Polish Clearinghouse Adopts ISO Messaging

Terry Flanagan

KDPW_CCP to use ISO 20022 messages to communicate with counterparties.

Clearinghouses will benefit from a new international messaging standard that improve the flow of communications among counterparties.

SWIFT, the financial messaging provider for more than 9,700 financial institutions, has announced that the Polish central counterparty (CCP) KDPW_CCP will be able to use standardized messaging over SWIFT to communicate with its clearing participants.

KDPW_CCP will use SWIFT XML messages developed according to the ISO 20022 methodology – SWIFT’s strategic Clearing solution. These messages cover trade leg management, position and settlement management, and risk and collateral management.

“The new ISO 20022 clearing messages cover the complete clearing life cycle, from the time the clearing house receives the trade until the time it is cleared,” Russell Jones, head of securities initiatives, EMEA at SWIFT, told Markets Media. “These messages cover trade leg management, position management, risk management and settlement management.”

A growing number of clearers are adopting SWIFT to support improved risk and collateral management, streamline communication in a fragmented marketplace and minimize operational costs, the company says.

By reusing SWIFT, market participants can avoid implementing proprietary formats and networks, and further extend the benefits of their investment in SWIFT. They can be up and running with their CCP communications more rapidly and the use of international standards minimizes the risk of errors and misinterpretation.

The advantages of ISO 20022, which has its roots in ISO 15022, is its flexibility and ability to link messages to business processes, which makes the fields meaningful and easily recognizable to users.

“With XML as the underlying syntax, ISO 20022 messages offers more fields in the actual message, which means more specific information and data can be added to the messages that now encompass the entire clearing process,” said Jones. “This eliminates the guessing and creates a more dynamic set of standardized information that then gets seamlessly communicated between clearing houses and their members.”

Responding to new regulation, KDPW will launch a new CCP service for OTC derivatives in 2012. KDPW CCP intends to adopt SWIFT’s Accord for Treasury for matching OTC derivatives transactions. This will extend the benefits of standardisation, operational risk and cost reduction and improved customer service for KDPW_CCP and its clearing community.

Adopting standardised messaging enables KDPW group to align with European market harmonization initiatives, and will reduce operational risks and costs for our clearing community, as well as KDPW_CCP itself, according to Iwona Sroka, president and CEO of KDPW_CCP.

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