t2s operational readiness

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SOFE, November 2014 T2S Getting ready for a new operational environment © S.W.I.F.T. SCRL (“SWIFT”) or its licensors 2014. All rights reserved. Confidential and proprietary information Do not disclose to any third party without SWIFT’s prior written consent

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Page 1: T2S Operational Readiness

SOFE, November 2014

T2S – Getting ready for a new

operational environment

© S.W.I.F.T. SCRL (“SWIFT”) or its licensors 2014. All rights reserved.

Confidential and proprietary information – Do not disclose to any third party without SWIFT’s prior written consent

Page 2: T2S Operational Readiness

Agenda

SOFE 2014 – Confidentiality: Public 2

On-boarding T2S

T2S… happening now!

Technical & integration readiness

Business & operational readiness

Page 3: T2S Operational Readiness

T2S – a single pan-european platform for securities

settlement in central bank money

SOFE 2014 – Confidentiality: Public 3 Source: « T2S – Settling Without Borders », European Central Bank, November 2009

TARGET 2 Securities (T2S) (as from June 2015)

TARGET2 (RTGS, live since November 2007)

Page 4: T2S Operational Readiness

Community leveraging SWIFT VAN

4 SOFE 2014 – Confidentiality: Public

Page 5: T2S Operational Readiness

Check-list:

Take strategic decision to go direct

Decide on the business flows (Cash / Securities or Both)

Decide on the communication channels (U2A / A2A or Both)

By above dates, inform

NCB for Cash DCP

CSD for Securities DCP

Eurosystem

Kick-off registration process

Select NSP and register to T2S VAN service (SWIFT e-order)

Get NCB and/or CSD approval

Get T2S approval

A2A mode U2A mode

Wave 1 3 March 2014 3 December 2014

Wave 2 19 September 2014 19 June 2015

Wave 3 16 February 2015 16 November 2015

Wave 4 9 October 2015 11 July 2016

To become a DCP…

SOFE 2014 – Confidentiality: Public 5

Source: Banque de France

Page 6: T2S Operational Readiness

Con.

2014

2016

2015

T2S Testing timeline and milestones

6 SOFE 2014 – Confidentiality: Public

Q3 Q4 Q1 Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar

GO-Live W2

W2 Migration tests

W2 Community/Business Day tests

Sources: ECB

GO-Live W1

W1 Migration tests

W1 Community/Business Day

Pre-Production tests

We are here

Milestones ICP Cash DCP DiCoA

Wave 1 Implement my

providers’ requirements

Finalise my

implementation plan

before connectivity

Connectivity set up and

testing before

community phase starts

Wave 2 Finalise analysis of

providers’ requirements

& decide on

implementation options

Detailed business,

technical and

commercial impact

assessments

Progress business and

technical readiness and

finalise support to

Community

Wave 3 / Wave 4 Strategic decision on Direct Indirect Connectivity

High-level impact assessment

Finalise target model

and clients offering

Page 7: T2S Operational Readiness

Business &

Operational

Readiness

Technical &

Integration

Readiness

On-Boarding

T2S

L E V E R A G I N G S W I F T C O R E C O M P E T E N C I E S

W I T H A U N I Q U E E N D - T O - E N D O F F E R I N G

3 streams of work today

7 SOFE 2014 – Confidentiality: Public

Page 8: T2S Operational Readiness

Business &

Operational

Readiness

Page 9: T2S Operational Readiness

Your challenges

SOFE 2014 – Confidentiality: Public 9

Assess T2S Impact on

my business model Analyse adjacent business

processes (corporate actions…)

Test and implement

smoothly and efficiently

Get my teams up-to speed to deliver

the best customer experience

Page 10: T2S Operational Readiness

Training Services

Community trainings

• ISO 15022 enhanced for T2S

• Securities settlement and management- ISO 20022 messages for T2S

• Liquidity and collateral management – ISO20022 messages for T2S

On-site trainings

• ISO20022 settlement flows in a CCP as DCP environment

• ISO20022 for liquidity management for a global custodian and liquidity provider in T2S

• ISO20022 for T2S messaging from a NCB / Stock exchange perspective

• W1 DCPs webex on BAH/BFH customised scenarios

SOFE 2014 – Confidentiality: Public 10

Frankfurt – Vienna –

Malta – Brussels –

Lisbon

CCP– NCB – Global

Custodians – regional banks –

SX - Payment banks

Page 11: T2S Operational Readiness

Get ready for T2S with SWIFT Training

SOFE 2014 – Confidentiality: Public 11

Page 12: T2S Operational Readiness

Get ready for T2S with SWIFT Training

SOFE 2014 – Confidentiality: Public 12

Page 13: T2S Operational Readiness

Be prepared!

Main building blocks

13 SOFE 2014 – Confidentiality: Public

Community On-Boarding

Business Testing

Technical Testing

Standards Gap Analysis

Impact Assessment

Supporting you end-to-end throughout the change

Training

Mapping & Transformation

Business &

Operational

Readiness

Page 14: T2S Operational Readiness

Impact assessment for T2S

Overview

SOFE 2014 – Confidentiality: Public 14

• Revolves around 4 axis (business processes and flows and related ISO messages, services available, T2S schedule, infrastructure capacity requirements)

IMPACT ASSESSMENT

• Provide an estimation of future volumes and optimised messaging model in a post-T2S environment.

VOLUME PROJECTIONS

• Identify the messages that need to be implemented and the integration and the infrastructure needs.

MESSAGE IMPLEMEN-

TATION EFFORTS

Page 15: T2S Operational Readiness

THE BUSINESS ENVIRONMENT CHALLENGE

Maintain different standards and processes

SOFE 2014 – Confidentiality: Public 15

THE STANDARDS FORMATS CHALLENGE

Page 16: T2S Operational Readiness

T2S ISO 20022 messages (DCP/ICP) Deep dive into usage and creation

SOFE 2014 – Confidentiality: Public

Documentation on business

flows

Explanation on messages

usage

Clarification on messages

functionalities

Creation of concrete

business scenarios

Identification of message

elements

• Main principles on ISO 20022 for T2S (description of

the functionality / common fields of the different

messages)

• How to manage the information within T2S ISO 20022

messages, which fields are used and how to

instruct/retrieve the different types of information

T2S actor reference/T2S reference/Account owner transaction

identification/Account servicer Transaction

Identification/Processor Transaction Identification/Matching

reference…

• How to manage identifications within T2S ISO 20022

messages, which fields are used and how to

instruct/retrieve the different types of identification

Members and options, account and options,

amounts/quantity/price/date indicators…

16

Page 17: T2S Operational Readiness

A number of MT changes have been made to maintain compatibility with

ISO 20022 as it evolves to support the requirements of T2S.

Impact of T2S on financial messaging

SOFE 2014 – Confidentiality: Public 17

1. PERFORM A GAP ANALYSIS OF CURRENT VERSUS NEW

Domestic formats

ISO 15022 (enhanced)

ISO 20022

ICP

ISO 15022

ISO 20022

T2S

DiCoA Domestic

ISO 20022

2. EVALUATE AND SELECT THE BEST IMPLEMENTATION

3. MANAGE STANDARDS DURING IMPLEMENTATION (AND BEYOND)

Page 18: T2S Operational Readiness

Standards gap analysis

Example: New functionalities offered

SOFE 2014 – Confidentiality: Public 18

sese.023

MT 543 to deliver out a

restricted balance must

be “enhanced” i.e. refer

to the restriction

reference.

ICP

T2S

DiCoA

MT 543

T2S will allow CSDs and NCBs to define their own restriction types.

Restriction types restrict the usage of a balance:

- blocking

- reservation

- earmarking

When a certain balance becomes restricted, T2S assigns a ‘restriction

reference’ to which all subsequent messages have to refer to.

Page 19: T2S Operational Readiness

Standards consulting services

SOFE 2014 – Confidentiality: Public 19

Page 20: T2S Operational Readiness

MyStandards for T2S and MI Communities Easy access to your market guidelines and adaptation

requirements

SOFE 2014 – Confidentiality: Public 20

ISO 15022

ISO 20022

ICP

T2S

ISO 20022

DiCoA

Use MyStandards to

manage and publish

T2S specifications

Consume the T2S

specifications in

MyStandards

Enrich, compare,

manage and publish

their internal

specifications

Consume the specs of

service providers via

MyStandards.

Use the platform to

document current

capabilities and

compare.

ISO 15022 ISO 15022E ISO 15022E ISO 20022

Bridging the gap between ISO 15022 and ISO 20022 by introducing an intermediary

layer: ISO 15022 Enhanced

Page 21: T2S Operational Readiness

MyStandards

MyStandards

Readiness

Portal

Single repository on a collaborative platform for standards content

management and maintenance

Input, analyse, compare and release specifications

Allow internal and external collaboration

Generate documentation and schemas

Communicate changes and ease/accelerate maintenance

A new layer on the web platform to streamline customer standards

testing (onboarding, servicing and readiness assessment)

Easy/fast access to documentation made available in MyStandards

Complete testing and validation features (schema validation, reference data,

ISO guidelines, Santander usage guidelines)

Provide a library of valid and invalid samples for community to test

Track customer readiness thru separate tailor-made portals and identify

where on-boarding support is needed

MyStandards platform in a nutshell

SOFE 2014 – Confidentiality: Public 21

Page 22: T2S Operational Readiness

Benefits for using MyStandards platform

SOFE 2014 – Confidentiality: Public 22

Publish for your customers

Review your own specs Internal

External

External

• Onboard new

customers faster

• Enable customer self-

service

• Shorten expensive end-

to-end testing cycle

• Monitor onboarding

Internal

• Keep documentation and

implementation in sync

• Create feedback loops

across teams

• Maintain high quality test

messages

Test and build your

your own library

Support and track

your customer

readiness

Page 23: T2S Operational Readiness

SOFE 2014 – Confidentiality: Public 23

Example with T2S

Page 24: T2S Operational Readiness

SOFE 2014 – Confidentiality: Public 24

Example with T2S

Page 25: T2S Operational Readiness

Validate your business developments with

Readiness Portal

SOFE 2014 – Confidentiality: Public 25

Covering both ISO 15022 and ISO 20022

Example with T2S

Page 26: T2S Operational Readiness

Easy (and free) access to market guidelines

SOFE 2014 – Confidentiality: Public 26

and more to

come…

MyStandards

Page 27: T2S Operational Readiness

Looking beyond settlement EU Market Standards for CA Processing and related impacts

SOFE 2014 – Confidentiality: Public 27

Giovannini Barrier 3

Corporate Actions Joint Working Group

European Market Standards for

Corporate Actions Processing

(European) Market Implementation

Group(s)

Ultimately reporting to the European

Commission

T2S Corporate Actions Sub-group

Sources: www.ebf-fbe.eu, www.t2s.eu

T2S impact

Market drive

Regulatory impact

Industry drive

Page 28: T2S Operational Readiness

Drivers for further Asset Servicing automation

P R O V I D E L E V E R A G E F O R N E G O T I AT I O N B Y N E T W O R K

D E PA R T M E N T W I T H D E P O S I T O R I E S

28

Increased

Efficience

Reduced risk

and exposure

Improved

customer

satisfaction

SOFE 2014 – Confidentiality: Public

Page 29: T2S Operational Readiness

Corporate Actions services

29

Efficiency measures (Nak rates,

Message type usage, average

message length)

Process mapping

IT system mappings

STP level

Number of staff , staff turnover, level

of expertise

Peer benchmarking

Market practice

compliance review

Operational efficiency

SMPG: EIG and beyond

ISITC recommendations

Focus on inbound production data

Provider benchmarking

Identification of critical areas

Basis for marketing campaigns

Objective neutral Third-party view

Business Intelligence

Market views

Timeliness of data transmission

Windows of election opportunities-

global view, per market, per sender

CAJWG – sequence of dates

Use of COAF, globally per market

Traffic growth analysis

Corporate

Actions

review Improving the

conformance of your

data

Compare your providers’

specifications

- amongst them

- against yours

- against EIG

- on-line editing

- easy access to documentation

- export the updated message

instance

- Perform testing on message

instances

Message mapping and transformations

Standards process review

Usage guidelines documentation

Usage guidelines validation

Standards release impact analysis

Community migration

Standards Consulting

Corporate Actions in a

T2S environment

SOFE 2014 – Confidentiality: Public

Training

Page 30: T2S Operational Readiness

Securities exchange

Securities distribution

Cash distribution

Consulting Services

30

Focus points

Scope and impact of Corporate Actions in T2S

CAJWG Standards

Corporate Actions toolkit

Corporate Actions processing workflow in T2S

Focus on specific processes (eg issuance)

In/out of T2S scope

CE grouping Players and configurations

Securities and cash

movements

Queries and reports

Position blocking and transaction

freeze

Sequence of dates

Transaction management

Monitoring process

Issuance Static data Cash

postings

SOFE 2014 – Confidentiality: Public

Page 31: T2S Operational Readiness

Benefit from SWIFT experience Recent business consulting assignments

SOFE 2014 – Confidentiality: Public 31

ECB / EUROSYSTEM (T2 / T2S)

Contributed to T2S User

Requirements Definition for a

centralised best-in-class securities

settlement platform

Delivered T2S detailed message

specifications and design

Involved in preparation of

TARGET2 move to ISO 20022

LONDON STOCK EXCHANGE

Contribute to the refresh of CCP

clearing systems and interfaces

with the review of clearing

business flows and map to ISO

equivalents

Gap analysis between LSE

specification and ISO20022 and

ISO15022 message and field

definitions.

Assist in the completion of their

document describing the client

facing ISO messages supported

by the CCP

SADC PAYMENT AND DVP

MODELS

Guidance, documentation and

delivery of implementation

guidelines

Construction of business

samples and interface

specification information

Loading of usage guidelines into

MyStandards

MAJOR SPANISH CUSTODIAN BANK

Assist the custodian bank in setting up a

general clearing member service to

connect to the newly established CCP and

offer clearing services to non-members.

Define workflows and how they translate

into FIXML and ISO 15022

communications flows, with detailed

message usage specifications

Document user functional specifications, in

the context of the Spanish Reform, for the

internal development of the new clearing

service

Define test scenarios for the acceptance of

the different message flows (FIXML and

ISO 15022 MT)

Page 32: T2S Operational Readiness

Technical &

Integration

Readiness

Page 33: T2S Operational Readiness

Your challenges

SOFE 2014 – Confidentiality: Public 33

Select VAN provider

Adapt to T2S technical

requirements

Perform Standards

mapping and transformation

Review of my technical infrastructure

Page 34: T2S Operational Readiness

INTEGRATION PLATFORM

CONNECTOR FOR T2S

Back office

applications

Network

Connection

Communications

Software

Messaging

Software

VAN

Integration Layer: Business

Integration Layer: Technical

Connectivity to T2S through SWIFT VAN

SOFE 2014 – Confidentiality: Public 34

A2A U2A

SAA

SAG

Page 35: T2S Operational Readiness

Alliance Access Integration Platform

Additional integration functionality

SOFE 2014 – Confidentiality: Public 35

SWIFT format

Financial

Applications

SW

IFT

Net

Inte

rface

Alliance Access

FIN

Inte

rface

Applic

atio

n

Inte

rface

Message store

Alliance Access Integration Platform

Validation Transformation Enrichment

Internal API

proprietary format

Connecto

rs

Customer application

Transformation

Transforming a

Proprietary Message…

… into a valid ISO Message…

…using customisable

translation rules…

Page 36: T2S Operational Readiness

Connector for T2S key features

Main Benefits

Connector for T2S

Shielding application from the complexity of T2S

SOFE 2014 – Confidentiality: Public 36

A plug-in, easy to install and

operate in Alliance Access

The T2S application deals with

messages in ISO 20022 format

A

B

All the logic to format InterAct /

FileAct messages

Generation / Verification of T2S

signature in BAH/BFH

Automatic compression /

decompression

Bulking & Debulking logic

Including Timeout/Oversize

logic for Queries/Responses 2

3

4

5

A

B 1

3

4

5 4

2

Simply T2S business

messages

No exposure to complexity of

T2S protocol

1

Page 37: T2S Operational Readiness

MessageDigest verification

SOFE 2014 – Confidentiality: Public 37

SWIFTNet

Back office

Alliance Access

Alliance Gateway

/ SNL

HSM VPN

MessageDigest

calculation

BAH/BFH Signature

generation and

verification

• XML test data as

generated by back

office

• MessageDigest

calculation by SWIFT

tool

• Comparison

• Both for messages and

files

Page 38: T2S Operational Readiness

Technical testing domain

SOFE 2014 – Confidentiality: Public 38

SYSTEM

INTEGRATION

TESTING

SWIFT Infrastructure

for T2S

Technical Functionality

FAILURE TESTING

Recovery process

Exception handling

PERFORMANCE

TESTING

Stability under

sustained load

Stress behaviour

Page 39: T2S Operational Readiness

Technical infrastructure review

Overview

SOFE 2014 – Confidentiality: Public 39

Review the SWIFT infrastructure at Customer

and assess the impact of T2S for the following

domains:

Architecture of SWIFT infrastructure

components, middleware and back-office

integration

Capacity requirements

Connectivity requirements

New services to be implemented

Security set-up

Business Continuity, Resiliency and

Recovery procedures

Roles and responsibilities

Page 40: T2S Operational Readiness

On-Boarding T2S

Page 41: T2S Operational Readiness

On-boarding

• Registration process for DiCoAs

• Support specific to T2S-related issues

• Access to central documentation

• Adopt ISO standards and shield your BO with transformation layer (integration)

• Testing / certification

• On-boarding over SWIFT (CUG)

• On-boarding your staff and create expertise & knowledge

• Certification CSD / NCB

• Help the community get ready and on board.

41

Page 42: T2S Operational Readiness

A2A access

What can be done prior to VAN registration opens for DCPs:

Confirm your volumes assumptions

Get a VAN quotation

Get information on the service and select the environments

to connect to

Go through the subscription guides (both VAN and T2S)

Consider an infrastructure sizing exercise with VAN to

ensure that the infrastructure is properly sized for T2S

activity

Ensure capability to generate valid ISO messages in

compliance with T2S usage guidelines

Ensure capability to meet T2S technical requirements

(header generation, signature etc).

Get informed by your CSD and NCB of what T2S expects in

terms of static data set up before operating in a testing

environment .

Only after VAN registration opens for DCPs:

Fill in the registration form as described in the subscription

guide

Get approval from your CSD, NCB and then Eurosystem

Get provisioned on the VAN service.

Start entering data into T2S to set up testing environment

Check list to effectively connect to

T2S and start testing…

42

U2A access: What can be done prior to VAN registration opens for

DCPs:

Order your tokens

Go through the U2A step-by-step guide

Security Officer to set up the tokens (check firewalls,

put certificates, assign to physical users, …).

After VAN registration opens for DCPs: same process as

for A2A.

SOFE 2014 – Confidentiality: Public

Page 43: T2S Operational Readiness

A2A and U2A registration and set up

documentation

SOFE 2014 – Confidentiality: Public 43

Page 44: T2S Operational Readiness

U2A setup steps with SWIFT - details

SOFE 2014 – Confidentiality: Public 44

Steps Description

(a) Registration with SWIFT to

T2S connectivity services

Refer to section 5.2 Subscription of “SWIFT`s VAN Solution for T2S Service

Description” document.

(b) Order personal tokens Boxes of 10 personal tokens can be ordered/purchased on swift.com in the ordering

section, You can use personal tokens that you already have, if those were ordered no

earlier then Oct2013. See also screenshots.

(c) Create certificate DN This step handled by the Security Officers using the SWIFTNet Online Operations Manager

(O2M). Refer to section Certificate Management of “O2M User Guide” available on the

SWIFT UHB. See also screenshots.

(d) Install token driver The token driver installation package is available on the SWIFT Certificate Centre

(www.swift.com/certificates) in the getting started section.

Refer to the “token Installation Guide” available on the SWIFT UHB.

(e) Activate the token This step is handled by the end-user using the SWIFT Certificate Centre, accessible over

internet or MV-SIPN. Refer to “SWIFT Certificate Centre portal user guide” available on the

SWIFT UHB. See also screenshots.

(f) Check Network configuration

requirements

Refer to appendix A.2 of the “SWIFT`s VAN Solution for T2S Service Description” +

Knowledge Base tip 5018711 – which URLs and IP addresses are used in the T2S U2A

(Browse) flow .

(g) Define certificate DN in T2S

static data

Refer to T2S documentation.

(h) Prepare end user workstation Refer to appendix A.3 of the “SWIFT`s VAN solution for T2S service description” for the

different requirements (.pac file, Browser settings, allow Java applet, system requirements)

(i) Access U2A Refer to appendix A.1 of the “SWIFT`s VAN solution for T2S service description” for the

URL of the different T2S U2A environments. See also screenshot.

Page 45: T2S Operational Readiness

SWIFTNet Header

BIC/DN in T2S messages for A2A

3 layers

‘Layer3’ => DN

Used within SWIFTNet services

is T2S ‘Technical Address’

provide in SWIFT subscription & T2S

registration

‘Layer2’ => BIC/DN

Used within BAH/BFH

is T2S Business Sender (BIC11) and T2S

Business Signer (DN)

‘Layer1’ => BIC

Used within ISO20022 Message

are Party fields

45

BAH

Document:

ISO20022 Message

Signature

IA/FA

‘Layer3’

‘Layer2’

‘Layer1’

SWIFTNet Payload

SOFE 2014 – Confidentiality: Public

Page 46: T2S Operational Readiness

SOFE 2014 – Confidentiality: Public 46

Key Documents and Links

SWIFT

• SWIFT Information Centre for T2S, on swift.com (here)

• SWIFT’s training on T2S (here)

• SWIFT’s VAN Solution for T2S Service Description (available on demand)

• SWIFT’s VAN Solution for T2S Subscription form (here)

• Price List for SWIFT’s VAN Solution for T2S (here)

• MyStandards Readiness Portal for T2S (here)

• Personal Token ordering form (here)

T2S

• ECB Website (here)

• T2S Connectivity Guide (here)

• T2S Message Validation Service (for CSD/NCB, planned by July 2014)

Page 47: T2S Operational Readiness

Did you know that SWIFT can help you

further in your T2S journey…?

Directly

Connected

Actors

(DiCoA)

DiCoA

Community

HANDHOLDING SERVICES TO SUPPORT YOUR TEAMS

Project management (how your set up translate into

relevant subscription data)

Consultancy on PKI Security

Infrastructure readiness (health check)

SERVICES TO HELP YOU SUPPORT YOUR COMMUNITY

Help managing your migration and on-boarding

programmes

Provide you with a customised test library published to

your Community on MyStandards

Give you access to a centralised tracking feature to get

evidences of readiness at individual customer level

(MyStandards Readiness Portal)

SOFE 2014 – Confidentiality: Public 47

Page 48: T2S Operational Readiness

50

Standard support module for T2S

Included in T2S VAN offering

Help solve problems faster

Find relevant operational information in one place

Coordination of 3-way Problem Resolution with T2S

For severe technical issues

Through SWIFT Support

Online Information Centre

Dedicated publishing space

Operational news

Operational status

Availability statistics (consolidated)

For subscribed swift.com contacts

SOFE 2014 – Confidentiality: Public

Page 49: T2S Operational Readiness

From Standard+

to Premium

Upgrade your support service to cope with

T2S challenges

51

Health Check

Best Practice Sharing

Training

Dedicated Team

T2S Support Module

T2S Expert View

From Premium

to Premium Plus/Custom

Premium Support

Escalation process

Monitoring

Customer reports

SOFE 2014 – Confidentiality: Public

Page 50: T2S Operational Readiness

Thank

you

Questions?

Please contact us on

[email protected]

SOFE 2014 – Confidentiality: Public 52