Swift publishes draft protocol for EU clearing and settlement

Swift publishes draft protocol for EU clearing and settlement

Financial messaging network Swift has published a draft of its proposed standardised communication protocol for cross border clearing and settlement in the European Union.

The protocol has been developed in response to the 2003 Giovannini Group report to improve efficiency of EU cross border clearing and settlement.

The report identified 15 barriers to efficient EU cross-border clearing and settlement and invited Swift to develop a solution to eliminate Barrier 1, which cites national differences in IT and interfaces used by clearing and settlement providers.

Andrew Douglas, Swift manager for the Giovannini Barrier 1 project, says the adoption of a common protocol for EU clearing and settlement is the foundation on which more cost efficient cross-border clearing and settlement can be built.

"This may be our industry's last chance to be proactive before the EU legislates and forces change," says Douglas.

Last month EU internal market commissioner Charlie McCreevy warned the securities industry that it must do more to cut costs for cross-border EU trading or face regulation on clearing and settlement.

McCreevy told a conference in Luxembourg that cross-border clearing and settlement can can cost up to six times more than those of domestic settlement.

Swift says it has published the draft protocol document to allow a period of time for all participants to consider whether it is an acceptable solution to the elimination of Barrier 1 and whether it could be implemented within the identified timeframes.

The review period is open until 27 January 2006. Swift says a final version of the protocol is expected to be published by 31 March 2006.

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