Investment Operations

SWIFT Pushes for Greater Automation in FX to Enable STP

SWIFT is leading industry efforts to increase automation levels in the global FX market through better standards to help remove barriers that hinder the exchange of information and to enable straight-through processing.

SWIFT says the global FX market, which trades in 180 currencies and in large volumes, cannot operate without high levels of automation, but obstacles remain that prevent it operating in the most efficient manner. With millions of confirmation messages exchanged every trading day between counterparties, discrepancies can lead to thousands of potential settlement failures.

As the global leader in financial messaging, SWIFT is calling on the industry to collaborate further to identify bottlenecks, inefficiencies and manual processes that can be eradicated through a common approach and higher levels of automation. A new report published this week, “The value of standards in the FX markets”, urges the FX industry to seize the opportunities presented by greater harmonization through standards.

Working with the FX industry, SWIFT said it was determined to drive through improved standards to iron out the areas that still create unnecessary costs, delays and risk that hamper the market. To meet the evolving demands of new instruments, products and regulatory requirements, analysts say SWIFT continuously adapts its messaging standards to ensure the most efficient operation of the FX market.

SWIFT believes its 2019 Standards Release will herald new changes to facilitate the automation of the matching process that enables an FX trade to be confirmed, saving counterparties time and money repairing data.

Further standards evolution will be required to keep pace with the commercial, operational and regulatory changes affecting the global FX market to ensure continued efficient operation. “While there is a high level of automation in FX markets already, the industry cannot be complacent and must work together to remove the remaining barriers to efficient exchange,” said Juliette Kennel, Head of Securities and FX Markets, SWIFT. “Increased levels of automation through more use of and better use of standards will unlock higher operational, commercial and financial performance for all participants in the global FX market.”

Although SWIFT is adapting standards used in FX, in conjunction with industry, to lower the cost of doing business, increase returns on investment and reduce the levels of risk involved, there is more to do, according to Kennel. “Industry must collaborate further to enhance standards by identifying the operational bottlenecks and barriers to great efficiency for all,” she said.