Institutions operating in global capital markets face the growing challenge of meeting the demands of customers for more efficient securities processing while contending with rising costs, increased regulatory burdens and heightened competition. A recent paper from SWIFT considers how numerous post-trade solutions have attempted to address these challenges in the past with limited success and outlines why SWIFT believes that a single, collaborative platform will revolutionize how capital markets firms service their customers and will drive efficiency across the industry as a whole.
The paper explains why the benefits of a single platform that functions at scale across markets are well-aligned with the needs of capital markets. Securities transactions will settle with greater visibility, new revenue generating opportunities will emerge, higher quality data will be made available, and the collaborative nature of the platform will spur innovation.
As part of its strategy, SWIFT is leveraging its unique position as a global cooperative to make such a platform a reality. The enhanced SWIFT platform will use APIs to provide a set of common processing services that institutions have typically invested in individually, saving the industry time and enabling smarter, securities transactions. This transformation is already in progress and SWIFT is particularly focused on delivering end-to-end transaction tracking for securities settlement transactions and, real-time transactional information to support inventory management and visibility on holdings while exploring the potential of tokenized assets.
Transactions in high volumes and at high values, which settle quickly and are often sent right before cut-off times, make the securities industry an attractive target for cyberattacks. There are multiple points of entry for attackers too, given the industry’s complex structure and long transaction chains.
Among the chief priorities of any platform is security of the data that it processes and stores. Specifically designed embedded and mandatory security controls should be implemented to safeguard the data security and privacy of the platform and its participants. Equally important is the possibility to screen transactions, specifically the asset identifier and issuer, against international sanctions lists, as well as client data to reduce the risk of non-compliance. Similarly, the platform should help automate and centralize know-your-customer (KYC) checks specific to the capital markets, and support anti-fraud protection.
David Watson, chief strategy officer at SWIFT, said in a statement: “Facing unprecedented disruption that has only been exacerbated by the pandemic, capital markets participants the world over require a collaborative, industry-wide solution to meet the evolving needs of customers…As part of our strategy, we will leverage the strength of our community and track record of responsible innovation to reduce industry costs and facilitate seamless securities transactions.”