2 May 2011

Another technical document or a key building block?

Even if you are familiar with T2S you may wonder what the UDFS is. You might even think that it is just another T2S document, but – given its importance and size (more than 1,500 pages, in addition to approximately 10,000 pages of message descriptions) – it is more appropriate to call the UDFS a building block of the T2S specifications, and therefore of the T2S project.

This having been said, let us look at the essence of this major document and answer the question why you, or your staff, should read it.

It is more appropriate to call the UDFS a building block of the T2S specifications, and therefore of the T2S project.

The UDFS describes the T2S services and functionalities for stakeholders who need to design and build the interface between T2S and their own information system. More specifically, it comprises three main chapters.

• Chapter 1 is user-oriented and describes how T2S behaves from the point of view of the market participants. Without going into the detailed description of internal T2S processes, it will mainly give you a general understanding of T2S, and of the main principles behind the exchange of information between T2S and the T2S actors.
• Chapter 2 illustrates the dialogue that is triggered when a particular message is sent from T2S to a T2S actor, and vice versa, and it explains how T2S will behave when messages are sent and received.
• Chapter 3 is the chapter that has thus far received the least attention from the market. However, this chapter explains in detail the set of ISO messages that can be used to communicate with T2S (i.e. to run application-to-application communications with T2S). The chapter is thus extremely important as it details the entire set of messages that can be processed by the T2S system, and explains how each may be used in a particular context. This chapter provides, for each message, essential information on the scope, the schemas and the business context. Most of its components, in particular the schemas, have been discussed and elaborated in collaboration with the market, and we should all pay tribute to the T2S Advisory Group’s Sub-Group on Standard Messages (SGMS) – chaired by Paolo Carabelli – which has reviewed them all and accompanied their registration process.

Market consultation – your opinion is important for us

I would like to take this opportunity to strongly encourage you to take part in this consultation – your opinion matters to us.

On 22 March 2011, the T2S Programme Board approved the launching of a public market consultation on UDFS version 1.0 (Spotlight). The consultation runs until 27 May 2011. I would like to take this opportunity to strongly encourage you to take part in this consultation – your opinion matters to us. T2S will be the new European securities settlement engine as of 2014, and you will most likely have to interact with it. This means that you will have to communicate with the T2S platform, i.e. you will need to speak its language.

As mentioned above, Chapter 3 describes the messages that can be used to communicate with T2S. 104 messages, or 85% of the total set of messages, are defined and explained, see insight. This market consultation gives you an opportunity to assess whether these messages fulfil your business requirements. Are there any gaps that will hamper your efficient interaction with T2S and/or is the set of T2S services that you intend to use suitable?

Of course, a clear business strategy is needed before you can answer these questions. Finding the best approach to reshape is a key challenge, as I pointed out in my previous “Bayle’s view”. However, the right solution will maximise the benefits for all, lower the costs for securities settlement in Europe and pave the way for new business opportunities in the global financial market. Use this consultation to reflect upon your business strategy. The T2S vision is becoming reality and it is time for you to ensure that the post-trade environment of tomorrow fits your needs.

Use this consultation to reflect upon your business strategy. The T2S vision is becoming reality and it is time for you to ensure that the post-trade environment of tomorrow fits your needs.

The consultation will also allow you to reflect on how harmonisation will impact your business. Increased benefits of harmonisation and standardisation across financial services will be a reality with ISO 20022. The future infrastructure is being prepared.

 

What parts to review?

I would like to say that market participants have been involved in the preparation of the UDFS through dedicated workshops. We are thus confident that their views have been reflected.

However, as indicated by Stephanie Duverger in her article, previous reviewers have focused on Chapter 1, which was the subject of 70% of all comments received, while only 20% of the comments concerned Chapter 3 (excluding the message descriptions and schemas, which were scrutinised by the SGMS). I would like to stress that all parts of the UDFS are important and deserve the attention of the market.

National user groups (NUGs) will, as usual, certainly play a major coordination role and help facilitate a successful consultation process, allowing each market to get the most out of the services offered by T2S.

National user groups (NUGs) will, as usual, certainly play a major coordination role and help facilitate a successful consultation process, allowing each market to get the most out of the services offered by T2S. The NUGs played a key role in the drafting of the User Requirements Document (URD), and I would like to encourage them to do the same in this context.

The process from here

Following the market consultation, comments will be taken into account and a new version 1.2 of the UDFS will be released at the end of October 2011. Version 1.2 will include some additional technical messages not currently available. A new short consultation on these additional messages is therefore scheduled for September 2011. However, in the September consultation, all messages included in this version of the UDFS, i.e. the 104 messages therein, will be considered to be final. This is thus your last chance to ensure that the 104 message are formulated in a way that facilitates your implementation and adaptation to T2S.

The UDFS is not just a matter of technicalities for geeks. It is a major piece of work prepared primarily by the 4CB teams and is crucial for the success of the market’s adaptation to the T2S world.

Version 1.2 of the UDFS will be the stable basis that allows directly connected T2S users to design and build their information systems for communicating with T2S. User testing will follow in early 2014, before the final launch of the first wave of migration in September 2014.

Let me conclude: the UDFS is not just a matter of technicalities for geeks. It is a major piece of work prepared primarily by the 4CB teams and is crucial for the success of the market’s adaptation to the T2S world.