Clearing and Collateral Management Solutions

06/09/2012

1

• CCP Clearing for Cash Equities Markets

• Bilateral Collateral Management

• Triparty Collateral Management

SWIFT Messaging Solutions

Our aim is to support clients with costs, risks and regulation -

anchored by Industry standards & community

CCP Clearing Bilateral

Collateral Management

Supporting tools

Triparty Collateral

Management

2

Supporting the communication

requirements of CCPs &

GCM/ICM/DCM for cash

markets,

Flow coverage from trade

management to risk &

collateral management,

supports interoperability

Provides an end to end

electronic messaging

solution around collateral

processes

Cross asset & cross

segment solution,

complementary with

downstream settlement

processes

Underpinned by global ISO

Standards & Value Added

Services (ie Testing &

migration, training … )

Life-cycle of a Triparty

transaction: Matching to

settlement

Complies with Regulatory

requirements

Provides real time instruction,

status& position reporting

Implemented by more than 150

institutions globally

Benelux forum Clearing & Collateral Mngt May 2012

06/09/2012

2

Agenda

• SWIFT CCP Clearing Solution

• Messaging solution description & flows

• Ongoing projects

• SWIFT Collateral Management offering

– Bilateral collateral management


– Triparty collateral management


3 Benelux forum Clearing & Collateral Mngt May 2012

Benelux forum Clearing & Collateral Mngt May 2012 4

CCP Clearing Solution

06/09/2012

3

Changes in the Financial markets

• Uncertainty in the financial markets, changing landscape of

trading venues and CCPs, arise of new business models,

interoperability discussions, structural changes in the clearing

business….


Managing Operational

Complexity & Risk in a

Changing Financial

Landscape

Key Challenges : Clearing member’s problem statements

External challenges

•Changing landscape • Fragmented infrastructures

• Inter-operability

• New CCPs (ex. Poland , Spain, CEE)

•Heterogeneous practices and environment • Lack of global technical standards

• Differing business practices (buying rules, buyer protection …)

Internal challenges

• More stringent risk monitoring and collateral management rules

requiring real time information

• Significant flow of information to manage (gross market executions, net

settlement, collateral

• Business expansion requiring time to market deliveries •In Europe : Poland, Hungary …

•And Beyond : Brazil, Singapore, Australia …

Source: SIBOS 2011 Clearing Session (BNP Paribas input)


06/09/2012

4

ISO 20022 Clearing Project

Standards Working Group Participants


• The Industry participants launch a working group in 2008 to standardize clearing

space in Europe.

New CCP Clearing Messaging Solution

• New messaging solution based on ISO 20022 methodology

• Servicing the communication and standardisation requirements of Clearing houses and

GCM/ICM/DCM for cash markets (FI & equities)


Clearing

Member Firm

Clearing

House 1

…

Clearing

House 2

Clearing

House n

Trade management

Position management

Settlement management

Risk & Collateral

management

Others ie Buy-in etc

Non -Clearing

Members 1

Non -Clearing

Members 2

Non -Clearing

Members n

…

Reports

Rec

Statements

8

06/09/2012

5

Interest

Processing Assignment of trade

to CCP

Trade

Management

9

Position

Management

Settlement

Management

Risk &

Collateral

Management

Others

CCP Life Cycle

Trade

Management

Position

Management

Settlement

Management

Risk & Collateral

Management

Others Interest Processing

Trade Leg

Notification

Trade Leg

Statement

Trade Leg

Notification

Cancellation

Net Position

Margin Report

Margin Call Request

Margin Call Response

Settlement Obligation

Report

Securities

Transaction Pending

Report

Bank To Customer

Account Report

Bank To Customer

Statement

Collateral Proposal

Collateral Proposal

Response

Collateral Substitution

Request


Response


Confirmation

Collateral

Management

Cancellation Request

Collateral

Management

Cancellation Status

Collateral Valuation

Report

Default Fund

Contribution

Report

Buy-in

Notification

Buy-in Response

Buy-in

Confirmation

Interest Payment

Statement

SWIFT Messages

CCP Clearing Messaging Solution

Benelux forum Clearing & Collateral Mngt

May 2012

What’s new in standardised clearing space

KDPW

CCP OTC derivatives

Q4 2012

Cash market

Live 2013

LCH.Clearnet

SA Risk & collateral

management

OSLO Clearing CCP CEE

AT, CZ, HU, Estonia

Live Q2 2012

EuroCCP

EMCF

LCH


06/09/2012

6


Bilateral Collateral Management Solution

Bilateral Collateral Management Solution


• Provides an end to end

electronic messaging

solution around collateral

processes

• Cross asset & cross

segment solution,

complementary with

downstream settlement

processes

• Enables monitoring &

mobilisation of collateral in

the business chain

• Development based on ISO

20022 methodology

• Complementary to Clearing solution, addressing the communication needs of CCP to GCM and

NCMs

• Collateral management solution is ready for Piloting as of November 2011.

12

06/09/2012

7

Initiation of

underlying deal

Margin Call

Initiation

13

Deal

Closing

Collateral

Negotiation

Dispute

Notification

Collateral

Substitution Reporting

Interest

Processing

Collateral Management Process

Margin Call Collateral Proposal Dispute Substitution Reconciliation Interest Processing

Margin Call

Request

Margin Call

Response

Collateral Proposal

Collateral Proposal

Response

Margin Call Dispute

Notification


Request


Response


Confirmation

Collateral

Valuation Report

Interest Payment

Request

Interest Payment

Response

Interest Payment

Statement

SWIFT Messages

Generic messages : Collateral Management Cancellation Request, Collateral Management Cancellation Status

Bilateral Collateral Management Messaging Solution


May 2012


Triparty Collateral Management Solution

06/09/2012

8

Mathcing &

Collateralisation

Status

Initiation of

underlying deal

Margin Call

Initiation &

Status

15

Deal

Closing

Exposure and

Collateral

Mark-To-

Markets

Reporting Claim

Return

Collateral Management Process

Margin Call &

Status

MTM & Collateral

Valuation

Status update Reporting Claim

MT527:

Triparty Collateral

Instruction

MT569:

Triparty Collateral and

Exposure Statement

MT558:

Triparty Collateral

Status Advice

MT569:

Triparty Collateral

and Exposure

Statement

MT527:

Triparty Collateral

Instruction

MT558:

Triparty Collateral

Status Advice

SWIFT Messages

Triparty Collateral Management Messaging Solution

• Life-cycle of a Triparty transaction: From matching to settlement

• Complies with Regulatory requirements ( US FED)

• Provides real time instruction, status and collateral position reporting

• Implemented by more than 150 institutions globally, facilitates single-window approach

through Standards and SWIFTNetwork


May 2012


Thank you

Clearing and Collateral Management Solutions

Economy & Finance

Transcript of Clearing and Collateral Management Solutions