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.”
Birger Schmidt, Chief Commercial Officer, VP SECURITIES adds: “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.
“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.”