Following a successful pilot, Swift is gearing up to launch a service designed to increases transparency in post-trade processing and prevent settlement fails.
The lack of visibility after a securities transaction takes place means that there is no way of tracking all the steps in its lifecycle across multiple intermediaries, increasing the risk that a security may not be in the right place at the time of completion.
This leads to settlement fails that add operational costs of $3 billion a year for the industry, claims Swift, as well as regulatory penalties such as those introduced by Central Securities Depository Regulation in Europe earlier this year.
Swift Securities View gives market participants a view of all the steps in the settlement journey and enables them to identify trades at risk of failing, including early detection of any discrepancies between buy-sell instructions, so they can take pre-emptive action.
It does this using an ISO-standard Unique Transaction Identifier that links messages related to the same securities flow, enabling automated tracking of both sides of the transaction by all market participants involved, similar to the tracking of a package via a postal delivery service.
Vikesh Patel, head, securities strategy, Swift, says: “Swift Securities View does more than just empower our customers to identify and rectify discrepancies in settlement transactions; it sets the blueprint and foundation for a new industry standard to radically transform the industry, just as Swift gpi continues to do for cross-border payments.”
The pilot included ABN Amro Clearing Bank, BlackRock, BNP Paribas, BNY Mellon, Citi, Credit Suisse, Euroclear, Euronext, HSBC, JPMorgan, Northern Trust, Optiver, Pershing, and SEB.
Steve Wager, executive manager, head of direct markets management, BNY Mellon, says: “The UTI adoption by the industry could facilitate earlier matching which is key to timely settlement especially with trade settlement cycles shortening across the Globe.”