Streamlining the financial industry with ISO 20022

ISO's standard for the exchange of messages in the financial world is increasingly smoothing out the risk of errors, with the Singapore Exchange (SGX) one of the latest financial institutions to mandate its usage by brokers, custodian banks and other stakeholders.

As the financial sector worldwide becomes more and more automated and complex, standardizing messages across institutions and companies has never been more important. The ISO 20022 financial services series provides clarity and consistency to a highly complex industry, thereby reducing the risk of errors and speeding up processes.

Mr Lai Kok Leong, vice president of Post Trade Services at SGX said the use of the standard for securities settlement would make the processing more standardized and consistent across different customer segments and thereby reduced risk of errors.

"Our services reach out to different segments of the financial industry, we interact directly with brokers, custodian banks who are members of SGX, but they in turn reach out to their customers, so it is vital we provide clear, standardized messaging services which cascade to different downstream customers directly or indirectly using our services and through different IT systems," he said.

Mr Lai Kok Leong, Vice President Post Trade Services - Singapore Exchange "Mandating the use of ISO 20022 will enable greater automation and straight-through processing (STP), and a consistent messaging standard will help reduce data processing risks. For high-value transactions, errors can result in significant financial losses."
ISO 20022 is also widely used in many other large financial sectors around the world, including the Eurozone, which is using it for its migration to the Single Euro Payments Area (SEPA), Japan, the US’ Depository Trust and Clearing Corporation (DTCC) for corporate actions, Singapore’s G3 - a new electronic payment service for banks and customers - and many more. In addition, the SWIFT network, which is a global provider of secure financial messaging services, uses ISO 20022 in investment funds messaging and payment operations and even has a free reporting app.

Mr Lai Kok Leong said the next step for the SGX would be to deploy the standard to other business areas such as corporate actions, reference data, payments and collateral management.

"ISO 20022 aligns well with our future developments and is a tool to help us future-proof our messaging, providing a consistent data structure across all our services and to all our different customer segments".”

Article & Image Credits: ISOorg