SWIFT has rolled out a range of new initiatives designed to reduce costly settlement errors and improve the rates of automation of Standing Settlement Instructions (SSIs), including the introduction of a global SSI repository.
SSIs make for speedy payment and settlement, SWIFT says, but they are frequently changed, which results in settlement errors and payment rejections. Research jointly conducted by SWIFT and 12 of its customer banks suggests there are currently about 40 million such payment errors every year, costing the financial industry an estimated $700 million.
The new global SSI repository is designed to be the most accurate such resource available to the financial industry, the firm says. The multiple sources and sophisticated selection strategies used will ensure that an institutions SSIs are complete, accurate and able to be replicated with ease.
The lack of a single source for SSI information has led to payment failures, costing banks considerable time and money, says Patrik Neutjens, head of reference data at SWIFT. In the age of automation and real-time reporting, it is crucial that this situation improves.
An SSI directory for retail payments based on the repository will be updated and published on a monthly basis. At a later stage, SWIFT will also launch an SSI directory for treasury in the FX and money markets sectors.
SWIFT has also created a standard messaging format for distribution of cash SSI updates, available from November this year. The message format will be structured, validated and authenticated, and allow senders to either specify a list of recipients for the notification, or to inform the broader SWIFT community.
Finally, SWIFT also now offers a diagnostics service that informs customers when counterparty SSIs held in their payment applications are incorrect and details corrective measures. The service, which was unveiled at Sibos last October, validates a customers current list of counterparty SSIs against multiple information sources to provide a reliable picture of their accuracy.
These three initiatives will provide a comprehensive solution to some of the problems with changing SSIs, Neutjens says. SWIFTs efforts will drastically improve the situation, culminating in a standard message format to allow banks and other financial institutions to efficiently update each other on changes to their SSI arrangements. This message format will ensure that only relevant parties are informed of the changes and prevent financial institutions being overwhelmed with irrelevant updates.
Markit and Omgeo announced Feb. 1 that they were partnering to link client settlement instructions used in trade allocations with client documentation used in account opening.