Leveraging the New Balance Reporting Standard What you

Leveraging the New Balance & Reporting Standard What you Need to Know about BTRS Timothy Johnson Cash Express Svc Delivery SME FIS Global James Wills Senior Business Mgr SWIFT David Repking Information Reporting Prod Mgr J. P. Morgan Chase

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Objectives From this session you will learn: 1. A Vendor’s Perspective of BAI 2 Challenges 2. How BTRS was Formulated 3. Key Elements of the new BTRS Standard 4. The BTRS Implementation Process for Banks and Companies 5. Various Tools Available from the X 9 Organization 4

5 Data Interchange History and Challenges Chronology • 1965: Holland-America Steamship Line used telex messages to transmit shipping manifest that were then converted for use as computer input. Considered the first EDI (Electronic Data Interchange) † • 1973: FTP Protocol Published † • 1975: Treasury Management Services – Balance Reporting (BALDIS format) Multi Bank Reporting processing. • 1980: BAI 1 – Bank Administration Institute publishes the Cash Management Balance Reporting Specification , Version 1 †‡ • 1987: BAI 2 is published †‡ • 2001: BAI 2 final official update. Shortly after this release the standard is considered self-sustaining and is no longer actively supported or updated. † • 2008: Bank Administration Institute transfers copyright ownership of the BAI format to Accredited Standards Committee x 9, Inc. BAI established as an American National Standard. † † source: Wikipedia (http: //en. wikipedia. org/wiki/BAI_(file_format) ‡ source: BAI (http: //www. bai. org/about-bai/reporting-codes. aspx)

6 Data Interchange History and Challenges A vendor’s perspective of Multi-bank Reporting • Multi-bank defined • The wild, wild west of Information Reporting – – 900 series Custom Type Codes Mixed formats Proprietary formats Inaccuracy of Data BTRS addresses all these issues

7 Balance and Transaction Reporting Standard (BTRS) History 1. BAI 2 Copyright Transferred to Accredited Standards Committee X 9, Inc. in 2008 2. AFP Survey Administered in April 2010 by David Bellinger 3. Responses from 1, 116 Corporates concluded: a) Payments industry has evolved to the point where BAI 2 is no longer effective b) Customization has resulted in large disparities between banks – – – c) Inconsistent formats, syntax and transaction codes Too many similar BAI codes Too many unused codes Very difficult to automate the data importation to internal systems 4. BTRS Formulated & Approved by ANSI (2010 – 2012) 5. BTRS Now Replaces BAI 2 as the Industry Standard 6. ASC X 9 to announce future sunset date for BAI 2

8 X 9 Workgroups The Accredited Standards Committee X 9 has the mission to develop, establish, maintain, and promote standards for the Financial Services Industry. X 9 BAI 2 Standards Lead BAI Codes Update Language of the Standard Jim Wills, SWIFT Chair David Repking, J. P. Morgan Co-Chair Greg Malosh, Bank of NY Mellon Chair Wire Remittance Structure Chair John Scully, Bank of America Co-chair Bill Lundeen , Proctor and Gamble Gina Russo, Federal Reserve Bank Co-Chair Susan Colles, Bank of America

The New BTRS A Foundational Release The Balance and Transaction Reporting Standard (BTRS) is intended to increase standardization of and improve upon BAI 2 Changes include: 1. User Guide Modernized to include developments in banking and technology over the past 25 years 2. Rationalization and Reduction of the number of supported transaction codes 3. Globalization: – Additional SEPA transaction codes to support new European payment types – Double byte character set support through the incorporation of UTF-8 – SWIFT and ISO 20022 XML interoperability – Code Mapping and Balance Inclusions – Modified currency rules to make them mandatory and allow for multi-currency 4. New batch level (89) and invoice level (90) records providing additional information using ISO 20022 component tags to assist in reconciliation and straight through processing 5. Additional structure to 88 record to support extended wire remittance in CTP payments 9

10 The New BTRS Highlights Goal: BTRS is as backward-compatible to BAI 2 as possible! 1. What does NOT change – – – Syntax No new positional fields 88, 49, 98, 99 Records (Hash totals) 2. File Header Record (01) – 1 = BAI 1, 2 = BAI 2, and 3 = BTRS 3. Account Record (03) – – – Modernized the list of Status and Summary Codes Core Balance fields and the Currency Code field are now required Inclusion of total credits and total debits are now required 4. Detail Record (16) – – Modernized the list of Detail Transaction Codes Eliminated Funds Type “D” (Distributed Availability) – use Funds Type “S” Created New Batch 89 and Invoice 90 Record Types Instituted a new Standard format for Wire Remittance CTP (aligned with ISO field names)

11 The New BTRS Status & Summary Codes Status Codes 1. 28 Codes Deleted 2. Opening Available (035) = Balance on the date reported 3. CD & PD Required Balances 4. ISO & SWIFT Interoperability Summary Codes Type Status Code Descriptions Code 010 Opening Ledger 015 Closing Ledger 020 Average Closing Ledger MTD 025 Average Closing Ledger YTD 030 Current Ledger 035 Opening Available 040 Opening Available Next Business Day 045 Closing Available 050 Average Closing Available MTD 055 Average Closing Available YTD 057 Investment Sweep Position 060 Current Available 1. 92 Codes Deleted 2. 1 Summary Code per Detail 3. Record 03, always include – 100 Total CR & 400 Total DR 4. Globalization – “Float” to “Available” Current Day Opening. Booked : 60 F: Closing. Booked : 62 F: Interim. Booked : 62 M: Yes Opening. Available : 65: Forward. Available : 65: Closing. Available : 64: Interim. Available : 65: YES ISO Family ISO Sub-Family SWIFT OPBD CLBD ITBD OPAV FWAV CLAV ITAV Prior Day YES

12 The New BTRS ACH Detail Codes Type Code Comparison of BAI 2 vs BTRS ACH Codes 141 142 143 145 164 165 166 168 Green = BTRS Red = Obsolete 169 257 441 445 447 451 455 464 466 468 469 557 BAI 2 Description ACH Credit Received Item in ACH Deposit ACH Concentration Credit Corporate Trade Payment Credit Preauthorized ACH Credit ACH Settlement ACH Return Item or Adjustment Settlement Miscellaneous ACH Credit Individual ACH Return Item ACH Concentration Debit ACH Disbursement Funding Debit ACH Debit Received Preauthorized ACH Debit Corporate Trade Payment Debit ACH Settlement ACH Return Item or Adjustment Settlement Miscellaneous ACH Debit Individual ACH Return Item BTRS ACH SEPA Transfer use 165 use new 89/90 records use 165/166 ACH Received ACH Originated Settlement - Return ACH Miscellaneous ACH Received - Return ACH SEPA Transfer use 455/466 use 455 ACH Received use 455/466 ACH Originated Settlement - Return ACH Miscellaneous ACH Received - Return

13 The New BTRS ACH Detail Codes 110 Codes Deleted Normalization Globalization – Full, Clear set of codes – 1 Summary Code Assigned to each Detail Code (1: 1) – Interoperability between BTRS, ISO & SWIFT – Added SEPA Codes – Local Language (UTF 8 – e. g. , Chinese) Type CR DB CR DB CR DR Detail Code 169 469 166 466 168 468 165 455 257 557 141 441 Summary Code 140 450 167 467 140 450 256 450 140 450 Description ACH Miscellaneous ACH Originated Settlement - Return ACH Received - Return ACH SEPA Transfer ISO Domain PMNT PMNT PMNT ISO Family RCDT ICDT RCDT ICDT ISO Sub. Family ATXN ASET ARET ACDT ADBT ARET ESCT ESDD SWIFT DDT STO RTI DDT RTI STO

14 The New BTRS What if I need a new Code? By instituting BTRS under “Continuous Maintenance”, changes are readily adopted. Step 1: Request the new code via X 9 Website. Step 2: If urgently required, use 900 series codes until X 9 assigns a new code.

The New BTRS New Batch and Invoice Reporting Record Codes Requirement: Indicate the items within a batch with associated invoices Challenge: Double-reporting! Solution: Insert items as a continuation of Transaction Detail – 89 Batch Detail – 90 Invoice Detail 15

The New BTRS New Batch and Invoice Reporting Record Codes Batch Record 89 Allows you to insert information about the items within a batch. Your Bank will need to include the 89 Record in your BTRS file and you will need to parse & load them Example: A Credit Settlement of $200 Represents 2 Originated Batches Valued at $100 each 16, 166, 20000, S, 20000, 0, 0, RRRRR, 99999/ 88, ORIG CO NAME=YYYYYYYY, ORIG ID=55555, ENTRY DESCR=RTN OFFSET, ENTR 88, Y CLASS=CCD, TRACE NO=021000024641577, ENTRY DATE=110919, IND ID NO=1234567890, 88, IND NAME=NNNNNNNNN, REMARK=EFT ITEMS OFFSET FOR FILE DATE MM/DD/YY 89, <Cdt. Db. Ind> CR <Ref> RRRRR <Dt> YYMMDD <Amt> 100. 00 <Orig. Nm> AAAAAA 88, <Orig. Id> AAAAAA <Addtl. Ntry. Inf> DDDDDD <Actl. Dt> YYMMDD <Bat. Nb> BBB 1 88, BBBBBB <Nb> NNNNNN <Nm> MMMMMMMMM <Addtl. Tx. Inf> XXXXX 89, <Cdt. Db. Ind> CR <Ref> RRRRR <Dt> YYMMDD <Amt> 100. 00 <Orig. Nm> AAAAAA 88, <Orig. Id> AAAAAA <Addtl. Ntry. Inf> EEEEEE <Actl. Dt> YYMMDD <Bat. Nb> BBB 2 88, BBBBBB <Nb> NNNNNN <Nm> MMMMMMMMM <Addtl. Tx. Inf> XXXXX 16

Implementing the New Standard A vendor’s perspective of Multi-bank Reporting A Phased BTRS Implementation Approach 1. Conversion of BAI 1 and/or BAI 2 to BTRS for Balance Reporting to Corporate Customers (outbound) 2. Conversion of BAI 1 and/or BAI 2 to BTRS for large scale FI Processing 3. SWIFT MT conversion to BTRS 4. Receipt and Processing of BTRS formatted files (inbound) 5. BTRS for Corporate Customers and FI utilizing XML file structures and format (inbound and outbound) 17

18 The New BTRS Simplifying the Implementation Process Moving to the BTRS Standard is a coordinated effort by both Banks and Companies 1. Banks should: – – Begin to offer the BTRS format within 12 -18 months Remap deleted Detail Codes using the Technical Implementation Guide Remap Summary Codes to the standard associated to each Detail Code Provide only codes on the list (Request New codes via X 9) 2. You should: – – Visit the X 9 Website to get your FREE copy of BTRS and to learn more Determine the impact to you back-office system for the new BTRS Format Ask your banks for their plans to upgrade from BAI 2 to BTRS Tell your banks YOUR requirements for upgrading (Remember, you asked for these BTRS improvements!)

19 Resources

20 Resources X 9 BTRS Website http: //www. x 9. org/home/

21 Resources BTRS is the New Face of BAI 2

22 Questions

23 Interested in attending a Webinar? Represent your Company on X 9 BTRS Committees? Give your Business Card to or email Tom, Jim or Dave Tim Johnson, FIS Global Tim. N. Johnson@fisglobal. com Jim Wills, SWIFT james. wills@swift. com David Repking, J. P. Morgan Chase david. repking@jpmchase. com