Chapter 6: The Role of Technology in the Settlement and Post-Settlement Phases

Question 1

What kind of transactions require second level approvals?

Answer 1

FoP

Question 2

What are the 3 ways that settlement instructions can be transmitted?

Answer 2

1) SWIFT Messages
2) Proprietary Messages (CREST, Easyway)
3) Email, fax, tele

Question 3

How do some custodian send out trade statuses?

Answer 3

In a SWIFT message at the end of each day

Question 4

What is the cash tolerance for trade matching in Euroclear?

Answer 4

25 USD

Question 5

What is the issue with having one Instruction Reference Number to one Trade Reference Number?

Answer 5

Many transactions often involve multiple instructions per trade, for example a stock loan trade will have open leg, cash leg, and a close leg

Question 6

What is best practice for the relationship between instruction and trade reference numbers

Answer 6

Many-to-many

Question 7

What is the SWIFTNet PKI?

Answer 7

Digital certificate security layer

Question 8

What is the store-and-forward principle?

Answer 8

Messages are sent to intermediate station to be sent at a later time to destination

Question 9

Why use store and forward?

Answer 9

Time Zone
Public Holiday
Recipient system down
Traffic limitations

Question 10

How can a business decide what is to be done with a SWIFT message?

Answer 10

Using business rules at the gateway

Question 11

What is needed in a SWIFT gateway for exceptions?

Answer 11

Repair queue

Question 12

What ISO standard is used by most MT, and what is the exception?

Answer 12

ISO 7775, MT500 - ISO15022

Question 13

What is MT200?

Answer 13

Financial Institution Transfer

Question 14

MT300?

Answer 14

Forex/MM/Deriv

Question 15

MT600?

Answer 15

Metals

Question 16

MT900?

Answer 16

Statement message, recs

Question 17

MT100?

Answer 17

Customer Payments and Cheques

Question 18

What is XML?

Answer 18

Extensible Markup Language
Create information formats and share format and data online

Question 19

What is SWIFT 20022?

Answer 19

Newest version of SWIFT that uses XML

Question 20

How can banks and corporate customers communicate?

Answer 20

SCORE - Standardised Corporate Environment
Must be listed on stock exchange in the FATF
MA-CUG - SWIFT messages managed by financial institution

Question 21

What is SWIFTNet File Act?

Answer 21

File sending service, have to request and acknowledge

Question 22

What is SWIFTNet InterAct?

Answer 22

Communication based on request and response messages between parties

Question 23

What is the FIX Protocol?

Answer 23

Open message standard developed by banks
Can be used for pretty much all communication

Question 24

What is FpML

Answer 24

OTC derivatives communication, managed by ISDA
no network

Question 25

What is the difference between an active and a passive breach in post-trade compliance?

Answer 25

A trade is made in the wrong investment -active
market moves causing overexposure - passive