Swift has announced the successful pilot of Swift Securities View, a new capability that significantly increases transparency in post-trade processing and helps prevent costly settlement fails.
The new service, available for broad adoption in 2023, addresses one of the biggest challenges in the securities industry.
The lack of visibility after a securities transaction takes place means there is no way of tracking all the steps in its lifecycle across multiple intermediaries.
This increases the risk that security may not be in the right place at completion time.
This, in turn, leads to settlement fails that add operational costs of some US$3 billion a year for the industry as well as regulatory penalties such as those introduced by Central Securities Depository Regulation (CSDR) in Europe earlier this year.
Swift Securities View gives market participants a clear view of all the steps in the settlement journey. It enables them to identify trades at risk of failing, including early detection of any discrepancies between buy-sell instructions, so they can take pre-emptive action.
It does so by leveraging an ISO-standard Unique Transaction Identifier that links messages related to the same securities flow, enabling automated tracking of both sides of the transaction by all market participants involved, similar to tracking a package via a postal delivery service.
Swift is encouraging universal adoption of the transaction identifier to achieve standardised data use across the post-trade lifecycle as part of its strategy to enable instant, frictionless and interoperable transactions globally.
This will bring increased transparency to securities transactions, help reduce risk, and support innovative new services.
The pilot included the following market participants: ABN Amro Clearing Bank; BlackRock; BNP Paribas; BNY Mellon; Citi; Credit Suisse; Euroclear; Euronext; HSBC; J.P.Morgan; Northern Trust; Optiver; Pershing; and SEB.
Headquartered in Belgium, Swift is a global member-owned cooperative and the world's leading provider of secure financial messaging services.
“Swift Securities View does more than just empower our customers to identify and rectify discrepancies in settlement transactions. It sets the blueprint and foundation for a new industry standard to radically transform the industry, just as SWIFT gpi continues to do for cross-border payments. Our early pilot results show this potential and further strengthen our mission of making transactions instant and frictionless, across all industries,” says Vikesh Patel, Head of Securities Strategy, Swift.
Jeff King, Head of Core Custody Product, Citi Securities Services, adds, "With the rollout of CSDR in Europe and the planned move to T+1 in Asia and the US, it is becoming increasingly important to ensure settlement efficiency and having transactions match and settle on time. Including the Unique Transaction Identifier within the settlement lifecycle data communication and adopting Swift's Securities View Service within the industry facilitates heightened transparency earlier in the settlement lifecycle. In addition, it allows matching issues to be discovered higher up the settlement chain rather than waiting on matching updates to come back from CSDs and market infrastructures."
Olivier Grimonpont, Managing Director, Euroclear, which participated in the pilot, notes, "Euroclear consistently focuses on improving operational efficiency in the post-trade space and helping our clients reduce settlement fails. We were pleased to participate in the pilot, which enabled the market to test the potential of adopting a UTI to improve transaction lifecycle visibility."
Russ Stamey, Senior Vice President, Asset Servicing, Northern Trust, adds, “We applaud Swift Securities View as another step toward full transaction transparency, enabling more efficient securities settlement and more control in the post-trade space.”
Edward Monrad, Head of Market Structure, Optiver, concludes, "Critical to the health of financial markets is a well-functioning and reliable post-trade process. Swift's Securities Tracking Pilot is making a significant contribution toward this goal by seeking to increase transparency and efficiency around the settlement.
“The UTI has the potential to substantially improve the OTC settlement process and reduce costs by allowing parties to a trade to easily find out where and how other parties are instructing in case of mismatches. Optiver is pleased to be participating in this pilot and looks forward to widespread adoption of the UTI.”