SWIFT has piloted a new capability that significantly increases transparency in post-trade processing and helps prevent costly settlement fails.

The new service, SWIFT Securities View, will be available for broad adoption in 2023.

The lack of visibility after a securities transaction takes place means that there is no way of tracking all the steps in its lifecycle across multiple intermediaries, increasing the risk that a security may not be in the right place at the time of completion.

This leads to settlement fails that add operational costs amounting to about US$3 billion a year for the industry as well as regulatory penalties such as those introduced by the Central Securities Depository Regulation (CSDR) in Europe earlier this year.

SWIFT says the service gives market participants a clear view of all the steps in the settlement journey and enables them to identify trades at risk of failing, including early detection of any discrepancies between buy-sell instructions, so they can take pre-emptive action.

It leverages an ISO-standard Unique Transaction Identifier that links messages related to the same securities flow, enabling automated tracking of both sides of the transaction by all market participants involved, similar to the tracking of a package via a postal delivery service.

As part of its strategy to enable instant, frictionless and interoperable transactions globally, SWIFT says it is encouraging universal adoption of the transaction identifier to achieve standardized data use across the post trade lifecycle. This will bring increased transparency to securities transactions, help reduce risk, and support innovative new services.

The pilot included major market participants such as ABN Amro Clearing Bank, BlackRock, BNP Paribas, BNY Mellon, Citi (Securities Services and Global Markets), Credit Suisse, Euroclear, Euronext, HSBC, J.P. Morgan, Northern Trust, Optiver, Pershing, and SEB.

Vikesh Patel, head of securities strategy at SWIFT, comments: “SWIFT Securities View does more than just empower our customers to identify and rectify discrepancies in settlement transactions; it sets the blueprint and foundation for a new industry standard to radically transform the industry, just as SWIFT gpi continues to do for cross-border payments.

“Our early pilot results show this potential and further strengthen our mission of making transactions instant and frictionless, across all industries.”