Financial securities firms operating commercial payment systems through the Swift messaging network must adopt a new data processing standard by November 2002 to ensure they can continue conducting B2B e-commerce transactions.
According to Andrew Muir, director of global securities solutions for e-business integration software firm Mercator, the global standard ISO 15022 (approved by the International Organisation for Standardisation) is a system which defines the semantic detail of any business message used in the securities and investment business.
"The standard acts like a data dictionary describing all 765 individual pieces of business data that may end up in a securities message, and models the information flow between all securities institutions," he said.
ISO 15022 replaces parts of Swift's entire securities messaging framework - ISO 7775 - for finance institutions. Swift is a global industry cooperative and banking interface software provider that supplies messaging services to banks, broker-dealers and investment managers and market infrastructures for payments, treasury, securities and trade.
Organisations cannot afford to ignore the [new] standard, Muir said, calling it an "architectural cornerstone" to an entire B2B strategy.
"ISO 15022 affects everyone from a three-man trading room to a Meryll Lynch," he said.
The 900 asset management and securities firms running STP (straight through processing) systems through the Swift messaging hub (which facilitates high-value payment systems and securities and foreign exchange settlement systems) will need to adopt ISO 15200 by November 17, 2002 in order to continue doing business electronically with customers and partners, Muir told Computerworld.
The new regulation will affect financial service providers like brokers, securities dealers or custodian banks. Some 650 organisations have been early adopters of the standard with strongest takeup in financial centres like Europe and the US due to acute trade volume problems there, Muir said. Companies like Deutsche Bank, Citibank and Chase Manhattan are at an advanced level of readiness, he said.
By standardising on ISO 15200, Swift and Mercator executives said users can increase STP rates in the lifecycle of financial transactions.
"ISO 15200 will minimise the risk of misinterpretation of data and automate an STP system 100 per cent."
Citing 1999 figures from the Global Straight Through Processing Association (GSTPA), Muir said the average value of a B2B trade was $US150,000 and the time it took to fix a faulty transaction was four days.
"The interpretation of individual bits of data is crucial given the number of trades executed globally a day is 600,000," he said.
"The world doesn't realise it has a standards problem - the risk of getting the message wrong is such that 37 per cent of financial transactions fail due to misinterpreted data."