Financial messaging network Swift is working with a host of market infrastructure providers and banks to develop a framework for harmonisation of the ISO20022 standard, amid concerns that a proliferation of different flavours of the protocol will lead to fragmentation.
The group is looking to build a roadmap for ISO20022 harmonisation to be presented at Swift's annual Sibos meeting in October, following a one-day summit in La Hulpe in April.
While recognising strong global traction for ISO20022, the group of 26 senior executives from 20 global market infrastructures expressed alarm over the sheer proliferation of ongoing initiatives worldwide. Currently, there are over 200 projects around the world pushing to implement ISO 20022 across payments, cash management, securities, trade and treasury.
Financial institutions which have a global footprint are evaluating the collective impact of having to implement numerous ISO 20022 projects, staged across multiple market infrastructures, each potentially with their own ‘flavour’.
Says David Renault, head of service maintenance and procurement at EBA Clearing: "A choice of 31 flavours is great for ice cream, but is a worse-case scenario when you are trying to adopt a singular definitive standard."
Part of the problem lies in the inherent flexibility of ISO 20022, allowing for implementation of different message versions, different market practices and/or different timetables.
Edwin De Pauw, head of product management at Euroclear, comments: "We need to balance inherent flexibility and the resultant fragmentation, versus loss of freedom, the need for a more persistent process and the need to drive market interoperability."
The group debated Swift’s proposal for tighter community management and a common framework focused on a number of pillars: sharing of information using MyStandards as the central harmonisation platform, establishing global market practice and introducing stricter message version control and release management.
The group also argued that conformance to these principles may have to be phased over time to reflect different maturity levels of ISO 20022 implementation. Some have already implemented projects and have been ‘live’ for many years, whereas others are at much earlier stages, where the standard is still ‘under consideration’.
At the conclusion of the Summit, the group agreed to continue to work on the harmonisation framework over the next few weeks with bi-lateral discussions, before reconvening at Sibos in Singapore, in October, with the aim of finalising an implementation roadmap.
As Clearstream's Bernard Lenelle observes: "Getting these major market infrastructures to work together is significant. As the tidal wave of projects could become all-consuming, any harmonisation is better than no harmonisation."