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ISO 20022 : A migration strategy in securities markets for corporate events and triparty collateral management
Journal of Securities Operations & Custody,
16
(3),
214-226
(2024)
Abstract
Anyone involved in processing corporate events and triparty collateral management needs automation and efficiency. A general transition to ISO 20022, the latest messaging standard available, will support further automation across Europe. Its rigorous structure and richer content — compared with the legacy standard ISO 15022 — enables efficient use of collateral across European financial markets and a harmonised process for asset servicing. The Eurosystem and the financial community have developed a Single Collateral Management Rulebook for Europe (SCoRE) setting out how to use ISO 20022. The adoption of this rulebook starts in November 2024 and use of the ISO 20022 format will then become increasingly common. The main issue is how long the legacy standard and local formats should run alongside ISO 20022. Market actors have not yet agreed on how long the transition should last because of a collective coordination problem. The result is a situation where everyone is worse off. To overcome this, a market-wide migration strategy is needed based on cooperation and incentives to define the point from which only ISO 20022 will be used. The Eurosystem is acting as catalyst for a common migration strategy to ISO 20022 because of the benefits it will bring to society.
Keywords: Eurosystem; collateral management; harmonisation; ISO 20022; co-existence; corporate actions; triparty collateral management
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Author's Biography
Holger Neuhaus is Head of the European Central Bank’s (ECB’s) Market Innovation and Integration Division in the Directorate General Market Infrastructure and Payments. His division develops the ECB/Eurosystem’s approach in relation to innovation and integration in the field of payments and post-trade services. Until November 2019 he headed the Money Market and Liquidity Division which provides market analysis of euro area money markets and ensures the execution of monetary policy through the Eurosystem’s open market operations and liquidity management. It also had a lead role in developing and transitioning to a new reference interest rate for the money market. He previously worked as Counsellor to the ECB’s Executive Board, was seconded to the Federal Reserve Bank of New York as Senior Policy Advisor. Moreover, he was employed by the Deutsche Bundesbank and a portfolio management company. Holger Neuhaus studied economics at the Universities of Essen and Toronto.
Benjamin Hanssens is Principal Market Infrastructure Expert in the European Central Bank’s (ECB’s) Market Innovation & Integration Division of the Directorate General Market Infrastructure and Payments. He develops the Eurosystem’s policy approach in relation to innovation and integration in the field of post-trade services, securities processing and collateral management. In this context, he contributes to the Eurosystem policy groups and participates in the Eurosystem’s market contact group, the Advisory Group on Market Infrastructures for Securities and Collateral (AMISeCo). He is member of the AMI-SeCo Task Force on the ISO 20022 migration strategy and acts as secretary to the AMI-SeCo Collateral Management Group. Previously, he was expert in the payment policy Division and overseer of different types of financial market infrastructures and entities. Benjamin was also a member of the secretariat of the Committee on Payments and Market Infrastructures (CPMI), contributing to international standard setting and recommendations about the safety and efficiency of payment, clearing and settlement arrangements. He studied economics at the Universities of Brussels and Berlin.
