Requiem For Sibos

Now that this year's Sibos is complete, it's a good exercise to check whether some of the expectations and insights I presented beforehand really were on target or rang true.

In short, I concluded that Swift's efforts to promote the ISO 20022 standard had made progress, and that Sibos sessions would be more about progress on migration than on merely just getting the industry to even make a move to the upgraded standard.

Judging from discussions and comments on ISO 20022, the story isn't turning out to be so simple. Swift is working on harmonizing the framework to weed out inconsistencies cropping up between various markets' implementation of the standard, as reported in late September. Sibos audiences also heard comments that ISO 20022 adoption remains uneven between markets as well as internally, within units of firms. Furthermore, Credit Suisse messaging services executive Win Bausch told the Swift Standards Forum at Sibos that ISO 20022 is raising IT challenges and that no single solution can solve all the requirements firms have for using ISO 20022.

KYC Basics In Play

Also, know your customer (KYC) data management still appeared to be in flux. With Swift as one but not the only major provider focused on offering a KYC solution (in the form of its KYC Registry), standardization will become important to keeping KYC data consistent.

At Sibos, Swift's KYC Registry took a lot of heat from a panel of end-users in a session. Barclays and Standard Chartered KYC data executives said they would have to sell their compliance teams on the value of the registry. These firms are concerned about data privacy and security, as well as the length of the process for inputting KYC information into a new system or repository. These are more basic concerns, in that the apparent issue firms have with the registry is its functionality and the way it operates—and they haven't yet gotten to its compatibility with other KYC offerings.

LEI questions

New concerns about progress on instrument identification and the legal entity identifier (LEI)—or lack thereof—are emanating from Sibos and from outside that conference.

The Association of National Numbering Agencies (ANNA), whose member agencies are in many cases serving as the local operating units (LOUs) to issue LEIs in their markets, addressed concerns about LEIs not being renewed. Dan Kuhnel, chair of ANNA, told a Sibos audience that NNAs serving as LOUs are expert at assigning instrument identifiers and are "well-placed" to educate entities about renewing LEIs.

On the other hand, ANNA administers the ISIN standard issued by the European Securities and Markets Authority (ESMA). In a recent blog post, Richard Robinson, head of Open Symbology and Financial Instrument Global Identifier (FIGI) efforts at Bloomberg, pointed out that ESMA characterization of the ISIN standard is faulty, because it is not open source, nor is it truly a low-cost solution—and that ESMA itself acknowledged that the ISIN standard is not well-suited for identifying instruments.

With MiFID II and other regulatory factors pushing the industry to better handle instrument-level identification—which can use LEIs—it appears the industry still has to ask itself what is the best solution for instrument identification, which must cover more types of securities, including derivatives.

Bloomberg fixed-income, entity, regulatory content and symbology manager Peter Warms points to the FIGI standard, adopted by the Object Management Group and based on Bloomberg's Open Symbology, noting that it is truly open source. Since such an open source alternative is out there, that's certainly incentive to address ISIN's reported flaws.