Industry Pushes for ISO 20022 Deadline

LONDON - The industry should set a deadline for the complete migration from messaging standard ISO 15022 to the new standard ISO 20022, according to speakers at the Corporate Actions 2010 conference in London in April.

Industry players are set to start adopting ISO 20022 in the coming years, but the two standards will initially co-exist. While the move to ISO 20022 is seen to represent a step forward in the corporate actions space, market participants have suggested the costs involved in changing a standard can result in firms waiting to move.

Brussels-based Sophie Bertin, head of asset servicing and custodians at Swift and speaker at the event, said: "There is a need for more flexible standards that accommodate the various formats and requests from a corporate actions perspective, and thus the creation of the ISO 20022 standard is very appropriate especially for corporate actions."

"It is necessary to explain the benefits of harmonization and standardization of corporate actions to all parties involved in the chain, and even if there is a lot of progress achieved lately, there is still much to do," said Bertin.

The predominant view is that there should be a deadline for the ISO 20022 implementation as a co-existence period of several years could be problematic.

Brussels-based Paul Bodart, executive vice-president, head of EMEA global operations, BNY Mellon Asset Servicing, said some think there should be a deadline, specifying when to move to ISO 20022. In the meantime, market participants could work with Swift and others to ensure there is compatibility in the translation from one format to the other, he explained.

Stockholm-based Christine Strandberg, global product manager, asset servicing, SEB, also said a long co-existence period would be complex. "People would need to buy conversion tools and convert to whatever format the counterpart is talking, but that has a cost and limits what you can do, and when it comes to corporate actions the differences are difficult to translate," she says, explaining that if there was a deadline for the migration, the move should have a start and a finish date, "but you probably get as many opinions as you have institutions on this subject at the moment."

Issuer Involvement

Meanwhile, speakers agreed there is a need to involve the issuers, particularly organizations such as the European issuers participating in the Corporate Actions Working Group (CAWG). Issuers are fairly represented within the CAWG, and while initially some resisted the idea of standardization, they are now active participants, said BNY Mellon's Bodart.

Yet, issuers are not always participating in local industry associations, and direct access to issuers varies in different countries. Strandberg said in countries without issuer organizations, the other option is speaking to the registrars of the issuers agents. "They can provide a view point, but it's not the same as speaking directly to the issuers or an organization directly representing their interests," she says.

The Swedish National Member Group, for example, does not want a long co-existence period of ISO 15022 and ISO 20022, but it also agrees a big bang migration would be a complex way to proceed, said Strandberg.

Carla Mangado.