ISO 20022 and Regulatory Reporting Alexandre Kech Head

ISO 20022 and Regulatory Reporting Alexandre Kech, Head of Securities markets & Standards, APAC May 2016

The global utility for secure financial messaging services User-owned cooperative Headquarter Brussels Overseen by central banks Servicing 150+ settlement infrastructures globally ISO 20022 enabler

Oversight Group Co-operating Central Banks from 22 countries Led by Central Bank of Belgium SWIFT is domiciled and headquartered in Belgium Canada France Germany Italy Japan The Netherlands United Kingdom United States Switzerland Sweden ECB Extended oversight Australia China Hong Kong India Korea Russia Saudi Arabia Singapore South Africa Turkey

G 20 summit and new regulations Increase transparency , reduce systemic risk G 20 commitments September 2009 • 2008 financial crisis: OTC derivatives pose risks to financial stability • Among others – to subject standardised OTC derivatives contracts to onexchange trade, cleared through CCP and reported to TRs US Dodd-Frank TR’s: DTCC EU EMIR TR’s: DTCC (for GTR) REGIS-TR Una. Vista, KDPW, CME, ICE APAC Country specific TR’s: DTCC Domestic MIs Others = connectivity can be done via SWIFT

Intensified Regulatory Development Regulations are global and national Source: KPMG, Evolving Banking Regulation, March 2015

Key trends are highly relevant for SWIFT APAC core businesses Payments • New systems: ISO 20022 messaging – rapidly growing interest in XML messaging capabilities • Multi-currency clearing, Pv. P • Extended operating hours (e. g. HK RMB 20. 5 hrs) • Real-time 24 -7 • Convergence btw high & low value • ASEAN Economic Community (AEC), CIPS, Pacific payment system • Increasing international connectivity of infrastructures • ISO 20022 adoption • Demand for safer and more reliable infrastructure • Cyber threats increasing • CPMI-IOSCO PFMI & Annex F for CSPs • Fighting financial crime, monitoring & control, compliance recommendations. • FATF, Basel III, FATCA, FCPA, AML, Sanctions APAC Securities 2020 strategy - 2016 plan Trends Securities • • Aging technology Fin tech (distributed ledger) Regional ambition-collaboration ISO 20022 Real-time (New services) • • Issuer to investor CA announcement Funds Collateral management OTC clearing Regionalization • ASEAN Economic Community (AEC) • Regional harmonization: ABMF, ASEAN Link, HK-CN, TW-SG, CSIF cross-border DVP • ISO 20022 adoption Renewal Resiliency & reliability Regulation & compliance • Demand for safer and more reliable infrastructure • Cyber threats increasing • CPMI-IOSCO PFMI & Annex F for CSPs • • CPMI-IOSCO Principles Mandatory OTC clearing (collateral management challenge) Securities regulatory reporting T+2 6

Scope of Regulations in Europe Derivatives EMIR Money Market MMSR/ SMMD Equity Mi. FID II/ MIFIR 2014 Mid 2016 Jan 2018

EU Regulations Adopting ISO 20022 for Regulatory Reporting EMIR Scope Information to be reported • Financial and non-financial counterparties • OTC and listed derivatives • Transactions • Positions valuation • Collateral amounts Money Market (MMSR) • 53 Euro banks (wave 1) • Euro Money Market (SMMD) • 12 GBP Banks • GBP Money Market transactions • Transactions Mi. FID II / Mi. FIR • Investment firms • All (but SFTs, primary markets, give-ups) • Transactions • Reference data • Approved Reporting Addressee • Trade Repository • ECB • NCBs (DE/FR/IT/ES) • BOE Mechanism (ARM) • National Competent Authority Format Frequency & Deadline • Proprietary format • Consultation feedback: ISO • ISO 20022 • Daily • D+1 07: 00 at the latest • Daily • D+1 at the latest 20022 • Daily • D+1 at the latest

Data Exchange between TRs and authorities Proposal maintained: An XML template based on ISO 20022 methodology APAC Securities 2016 detailed Harmonised Compliance Ensures correct and harmonised handling of communications High level of compliance with envisaged legal requirements Standardised output, data exchange, performance and extensibility Basis of Assessment Operation Facilitative Positive improvements to STP, transparency, regulatory compliance and interoperability Expected to reduce longterm costs to bot TR and authorities Facilitate daily data collection and timely processing 9 Source: Draft technical standards on access to data and aggregation and comparison of data across TR under Article 81 of EMIR, ESMA, April 2016

Regionalisation Initiatives Progressing using ISO 20022 B IM SMI C C B 10

Trade Reporting - APAC Progress at a Glance Staggered and at different stages of development CN • CFETS (PBOC) – IRS, RMB FX, credit • CSIS -SCM and FMCs to report OTC derivatives trades JP • JFSA (direct) or DTCC • OTC forwards, options, swaps, CDS North Korea Japan South Korea IN • RBI – CCIL • FXD, IRS and CR KR • BOK-FSC • CR, IRD, FX and EQD • FSC designate KRX as TR (2015) China Nepal India Bhutan Bangladesh Myanmar MY Maldives • Consultation issued in 2014 by BNM, SC and PIDM • CR, IRD, FX, EQD, Comm and Islamic Derivs Taiwan Laos Thailand Cambodia Sri Lanka Hong Kong Philippines Vietnam TW • FSC – Gretai • CR, IRD, FXD, EQD and Comn. D Brunei Malaysia Singapore SG • MAS – DTCC (LFTR) • CR, IRD, FX Indonesia HK • HKMA&SFC – HKTR (DTCC as agent) • FXD and IRS East Timor Australia AU • TR rules phased in since 2013 • DTCC, CME • IRS, FXD, EQD, Comm. D In progress Live 11 11 As at Jan 2016. Various sources.

Why ISO 20022 for Reporting? Preferred Data Model • • Ideal for harvest, aggregate and interpret data Unambiguous, clear and equivalent irrespective of its source Encourage consistent data submission Is syntax agnostic but recommend XML APAC Securities 2016 detailed “Recipe” for Standards • • • Has a development methodology, a registration process, and a centralised, machine processable “erepository” Open methodology for developing new financial messaging standards Open methodology for harmonising existing financial messaging standards Universal Language • • • Can be shared by business, legal and technical experts Simplifies interpretation and implementation Open and transparently governed standard Platform neutral, free to download, implement and extend Allows for characters such as Chinese, Thai and etc Adopted Globally • • Widely adopted in the financial industry – central bank and market infrastructures US – US payments, DTCC, Etc, EU – T 2 S, SEPA, ESMA, Etc. APAC – CNAPS, JASDEC, SGX, ASX, Etc. 12

Towards a harmonised use of ISO 20022 Harmonisation Charter Publication Publish your standards information in a consistent format on My. Standards [messages/versions used, release timeline, market practice] Adherence Market Practice Information sharing Adhere to/promote Global market practice Align with best practices for version management Share information on ISO 20022 messages, versions and market practice

14