Enhancement enables banks to harness same industry standards used to connect with other securities market infrastructures across the globe
SWIFT has enhanced its connection to Denmark’s central securities depository (CSD) VP SECURITIES using ISO 20022 standards, reducing costs for banks by enabling them to leverage the same network and standards they use to connect with other securities market infrastructures across the globe.
Banks have traditionally used fixed, proprietary lines to connect with CSDs, each with its own disparate connectivity protocol, resulting in significant inconsistencies and complexity. As cross-border trading activity has increased, banks have become active in a growing number of markets and have sought the technology to enable them to rationalise the way they communicate with securities market infrastructures in each country.
By implementing ISO 20022 standards, SWIFT now offers banks fully standardised communication with VP SECURITIES and all other domestic and cross-border securities market infrastructures on the SWIFT network. This significantly cuts costs for banks trading in Denmark, removing the need to develop and maintain a separate, standalone connection to VP SECURITIES. In addition, SWIFT will provide reverse billing, which lowers the cost of reconciling invoices and provides greater transparency for VP SECURITIES’ clients.
The service is expected to launch in 2018.
CSDs in Europe face growing competition as their core services become increasingly commoditised and initiatives such as TARGET2-Securities (T2S) and Central Securities Depository Regulation (CSDR) come into play. By harmonising market practices, CSDs can maximise their own operational efficiency and minimise risk and costs in an increasingly challenging business and regulatory environment.
Nadine Limbourg, Senior Market Manager at SWIFT, comments: “As cross-border trading activity becomes more sophisticated, banks don’t want to have to build and maintain multiple connections to different market infrastructures. The enhancements we have made with VP SECURITIES enables banks to adhere to global ISO 20022 standards and cut costs by streamlining connectivity, harmonising domestic and international activities and maximising the benefits of investment in existing SWIFT infrastructure.”
“Our aim is to offer communication and connectivity tools at a very competitive price to the market place, and we see this new agreement as win-win for both VP and our clients,” says Birger Schmidt, Chief Commercial Officer, VP SECURITIES. “Our customers deserve to have a choice when selecting communication platforms. Our goal is to offer the different platforms at a very competitive price, which this agreement certainly ensures. This is yet another important step in our ISO roadmap and will ensure a better business case for our customers to harmonising their business processes with the internationally standardised ISO format.”
Annika Lindgren, Senior Account Director at SWIFT, comments: “Lack of standardisation is a serious challenge for banks when communicating with CSDs. SWIFT plays a key role in the development of the ISO 20022 standard, and our work with VP SECURITIES is testament to our commitment to create robust, interoperable multi-party business solutions that foster efficient re-use of knowledge, skills and technology.”
SWIFT is a global member owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance.
Our messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. While SWIFT does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardised financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world.
As their trusted provider, we relentlessly pursue operational excellence; we support our community in addressing cyber threats; and we continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies. Our products and services support our community’s access and integration, business intelligence, reference data and financial crime compliance needs. SWIFT also brings the financial community together – at global, regional and local levels – to shape market practice, define standards and debate issues of mutual interest or concern.
Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centres.
VP SECURITIES’s core business is CSD Services, which facilitates the financial sector’s requirements for secure issuance, clearing & settlement and safekeeping of securities. VP SECURITIES offers Asset Services, Investment Fund Services, Issuing Agent Services and Investor Services.
VP SECURITIES joined the pan-European settlement platform TARGET2-Securities in September 2016 offering cost-effective cross-border settlement transactions and safekeeping services for securities issued by other CSDs.
VP SECURITIES filed the application for the CSDR license in 2017 with the expectation of receiving it early 2018. At the threshold to a liberalised market for CSD services, VP SECURITIES has undertaken a fundamental adjustment of the organisation working with a customer centric approach and transforming from an infrastructure company to a financial services company.