOC
RU-CMPG
SABS
SMPG
SPRING
SWIFT
Target
TC68/SC7/TG1
Tieto Corporation
TWIST
T2S
UN/CEFACT
etc.
12

13. ISO 20022: The actors (2/3)

Registration Management Group, RMG
Approve business justifications for new message standards
Approve new member entities
Create Standard Evaluation Groups (SEGs) and SubSEGs
Standards Evaluation Groups, SEGs and SubSEGs
Represent future users in specific financial areas
Validate new candidate messages and change requests
13
ISO_20022_LV_v187

14. ISO 20022: The actors (3/3)

Registration Authority, RA
Ensure compliance
Maintain and publish ISO 20022 Repository
Technical Support Group, TSG
Assist RMG, SEGs, RA and submitting organisations
14
ISO_20022_LV_v187

15. ISO 20022 The registration process (1/3)

R
M
G
Submitting
organisation
Financial industry group or standards body
Business
justification
Business justification
m
o
n
i
t
o
r
s
RMG
Submitting
organisation
& RA
SEG
RA
Submitting
organisation
& users
Project approval & allocation to a SEG
Development & provisional registration
Business validation
Official registration
and publication
Repository
Dictionary
Catalogue
Optional pilot testing
or first implementers
www.iso20022.org
15
ISO_20022_LV_v187

16. ISO 20022 The registration process (2/3)

R
M
G
m
o
n
i
t
o
r
s
Submitting
organisation
Financial industry group or standards body
Business
justification
Business justification
RMG
Submitting
organisation
& RA
Project approval & allocation to a SEG
Candidate ISO 20022 messages
Development & provisional registration
SEG
Business validation
RA
Official registration
and publication
ISO 20022 messages
Repository
Dictionary
Submitting
organisation
& users
Optional pilot testing
or first implementers
Catalogue
www.iso20022.org
16
ISO_20022_LV_v187

17. ISO 20022 registration process (3/3) Yearly maintenance process

Timing
By June 1
By July 7
By August 21
Users CRs
SEG
Submitting
organisation
By October 1
SEG
By December 1
By February 1
By February
- May
ISO_20022_LV_v187
Submitting
organisation
& RA
SEG
RA
Submitting
organisation
& users
Users introduce Change Requests to the RA
SEG screens Change Requests (CRs)
Submitting organisation prepares ‘Maintenance
Change Request’ with each CR implementation
SEG approval/rejection
Development of candidate new versions
Provisional publication
Validation of new versions
Registration and publication
First implementers
www.iso20022.org
17

18. ISO 20022 - The Financial Repository

Data Dictionary
Business Concepts
Message Concepts
Data Types
Business Process Catalogue
Financial business process models
Financial business transactions, including messages
XML or ASN.1 message schemas
www.iso20022.org
18
ISO_20022_LV_v187

19. ISO 20022

Continuing with today’s agenda…
ISO 20022
ISO 20022 Registration Platform
19
ISO_20022_LV_v187

20. ISO 20022 - The Deployment

Approval of the international standard
Selection of the Registration Authority and set-up of the
www.iso20022.org
Creation of Registration Management Group
Creation of Standards Evaluation Groups
Registration and publication of first ‘ISO 20022 messages’
Approval of a new edition of the international standard in
2013
Ongoing: promotion to developers (standardizers, industry bodies)
and users (market infrastructures, end-users, vendors)
20
ISO_20022_LV_v187

21. ISO 20022 Registration Management Group (RMG)

Members :
21 countries: AT, AU, BR, CA, CH, CN, DE, DK, FI, FR, GB, IN, IT, JP,
KR, NL, NO, SE, SG, US, ZA.
18 organisations: ACTUS, Bank of England, CFTC, Clearstream,
DTCC, ECB, EPC, Euroclear, FPL, ISDA/FpML, ISITC, MasterCard,
NACHA/IFX, nexo, OMG, SWIFT, RippleNet, VISA
Convenor: James Whittle (GB); Vice-convenor: Mike Tagai (JP);
Secretary: David Heron (GB)
Meetings: twice a year
Key decisions:
Creation of six SEGs: Payments and Securities in 2005, Trade
Services and Forex in 2006, Cards & Related Retail Financial
Services in 2008, Derivatives SubSEG in 2016
Approval of ISO 20022 message development projects
Approval of new ISO 20022 Member Entities
21
ISO_20022_LV_v187

22. ISO 20022 – The Payments SEG (1/3)

Members:
19 countries: AU, AT, BR, CA, CH, CN, DE, DK, FI, FR, GB, IT, JP, NL,
NO, SE, SG, US, ZA
10 organisations: Bank of England, ECB, Euroclear, ISITC, MasterCard,
NACHA/IFX, nexo, STET, SWIFT, EBA Clearing
Convenor: Peter Hoogervorst (SG); Vice-convenors: Charlie Clarke/Neil
Buchan; Secretary: Aurelie Steeno, SWIFT
Approved: C2B payment initiation (SWIFT/ISTH), Interbank credit transfers and
direct debits (SWIFT, EPC), Exceptions and investigations (SWIFT), B2C cash
management (SWIFT/ISTH), Mandates (SWIFT, SABS) , Change/verify account
identification (GUF), Bank account management (SWIFT), Creditor payment
activation request (CBI Consortium), Cash account reporting request and
notification (SWIFT), Bank Services Billing (TWIST/SWIFT), Authorities financial
investigations (FFI), Stand-alone remittance advice (IFX/OAGi), Cross-border
Transactions Currency Control Reporting (RU-CMPG), Account switching
(Payments UK), Cash management (SWIFT), Request to Pay (formerly called
EIPP) (EPC)
Under evaluation: API resource Access to Account (STET/Berlin
Group/OBIE/SWIFT)
Next: Payment pre-authorization (Early Warning Services), Proxy for bank
account numbers (SPRING), EMIP (Deutsche Bundesbank, Banca D’Italia &
SWIFT), Tracking Business Transactions (SWIFT), Cheques & Charges (SWIFT)
22
ISO_20022_LV_v187

23. ISO 20022 – The Payments SEG (2/3)

Covering instruments such as:
Payments
Covering actors such as:
Credit
transfers
Cheques
Direct
debits
Financial
institutions
Private &
corporate
customers
Clearing
houses &
RTG
systems
Central
banks
23
ISO_20022_LV_v187

24. ISO 20022 – The Payments SEG (3/3)

Including business areas such as:
Clearing & settlement
Payment initiation
Communications
between the
ordering
customer and its
bank, etc.
Payments
Interbank
transfers via
correspondent
banking or
ACHs, high
value
payments, low
value bulk
payments,
RTGS, etc.
Cash Management between various actors:
Account
opening,
standing orders,
transaction and
account
information,
advices &
statements from
…
...the account
servicing
institutions to
account
owners,
including
reporting from
the financial
institution…
…to the
ordering &
beneficiary
customers,
reconciliation,
exceptions &
investigations
handling.
24
ISO_20022_LV_v187

25. ISO 20022 – The Securities SEG (1/3)

Members:
17 countries: AU, BR, CH, DE, DK, FI, FR, GB, IE, IT, JP, NL, NO, SE, SG, US,
ZA
10 organisations: ACTUS, CFTC, Clearstream, DTCC, ECB, Euroclear, FPL,
ISITC, SWIFT
Convenor: Axelle Wurmser (FR); Vice-convenor: Charles-Raymond Boniver,
SWIFT; Secretary: Benoit Vandaele, SWIFT
Approved: Investment funds (SWIFT), Proxy voting (SWIFT), Issuer’s agents
communication (Euroclear), Corporate actions (SWIFT), Settlement & reconciliation
(SWIFT), Post-trade (SWIFT/Omgeo), Total portfolio valuation report (ISITC,SWIFT),
CCP Clearing (FPL,SWIFT), Collateral Management (FPL, FpML, ISITC, SWIFT),
Money Market Statistical Reporting (ECB/3CB), Transparency of Holdings
(Clearstream), SSI for Securities, Payments & FX (ISITC, Omgeo, FPL), Financial
instruments and transactions regulatory reporting - MiFID II/MiFIR v1 and v2
(ESMA), CSDR-Settlement Internaliser Report (ESMA), Target2-Securities
(SWIFT/4CB), Securities Markets Regulatory Reporting – Benchmark Reporting
(ESMA), Shareholder Identity Disclosure (SMPG/SWIFT), CCP supervisory reporting
(BoE), Securities Financing Transactions Regulatory Reporting – SFTR (ESMA),
CSDR (ESMA), Target2-Securities (SWIFT/4CB), MiFID II/MiFIR Fast-track (ESMA),
CSDR Buy In Reporting (KDPW/SWIFT), Market Claims (SMPG/SWIFT)
Under evaluation: none
Next: ASX CHESS Replacement (ASX), Triparty Collateral Management (Banco de
Espana/SWIFT)
25
ISO_20022_LV_v187

26. ISO 20022 – The Securities SEG (2/3)

Covering instruments such as:
Securities
Covering actors such as:
Equities
Fixed
income
Funds
Investment
managers,
distributors,
transfer
agents, fund
administrators
Service
bureaux
Broker /
dealers
Custodians
Regulators
Market
Data
Providers
Stock
exchanges
, ETC
providers
Clearing
houses,
CCPs
CSDs,
ICSDs
26
ISO_20022_LV_v187

27. ISO 20022 – The Securities SEG (3/3)

Including business areas such as:
Securities
Issuance
Trade
Initiation,
pretrade
Trade,
posttrade
Securities
Account
opening,
standing orders,
transaction and
account
information,
advices &
statements,
queries &
investigations
Clearing
&
settlement
Custody
Collateral management
Collateral,
repos,
securities
lending &
borrowing
Income,
corporate
actions,
market data,
proxy voting
27
ISO_20022_LV_v187

28. Looking at the advantages ISO 20022 brings over ISO 15022

ISO 20022:
Builds on the ISO 15022 data dictionary concept and
registration infrastructure, but strengthens the monitoring
by the industry
Uses a more robust, syntax independent development
methodology based on modelling of business processes
and transactions
Uses XML or ASN.1 as the syntax for the actual physical
messages
Has a wider scope than ISO 15022, which is only for
securities messages
Syntax independent business modelling
is key to the ISO 20022 standard !
28
ISO_20022_LV_v187

29. ISO 20022 – Derivatives SubSEG (1/3)

Members:
8 countries: BR, CN, DE, DK, FR, GB, JP, US
10 organisations: ACTUS, CFTC, Clearstream, DTCC, ECB,
Euroclear, FPL, ISDA/FpML, ISITC, SWIFT
Convenor: Karel Engelen, ISDA/FpML; Vice-convenor: Joe
Halberstadt, SWIFT; Secretary: Courtney McGuinn, FPL
Approved: Financial instruments and transactions regulatory
reporting – Trade Repository Reporting (ESMA)
Under evaluation:
29
ISO_20022_LV_v187

30. ISO 20022 – Derivatives SubSEG (2/3)

Covering instruments such as:
Listed
Derivatives
OTC
Derivatives
Derivatives
Covering actors such as:
Investment
managers,
distributors,
transfer
agents, fund
administrators
Market
Data
Providers
Broker /
dealers
Market
Infrastructures
Custodians
Regulators
CSDs,
ICSDs
Confirmation,
Execution
platforms
Clearing
houses,
CCPs
30
ISO_20022_LV_v187

31. ISO 20022 – Derivatives SubSEG (3/3)

Including business areas such as:
Initiation, pre-trade
including RFQ and
credit limit check,
clearing eligibility,
margin quote
Clearing
&
settlement
Trade, post-trade, including
post-trade events such as
novation, termination,
increase, amendment, option
events, and external events
such as index and basket
changes.
Derivatives
Collateral
management
Regulatory
reporting
including
real-time and
snapshot
reporting
31
ISO_20022_LV_v187

32. ISO 20022 – The FX SEG (1/3)

Members:
8 countries: CA, CH, CN, FR, GB, NO, US, ZA
3 organisations: FPL, ISITC, SWIFT
Convenor: Zaiye XU (CN); Vice-convenor: Howard
Middleton (UK); Secretary: Joe Halberstadt (SWIFT)
Kick-off meeting: in September 2006
Approved: Forex notifications (CLS), Post Trade Foreign
Exchange Messages (CLS), FX Post-Trade Trade
Capture and FX Post-Trade Confirmation (CFETS)
Under evaluation: none
Next: none
32
ISO_20022_LV_v187

33. ISO 20022 – The FX SEG (2/3)

Covering instruments such as:
Foreign eXchange
Covering actors such as:
Spot
Swaps
Forward
Currency
Options
Investment
managers
Hedge
funds
Trading
portals,
matching
services
providers
Custodians
Dealers
Money
brokers
CLS and
CLS
settlement
members
Industry
associations
(ISDA)
Application
providers
33
ISO_20022_LV_v187

34. ISO 20022 – The FX SEG (3/3)

Including business areas such as:
Pretrade:
IOI,
quotes,
etc.
Trade:
order,
execution,
allocation,
affirmation,
etc.
Post-trade:
confirmation,
matching,
assignment,
novation, etc.
Foreign eXchange
Notification
of trades to
third parties
Trigger
events,
option
exercises
Clearing and
Settlement,
including
netting and
related
reporting
34
ISO_20022_LV_v187

35. ISO 20022 - The Trade Services SEG (1/3)

Members:
10 countries: CA, CH, DE, DK, FR, IS, IT, JP, NL, US
1 organisation: SWIFT
Convenor: Open Vice-convenor: Open Secretary: David
Dobbing (SWIFT)
Kick-off meeting: in September 2006
Approved: Invoice Financing Request (CBI Consortium),
Trade Services Management (SWIFT), Demand
Guarantees and Standby Letters of Credit (SWIFT),
Factoring Services (ASF), Invoice Tax Report (FFI & Tieto)
Under evaluation: none
Next: none
35
ISO_20022_LV_v187

36. ISO 20022 - The Trade Services SEG (2/3)

Covering products…
Trade Services
…and services such as:
Collection
Reconciliation
(A/R, A/P),
remittance
data
Documentary
credit
Letter of
credit
Guarantee
Open
Account
Trading
e-Invoicing
Purchase
order,
transport
documents
EBPP
Invoice
financing
36
ISO_20022_LV_v187

37. ISO 20022 The Trade Services SEG (3/3)

Including actors such as:
Private and
corporate
customers
(treasurers)
Financial
Institutions
Trade Services
Risk
management
entities
Application
providers
Associations
providing rules
and master
agreements
(eg IFSA, ICC)
Trade facilitators:
chambers of
commerce, insurance
co, freight forwarders,
carriers, customs,
factoring co
37
ISO_20022_LV_v187

38. ISO 20022 – The Cards & Related Retail Financial Services SEG (1/3)

ISO 20022 – The Cards & Related
Retail Financial Services SEG (1/3)
Members:
16 countries: AT, CA, CH, CN, DE, DK, FI, FR, GB, JP, KR, NL, SE,
SG, US, ZA
5 organisations: Mastercard, NACHA, nexo, SWIFT, VISA
Convenor: William Vanobberghen (FR); Vice-convenor: Ian Groves
(GB); Secretary: Reinhard Herwig (DE)
Kick-off meeting: on 23-24 October 2008
Approved: CAPE – Acceptor to Acquirer and Terminal Management
(nexo), ATM interface for transaction processing and ATM management
(IFX Forum/nexo), Acquirer to Issuer Card Messages – version 1
(TC68/SC7/TG1), Card Sale to POI ISO20022 Protocol, Acquirer to
Issuer Card Messages – version 2 (TC68/SC7/TG1), EU Strong
Customer Authentication (SCA) Exemptions Extension
Under evaluation: None
Next: Payment Tokens Management Exchanges (nexo,TC68/SC7/TG1)
38
ISO_20022_LV_v187

39. ISO 20022 – The Cards & Related Retail Financial Services SEG (2/3)

ISO 20022 – The Cards & Related
Retail Financial Services SEG (2/3)
Covering instruments…
Debit
card
Cards and Retail
…and actors such as:
Charge
and credit
card
Prepaid
card
Card
holder
Acceptor
(merchant,
retailer)
Card issuer
Hard- and
Software
providers
Acquirer
Card
scheme
Intermediary
agent
39
ISO_20022_LV_v187

40. ISO 20022 – The Cards & Related Retail Financial Services SEG (3/3)

ISO 20022 – The Cards & Related
Retail Financial Services SEG (3/3)
Including business areas such as:
Transactions
between
acquirers and
card issuers
ATM processes
such as
authorization,
processing,
ATM
management
and inventory
ISO_20022_LV_v187
Transactions between
merchants and acquirers,
and cardholders and issuers
that support authorization,
clearing, reversal,
chargeback, dispute
processing, etc.
Similar messages
transacted on
internet or from
mobiles or other
personal devices
POI
messages
for
payments,
administrativ
e and device
related
services
40

41. ISO 20022 – Technical Support Group

Members:
8 countries: BR, CA, CN, CH, DK, GB, JP, KR
10 organisations: ACTUS, CFTC, DTCC, Euroclear,
FPL, ISITC, NACHA, nexo, SWIFT, VISA
Convenor: Martin Walder (CH); Vice-convenor: Jason
Polis; Secretary: Li Jie, SWIFT
Kick-off meeting: on 23-24 October 2008
Mission: help RMG, RA, SEGs and Submitting
Organisations with technical matters
41
ISO_20022_LV_v187

42. ISO 20022

Continuing with today’s agenda…
ISO 20022
Interoperability within the financial industry
42
ISO_20022_LV_v187

43.

Using ISO 20022 modelling to reach
interoperability
All institutions have
their own sets of
data objects
ISO standardizes common
data objects…
…and groups them into ‘syntaxneutral’ message models, which...
… can be ‘transformed’ in
message formats in the
desired syntax
XML
ASN.1
ISO_20022_LV_v187
FpML
FIX
43

44. ISO 20022 compliance at model level

Repository
ISO 20022
Dictionary
Dictionary
Catalogue
ISO 20022
message
models
Card payments
Payments clearing
& settlement
physical
message
representation
ISO 20022 ASN.1 syntax
ISO 20022 XML syntaxx
44
ISO_20022_LV_v187

45. ISO 20022 compliance at model level

Repository
ISO 20022
Dictionary
Dictionary
ISO 20022 compliant
Catalogue
ISO 20022
message
models
Card payments
Payments clearing
& settlement
physical
message
representation
other syntax
ISO 20022 compliant using
a domain specific syntax
ISO 20022 syntax
ISO 20022 compliant
45
ISO_20022_LV_v187

46. “Investment Roadmap” for ISO, FIX, XBRL and FpML syntaxes

The Investment Roadmap is maintained by the Standards
Coordination Group including the following organisations:
Download the Investment Roadmap and related FAQ
46
ISO_20022_LV_v187

47. Interoperability in the customer-to-bank payment domain

Interoperability in the customerto-bank payment domain
Bank A
IFX format
Proprietary format
Bank B
Customer A
SWIFT
MT 101
Bank C
Let us look at a concrete example from payments area:
a customer may need to adapt to the format of the banks…
47
ISO_20022_LV_v187

48. Interoperability in the customer-to-bank payment domain

Customer A
IFX format
Proprietary format
Bank A
Customer B
SWIFT
MT 101
Customer C
…or banks may need to accept many formats…
48
ISO_20022_LV_v187

49.

Interoperability in the customer-tobank payment domain
Proprietary
TWIST
ISO 20022
Core Payment
Kernel model
SWIFT MT
OAGi
IFX
The reverse engineering produces a canonical ISO 20022
message model
ISO_20022_LV_v187
49

50. Interoperability in the customer-to-bank payment domain

Interoperability in the customer-tobank payment domain
Core
Payment
Kernel
IFX
IFX
Core
Payment
Kernel
Adopting ISO 20022 facilitates convergence and co-existence
50
ISO_20022_LV_v187

51.

www.iso20022.org
uestions
A
&
nswers
[email protected]
51
ISO_20022_LV_v187