As straight-through processing (STP) standards are increasingly accepted and adopted, and faster settlement of transactions becomes the norm, financial institutions need technology that will support these new requirements.
"Financial institutions have to comply with new standards for shorter transaction settlement times and message structuring standards determined by international financial messaging exchange bodies, but local companies are lagging behind," says Russell du Bois of DST International South Africa.
The deadline for the migration from the ISO 7775 to the ISO 15022 messaging structure standards was November 2002, and while SWIFT (Society for Worldwide Interbank Financial Telecommunication) has announced 94% compliance, there are still the STP requirements to be met, along with the transition from T5 to T1 and, eventually, T+0 (transaction plus zero delay) settlement times.
STP describes an environment where human intervention is no longer required at any stage in the funds transfer process, including final settlement. The STP rules were designed after discussions with 100 banks worldwide. Over two million messages were initially analysed against these rules to verify their accuracy.
"These standards are being implemented to improve risk management and lower the costs of transactions by eliminating the queries and delays which result from poor interpretation of the messaging by various parties in the transaction value chain. It is critical that local financial institutions move quickly to conform to these standards," notes Du Bois.
It is for these institutions that DST International (DSTi) has introduced HiMessaging, a software solution which streamlines the STP process for trade confirmation, settlement and corporate actions processing. It is one of the few solutions in the marketplace with SWIFT Ready Gold Accreditation.
With HiMessaging implemented at a large number of international sites, DSTi has the experience of catering to the demands of dealing with the global financial settlement systems such as SWIFT and OMGEO, a provider of institutional post-trade processing services.
HiMessaging allows disparate computing environments to be integrated seamlessly via its Message Broker, allowing for STP. The product runs on top of a queue-based system such as MQ Series or MSMQ, and HiMessaging`s Message Broker itself controls the flow and content of the messages on the queues.
HiMessaging will format, translate and route messages; provide transaction monitoring and exception handling; incorporates a powerful development tool for in-house mapping, rule configuration and system modifications, designed to give business analyst level users the ability to configure their own systems; and offers a real-time messaging system designed for the front-office environment.
The HiMessaging TradeFlow module enables STP of the entire trade confirmation and settlement process, including a matching engine and Standing Settlement Instruction SSI database.
HiMessaging reduces operational risk and increases control of data, can reduce settlement cycle processing time in order to facilitate T+0, and comes free with SWIFT data definition libraries.
DSTi`s products may be used as a totally integrated solution or in a best-of-breed environment, interfaced to many other third-party software and external interfaces. The solutions are priced for the South African market.
* SWIFT is an industry-owned cooperative supplying secure messaging services and interface software to 7 000 financial institutions in 198 countries. Its aim is to create a shared worldwide data processing and communications link and a common language for international financial transactions and provide a national and international forum for addressing standards issues and operational and user requirements.
* Omgeo LLC is the leading provider of complete global trade management services, processing 800 000 trades per day and serving 6 000 broker-dealers, custodians and investment managers in over 40 countries. A partnership between the securities industry`s utility and the commercial sector, Omgeo is industry-backed and market-oriented. A recent alliance between SWIFT and OMGEO sees them working together on the development of common industry standards.
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With 16 offices and around 1 000 professionals to support its growing client base, DST International provides a comprehensive range of investment management and business process management software solutions to over 550 clients in 54 countries. Its parent company, DST Systems Inc, services nearly 8 000 mutual funds and over 78 million accounts, with 2002 revenues of $1.66 billion.
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