From 18th to 21st September 2023, Toronto is set to host Sibos 2023 at the Metro Toronto Convention Centre, one of the year’s most anticipated events in the financial sector.
With both in-person and digital participation options, this conference aims to bridge distances and bring together industry professionals from various spheres of the financial world.
The central theme for Sibos 2023 is ‘Collaborative finance in a fragmented world’. It highlights the significance of unified efforts in ensuring a resilient and inclusive financial industry, particularly in the face of economic and geopolitical challenges. The theme underscores the importance of balancing technological advancements with the foundational element of trust.
The conference explores various financial topics, ranging from ESG standardisation and cross-border payments to digital currencies and the role of emergent technologies like AI and machine learning in reshaping the industry. The conference will also be hosting various sessions, such as Inside Leadership, Spotlight and Swift Innotribe, as well as new additions to the programme.
As the financial community prepares for this event, Funds Europe has sought insights from a selection of speakers at Sibos 2023. They have offered their views on the core themes that are expected to take centre stage at the conference, including banking & payments, cybersecurity & compliance, securities, trade finance and the broad domain of technology & innovation.
Isabel Schmidt, co-head of payments products, BNY Mellon
Sibos Session: A new era for payment investigations
How are emerging technologies reshaping payment investigations to reduce friction?
When it comes to international payments, having robust compliance processes in place is critical. At the same time, however, these very compliance checks can introduce some of the most significant sources of friction. One of the reasons for this is that the data contained in legacy MT payment messages is unstructured, which makes the information more difficult to accurately review from a compliance perspective. This, in turn, leads to a higher proportion of false positives – a situation where completely legitimate transactions are flagged for investigation. When working with huge amounts of payment data, false positives become a significant issue, with each investigation taking a significant amount of time, cost and resources to resolve. The implementation of ISO 20022 could be a game changer in this regard.
ISO 20022 – the new global payment messaging standard – brings with it richer and more structured payment data. This structured information allows us to improve the quality of the risk checks we do – and it is expected that this will significantly reduce the number of false positives we face. With less time spent looking into false positives, we – and the entire industry – can focus our efforts on analysing and investigating real risks, while also driving the push towards straight-through processing. Having more data at hand also means that emerging technologies – such as artificial intelligence and machine learning – can be more effective, improving compliance checks and reducing the number of investigations.
Bruno Campenon, global head of banks, brokers and corporates, securities services, at BNP Paribas
Sibos Session: Big Issue Debate: What is the impact of technology and data intelligence on financial services?
How are tech and data intelligence altering the operational models in the institutional funds industry amid evolving regulations?
Operational models are increasingly shifting towards outsourcing data management to specialised service providers to reduce operational challenges and harness advanced technological capabilities. This trend is particularly evident in the regulatory domain, where adapting to ever-evolving guidelines requires expertise and significant data management capabilities. Without the appropriate technology and know-how, managing such vast amounts of data becomes complex.
The regulatory landscape often necessitates considerable development and investment cycles. For example, regulations like CSDR and UMR have led to the establishment of extensive data management processes and solutions. Moreover, the emergence and growing significance of Fintechs in the industry has also played a role in shaping operational models. Platforms such as Proxymity, for instance, offer services like shareholder disclosure and automatic shareholder ID requests in SRD II-compliant formats, eliminating the need for manual processes. Such platforms can complement existing services, enriching the service offerings available to clients and potentially altering traditional operational frameworks.
Certainly, as a custodian, we are looking at these providers as a way to deliver value to our clients, which in turn can transform our own operating model.
Steve Carlin, VP Product Management, AutoRek
Sibos session: What T+1 really means for the global asset management community.
How can asset managers ensure timely settlements in the T+1 era, given the challenges of multiple time zones?
Major asset managers have funds scattered across all parts of the world. While these firms have significant back-office resources to help cope, this does not change the fact that they will have more cross-border transactions to handle because they have multiple funds to manage. Fund allocations typically take place at the end of the trading day, but these will either need to be sent when the order is sent or during the trading day to enable their broker-dealers to instruct the trades in time.
Consequently, the more cross-border transactions being made by funds based outside the US (but holding US equities), the harder it will be to settle in the shortened timeframe prescribed by T+1. This issue is exacerbated by the fact that many asset managers are still reliant on people to solve settlement disputes which slows down the cycle even further.
Automating processes such as trade confirmation and reconciliation enables firms to quickly verify if a transaction has taken place. For large asset managers that process thousands of transactions every day, this will greatly speed up the settlement process. This also helps to relieve the administrative burden on back-office staff and free up their time to focus on other tasks. Ultimately, asset managers are in the business of devising investment strategies that deliver strong returns for investors, not spending countless hours trying to solve settlement problems.
Stephanie Eckermann, CEO, Clearstream Banking AG
Sibos session: The future of securities
How do you see the impact of digitisation and new digital assets on the future of the securities services sector?
The financial services sector is always fast-paced, and securities services are not immune from the changes and demands that are shaping the future of our industry. Against this backdrop, we must drive the innovation of technology, services and business models now – and we must do it in a sustainable way.
We are at a new turning point in our innovation journey: the digitisation of securities coupled with the emergence of new digital asset classes has the potential to revolutionise the way we trade and settle securities. The coming years will decide the fate of these new securities markets. For them to add real value, we must take care not to create a plurality of new yet isolated systems. Instead, we need to create sustainable and integrated solutions that focus on streamlining processes and connecting systems.
Innovation must be geared towards solving real-world problems whilst ensuring adoption and market acceptance. Balancing technological innovation, regulatory requirements and investor demands is the challenge of our time, impacting business model reviews and future strategic planning like never before. Daring to go off the beaten track and rethinking existing services and processes together is the only way to deliver a seamless future-proof experience to the global market. Through engagement and education, supported by digitisation and the wise usage of data, we can make that happen.
Hannah Elson, global head of custody, J.P. Morgan
Sibos Session: Unlocking the full potential of the Unique Transaction Identifier in securities
Can you discuss the recent evolution in the utilisation of UTIs and highlight innovative approaches to maximise their benefits in securities transactions?
Whilst the UTI is not a new concept, it is mostly used in derivatives for regulatory reporting, and extending its use to securities cash trades could unlock significant benefits due to the multiple touchpoints by multiple actors throughout a securities trade lifecycle. Generating the UTI at the allocation level so that it propagates throughout the booking, confirmation, matching and settlement lifecycle will create a common thread to uniformly track the status providing a ‘single version of the truth’. It also allows the identification of corresponding legs of an instruction (e.g., one from the buyer and one from the seller) immediately as soon as instructions are input into the Swift network, speeding up matching and reconciliation. This increased transparency will help expedite the exception management process.
Securities post-trade is constantly evolving due to the trend for accelerated settlement cycles or regulations such as CSDR, which require immediacy of information, mutualisation of issues and process integration – the UTI helps get us there, but there are challenges to be tackled.
There’s been an increase in exception management tools in recent years, but there is insufficient interoperability across the vendor landscape. For the benefits of the UTI to be realised, it requires broad adoption and collaboration, supported by all actors, such as FMIs, clearing agents, custodians, matching and exception management vendors. It also needs to be unique and created early on in the trade lifecycle.
John Bevil, product director, capital markets, Xceptor
Sibos session: Reduce operational risk by taming tactical reconciliations
How can we streamline reconciliations to address evolving business goals and data challenges efficiently?
The increase in volume and complexity of unstructured data that drives reconciliations requires a robust solution that can solve tactical business responses by:
• Extracting, curating, and validating the most complex of data structures.
• Building reconciliations rapidly and in line with business objectives.
• Being flexible enough to support changes to the data or process.
• Managing increasing volumes of data.
• Continually delivering business value and mitigating risks.
Solutions that can be tactically deployed to solve challenging reconciliations that reside on the periphery of businesses, in spreadsheets and EUCs or are being reconciled manually, will be in strong demand. The realisation that the reconciliation is only as good as the data which resides within is fast becoming recognised. If data can be transformed from multiple unstructured sources and turned into business-ready data quickly and efficiently, and generally without a major IT footprint, the sooner the efficiency gains.
Reconciliation solutions which offer the user flexibility and speed of set-up are moving the dial. There’s growing demand to support the business using AI techniques to better understand the data in its original format to formulate and structure the reconciliation. This builds efficiency by removing many of the lower-value human touch points, speeding up the onboarding process, and eliminating friction as the data is clean, reliable, and trustworthy. Reconciliations will be operational in days rather than months and false positives removed, meaning only genuine exceptions require remediation.
The point of reconciliation is to provide integrity and surety to the business. A reconciliation solution that can support this will drastically improve efficiency. More reconciliations can be onboarded as the data challenge is eliminated and the pace of becoming operational is improved through the automation of sub-optimal processes.
Duarte Pedreira, head of international development organisations & trade finance, Crown Agents Bank
Sibos session: Helping the helpers: Overcoming friction in humanitarian aid payment flows
“What measures can be implemented to reduce friction and inefficiencies in humanitarian aid payment channels”
Although the development and financial sectors have historically shared close ties, events over the last couple of decades affecting financial regulations have contributed towards the creation of a gap between the sectors. This has had a serious onward impact, making it harder for the financial sector to support organisations delivering much-needed assistance to afflicted people around the world.
Increased compliance, anti-money laundering, anti-financial crime and anti-terrorist financing measures introduced by regulators and welcomed by the financial sector have been effective in stopping perpetrators from using the financial system for their activities. However, they have also had a negative knock-on effect by slowing down (and, at times, completely halting) financial flows originating from the development sector.
The solution to overcome the additional regulatory requirements doesn’t require complexity. Through sheer increased collaboration and dialogue, the financial and development sectors can and should eliminate these growing barriers. By extensively sharing information, pre-empting payment issues through pre-vetting and assessment, and proactively working towards a mutual understanding of risk appetite, needs and constraints, financial service providers and development organisations can overcome friction and inefficiencies in humanitarian payment channels.
Emma Johnson, executive director, custody industry development, J.P. Morgan
Sibos session: ISO 20022 and securities markets: To be or not to be
How will ISO 20022 impact securities markets, and what hurdles lie ahead for its widespread adoption?
ISO20022 for securities markets is a significant and complex proposition. I see three key hurdles. The first is scale – the majority of SWIFT activity is securities messaging. There are over 60 securities message types supporting activity in over 70 CSDs. There are multiple actors and processes connected through messaging in the trade lifecycle, meaning there is more to change by multiple parties, from the FMIs through to the issuers and investors.
The next is the business case; ISO15022 is, in the main, highly efficient. The majority of volume relates to settlement which benefits from high STP. When looking for a business case, firms look for client demand, process improvement and automation, new business or mandatory change. If something is already highly efficient and there is a lack of client demand, then where is the business case?
That being said, there are opportunities. ISO20022 provides a clear benefit for shareholder identification and general meeting messaging, which are substandard today in ISO15022. Europe has led the way in adapting through regulation which paves the way for other markets to replicate and adopt. The third hurdle and perhaps the biggest hurdle of all – it is a global topic which will challenge the path to adoption.
Alex Dockx, head of industry development for custody, securities services, J.P. Morgan
Sibos session: Can securities market infrastructures march in step to ISO 20022?
Considering the diverse nature of securities infrastructures globally, what strategies do you suggest to foster unified adoption of ISO 20022?
The diverse nature of securities infrastructures and different levels of market maturity, efficiency and standards all render unified adoption of ISO 20022 complex. While the adoption of ISO 20022 by securities infrastructures can act as a catalyst to encourage adoption throughout the custody chain, intermediaries and their clients will still need a proper business case to justify the expense of system changes.
The European Economic Area is leading the way in the use of ISO20022 at the market infrastructure level. This is helped by common infrastructure in the form of T2 and T2S, the ECB harmonisation agenda and regulations prescribing ISO20022, such as SRDII. Other regions can benefit from the experience gained in the EEA.
It is nevertheless unrealistic to assume that all markets can adopt ISO 20022 in unison. A big bang approach migrating all securities message types in every securities market would create a lot of risks. A more successful strategy may be to identify data and processing gaps. Leveraging ISO20022 to improve investor and issuer connectivity feels more appropriate, achievable and globally relevant than focusing on settlement which is already highly STP.
Still, in the asset servicing domain, European CSDs have recently committed to discontinuing ISO15022 for Corporate Actions and Market Claims by 2030, which can encourage other markets to adopt a similar strategy. However, for every messaging type, a business case is required to convince participants to change systems and justify the spending. Any rollout also needs to be done in a gradual and transparent process.
>Marion Leslie, head of financial information, SIX
Sibos session: Making the most of post-trade data: Cloud, AI and real-time analytics.
Considering the slow adoption of AI in post-trade processes, how can asset managers effectively unify fragmented data systems to harness AI’s full potential in the industry?
Before asset managers can even start to think about deploying AI tools to identify alpha or predict and avoid potential costs in post-trade processes, a fundamental data challenge remains: How can financial institutions successfully deploy AI when the data is stored across multiple systems and in different formats?
AI requires a coherent data strategy: identify the data, make it accessible, and understand provenance, ownership, governance and entitlements. Asset managers should engage the whole organisation, building cross-functional teams to understand both risks and opportunities – everyone from the board to administration should be aware and fully engaged to identify and leverage the full value whilst effectively managing challenges around privacy, regulation and transparency.
Only once data is accessible can AI get to work, driving better decision-making, predicting activity and performance of post-trade functions, and creating fruitful connections between structured and unstructured data assets. For example, in settlement fails, counterparties’ historical settlement performance can be analysed, and AI can be used to not only predict the likelihood of future fails but also the associated cost of associated buy-ins, should they come in under CSDR and opportunities for stock lending.
Gemma Laman, global head of FX sales solutions, HSBC
Sibos session: FX in focus: Risk, efficiency, and liquidity.
How can institutions ensure end-to-end FX transparency, manage emerging market currency risks and maintain profitability simultaneously?
The adoption of new, innovative technology is enabling institutions to achieve greater efficiencies and transparency within their portfolios as they are able to identify both operational and market risks more accurately.
The successful implementation of this technology, combined with the institutions’ ability to leverage the increased availability of quantitative data, is helping them to make more informed and dynamic decisions when it comes to risk mitigation, and this, ultimately, can contribute to a more resilient and profitable risk management approach.
Kalliopi Chioti, chief marketing & ESG officer, Temenos
Sibos session: The 2+2=5 effect: Joining forces to achieve more in ESG.
“How do joint ESG initiatives in the banking industry create value beyond standalone approaches?”
Banks are uniquely positioned to influence the transition to a low-carbon economy by reducing the impact of their own operations and the emissions they finance. A new Economist Impact survey of 300 global banking executives, commissioned by Temenos, finds three-quarters of banks will be offering more ESG and sustainable banking propositions in the next five years. They are also keen on providing capital to environmentally friendly projects (74%) and taking capital away from carbon-intensive industries (64%).
Collective action extends the impact of banks’ ESG efforts beyond individual institutions. By tackling global challenges together, joint initiatives enable banks to have a more profound, positive impact on society and the environment.
Many technology providers serving the banking sector have integrated ESG into their operations and product lines. These efforts aim to equip banks with the necessary tools to transition to a low-carbon economy and achieve their ESG goals. Collaborations with large-scale tech entities and integration with fintech solutions are vital in advancing these initiatives.
Cloud-based banking solutions can significantly reduce energy consumption, with potential decreases in greenhouse gas emissions compared to traditional on-premise deployments. ESG Investing tools in the market help banks meet reporting standards and offer ways for customers to select investments that align with their values. Continual advancements are made in the software industry to enhance code efficiency, reducing its environmental footprint.
Through joint efforts, there is potential to transform banks into more intelligent, inclusive and sustainable organisations.
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