Chapter 6: The Role of Technology in the Settlement and Post-Settlement Phases Flashcards
What kind of transactions require second level approvals?
FoP
What are the 3 ways that settlement instructions can be transmitted?
1) SWIFT Messages
2) Proprietary Messages (CREST, Easyway)
3) Email, fax, tele
How do some custodian send out trade statuses?
In a SWIFT message at the end of each day
What is the cash tolerance for trade matching in Euroclear?
25 USD
What is the issue with having one Instruction Reference Number to one Trade Reference Number?
Many transactions often involve multiple instructions per trade, for example a stock loan trade will have open leg, cash leg, and a close leg
What is best practice for the relationship between instruction and trade reference numbers
Many-to-many
What is the SWIFTNet PKI?
Digital certificate security layer
What is the store-and-forward principle?
Messages are sent to intermediate station to be sent at a later time to destination
Why use store and forward?
Time Zone
Public Holiday
Recipient system down
Traffic limitations
How can a business decide what is to be done with a SWIFT message?
Using business rules at the gateway
What is needed in a SWIFT gateway for exceptions?
Repair queue
What ISO standard is used by most MT, and what is the exception?
ISO 7775, MT500 - ISO15022
What is MT200?
Financial Institution Transfer
MT300?
Forex/MM/Deriv
MT600?
Metals
MT900?
Statement message, recs
MT100?
Customer Payments and Cheques
What is XML?
Extensible Markup Language
Create information formats and share format and data online
What is SWIFT 20022?
Newest version of SWIFT that uses XML
How can banks and corporate customers communicate?
SCORE - Standardised Corporate Environment
Must be listed on stock exchange in the FATF
MA-CUG - SWIFT messages managed by financial institution
What is SWIFTNet File Act?
File sending service, have to request and acknowledge
What is SWIFTNet InterAct?
Communication based on request and response messages between parties
What is the FIX Protocol?
Open message standard developed by banks
Can be used for pretty much all communication
What is FpML
OTC derivatives communication, managed by ISDA
no network
What is the difference between an active and a passive breach in post-trade compliance?
A trade is made in the wrong investment -active
market moves causing overexposure - passive
