Part III in a series of blogs around the 2014 Standards Forum events.
Standards are often criticized. Painstaking to develop, some might say painful, and adoption can be frustratingly tedious and drawn out. To wit, I first started talking publicly about 20022 as long ago as 2006 and look where we are now. To be fair though,
this is largely true of standards in all fields, not necessarily limited to financial industry messaging. To illustrate I’d like to take a peek back to the New York Standards Forum last year. I wrote a pre-event article in which I posed some "questions to
ask". Wouldn’t it be fun to go back and try to answer some of those questions now?
I realize this is a dangerous proposition because we might not like the answers, but one year on, let’s see how well we’ve done.
1. Who will assume ownership of the big stick in the US market? To provide some context here - in cases where we've seen the most success in adoption of 20022 it has been driven by regulation, or by a quasi-governmental utility, or a market infrastructure...
aka "the big stick". Will a similar situation arise in the US market?
2014 update: The New York Fed made all the right noises in the Standards Forum New York last year, and a subsequent update was provided at Sibos in Dubai. At the Standards Forum in New York we heard that the analysis is in progress and the results will
be forthcoming soon. But what about securities? There are rumblings of a mandated move to a T+2 settlement cycle. This would appear to be a gilt-edged opportunity to introduce 20022. DTCC’s largely positive experience of 20022 with Corporate Actions will
surely influence their thinking and appetite for a similar initiative relating to settlements.
Reasons to be optimistic here.
2. Globally, there are 24 trade repositories, so we heard at Sibos in Osaka, all accepting data in multiple different syntaxes; FpML, FIX, SWIFT MT, proprietary. How will this play out over time? How will the regulators manage to aggregate this data?
Is this a perfect opportunity to align all these message syntaxes with a common underlying data model?
2014 update: The regulators are well aware of this issue. Regulators are also well aware of ISO as a standards body. The LEI, an ISO standard, is an important first step to address one fundamental problem in being able to uniquely identify your trading
counterparts. Over time I expect future reporting regulation to be more prescriptive by insisting on ISO standard data formats. However, this completely glosses over the massive re-factoring exercise that would be required to normalize all the existing regulatory
reporting into a single dataset. This is still a big outstanding question but cautiously optimistic nevertheless.
From a single-model/multiple-syntax perspective there has been little public progress. However, quietly behind the scenes, the 2013 release of the ISO 20022 standard has paved the way for non-ISO 20022 XML syntaxes to be formally aligned with the business
model. I’m hoping that this item gathers a head of steam in 2014.
3. Why no CAT-3 equivalents in 20022? Surely market participants need a set of messages that represents their entire business process before they can even begin to entertain thoughts of migrating.
2014 update: No progress on this, which is depressing as all hell. There are still no 20022 equivalent messages for those cat-3 messages commonly used by securities market participants; MT300, 304, 320, 321, 380, 381. One thing that hasn’t changed is
that the likelihood of banks and their clients migrating to 20022 is pretty small unless the full range of messages are available.
Very frustrating. Nil points.
4. ISO 20022 for the US Payments marketplace – Why? Whether? When?
2014 update: This was actually the title of a panel at the 2013 event. One year on it was noted that the conversations have shifted from "whether and if" to "how and when", but judging from the industry feedback there appears to be a lack of consensus on
the "whether" question as noted in my previous blog. A definite "A" for effort though.
Last year I ended my blog with "if you can’t tell us when, can you at least tell us when you can tell us when?" Some time in the second half of 2014 it seems. I’m confident that the outcome will eventually go the way the large banks want it to go.
So, overall, a mixed bag. Some good news, some almost-good-news-but-we-just-can’t-tell-you-yet, and some OK news, and some not entirely unexpected news, all overlaid with varying degrees of optimism and frustration.
Now taking predictions for my March 2015 blog…