LCH Signs Up to SWIFT’s ISO 20022 Harmonisation Charter


SWIFT.com – Brussels – SWIFT announces today that LCH has signed up to the ISO 20022 Harmonisation Charter,an industry-driven framework that facilitates the rollout of the ISO 20022 messaging standard and provides the technology platform to promote harmonisation. LCH is one of 17 financial market infrastructure providers to have endorsed the charter, with other participating organisations including payments associations, central banks and exchange groups.

LCH, a leading multi-asset clearing house which is majority-owned by London Stock Exchange Group, uses ISO 20022 over SWIFT to send and receive collateral messages, including margin call notifications, with its members. As a participating member of the Charter, LCH will use SWIFT’s MyStandards platform to share and publish information about the CCP’s ISO 20022 usage and market practices, enabling greater clarity and consistency across the community.

“Standardisation and providing our members and their clients with an efficient process is an important element of our collateral management service,” says Gerard Smith, Director, Collateral Services, LCH. “Participating in the ISO 20022 Harmonisation Charter reconfirms our commitment to driving consistent adoption of the standard across our members and their clients. A standardised approach can bring increased operational efficiency to the industry, but it requires a consistency and collaboration across the market in order for participants to realise the benefits.”  

“For LCH, as well as many other organisations, regulation has had a profound effect on the way it conducts its business, including the provision of collateral,” says Stephen Grainger, Managing Director, Market Infrastructures and Experts, Americas & UK, SWIFT. “With the need for greater reporting transparency and client asset segregation, the number of margin calls is set to increase dramatically, and with that, many institutions are looking at ISO 20022 as a tool to standardise and automate  collateral management and margin call processes.”

Building the case for ISO 20022 in collateral management

In January 2015, a group of financial institutions [led by SWIFT], formed the ‘Cleared Collateral Working Group’ with the objective to automate the collateral management process by defining common implementation usage guidelines. The guidelines detail how the existing 14 ISO 20022 collateral management messages (which cover the entire, end-to-end process including initial and variation margin, substitution, reconciliation, posting and reporting of collateral exposure) should be used.

“With the help of the ‘Cleared Collateral Working Group’, CCPs and their clearing members can now use SWIFT certified middleware or their internal infrastructure to send and receive EMIR / Dodd-Frank compliant ISO 20022 collateral instructions,” says Patrik Neutjens, ISO 20022 Programme Director at SWIFT. “The initiative is driving market harmonisation; it reduces manual processing, automates monitoring and tracking of collateral and enhances transparency and reporting. We welcome the efforts of the financial community and look forward to achieving the next milestone.”

The ISO 20022 messages and usage guidelines for margin call request, collateral proposal, collateral postings and collateral and exposure reporting are available for download on the MyStandards industry platform and on www.iso20002.org.

Related articles

  1. Buy Side Forced to Review Collateral Arrangements

    As rates and volatility rise, the need to optimise the value of collateral is greater than ever.

  2. CEDX is planning to expand its range of products in 2023, subject to regulatory approvals.

  3. The CFTC regulated derivatives market and clearer was not included in FTX's bankruptcy filing.

  4. Schroders cleared NDF trades across a Asian and Latam currency pairs via Citi.

  5. The derivatives venue owned by FTX wanted to offer products that were not fully collateralized.