Banks have been working on standards for inter-bank credit transfer messages for around 50 years. Those standards have typically been used for cross-border credit transfer systems and not for domestic systems. However, as a political and strategic goal
of the European Union is to have a single market – one large “domestic” market – it’s always been fairly obvious that those cross-border credit transfer message standards would be good ones to use as standards within the EU.
The European Commission has proposed a new pan-EU regulation that all banks across the EU must use a single set of standards for credit transfer messages, as well as for direct debit messages. If that proposal gets approved by the European Parliament this
year, all credit transfer message would have to use the standard format before the end of next year.
Though financial institutions want to see standards adopted more and more, they don’t necessarily want it all to happen at once – that would put a big dent in a firm’s operational planning and IT budget in the year that it happens. “Progressive adoption”
is what they tend to see as a preferred approach – a sequence of small controlled explosions rather than a “big bang”. But the proposed new regulation will be a sizable petard that will do some hoisting among a lot of banks.
In parallel, as the MiFID Review progresses, hopefully we will start to see industry standards being adopted by regulators and the required use of industry standards by industry infrastructures. Better for financial markets participants to start implementing
standards themselves now rather than waiting for a petard from the Commission that will be aimed at them.
After all, we’ve got the standards and we want them to be used.