|SWIFT launches SSI initiatives to reduce settlement errors and increase automation|
February 28, 2011
SWIFT, the financial messaging provider for more than 9,500 financial institutions and corporations in 209 countries, rolled out a range of new initiatives designed to reduce costly settlement errors and improve the rates of automation of standing settlement instructions.
SSIs are agreements between two financial institutions that fix the receiving agents of each counterparty. They make for speedy payment and settlement, but SSIs are frequently changed, which results in settlement errors and payment rejections. Research jointly conducted by SWIFT and 12 of its customer banks suggests there are currently about 40 million such payment errors every year, costing an estimated $700 million.
In response, SWIFT launched a global SSI repository with multiple sources and sophisticated selection strategies to ensure that an institution’s SSIs are complete, accurate, and able to be replicated. An SSI directory for retail payments based on the repository will be updated and published on a monthly basis. At a later stage, SWIFT will also launch an SSI directory for treasury in the FX and money markets sectors.
A second initiative is the creation of a standard messaging format for distribution of cash SSI updates, available beginning in November. The message format will be structured, validated, and authenticated, and will allow senders to either specify a list of recipients for the notification, or to inform the broader SWIFT community.
Third, SWIFT now offers a diagnostics service that informs customers when counterparty SSIs held in their payment applications are incorrect and details corrective measures. The service, which was unveiled in October 2010, validates a customer’s current list of counterparty SSIs against multiple information sources to provide a reliable picture of their accuracy.
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