Brussels-based financial messaging co-operative SWIFT has upped its commitment to increasing the rate of automation in the OTC derivatives industry by agreeing with the International Swaps and Derivatives Association (ISDA) to provide FpML messaging services over its SWIFTNet network. SWIFT reckons the service will appeal because it offers standardized and secure messaging for derivatives transactions, which will in turn boost automation and so reduce risk.
The two organisations have agreed to create a SWIFT Closed User Group, which is expected to transport FpML messages before the end of 2006.
SWIFT describes the agreement as “a key building block in SWIFT’s Alternative Investments/Derivatives solution roadmap to help members respond to automation challenges in the OTC derivative post-trade area. FpML support on SWIFTNet will speed implementation of FpML-based messaging by a broad group of industry participants, including new counterparties. It will reinforce automation within the buy-side and asset servicing communities and help reduce operating costs.”
ISDA and SWIFT continue to work together on other issues related to interoperability, coexistence and the ultimate convergence of standards through their joint participation on the ISO 20022 Registration Management Group. SWIFT says it and ISDA after well-positioned to catalyse interoperability efforts encompassing trade confirmation, cash flow settlement, portfolio reconciliation and collateral management. “This collaboration will bring tremendous benefits to our mutual community of users,” says James P. Donovan, Head of Securities Industry Division, SWIFT. “This agreement between ISDA and SWIFT is viewed by both as a major step forward to further improve automation levels in the OTC post-trade environment.”