Read This If You’re Thinking About Joining SWIFT

SEPA-for-Corporates

6 years ago

While there are many ways for corporates to connect with their banks, if you want a single, secure, reliable and global multi-bank solution – then SWIFT is your answer. Before you get too excited you should understand their are some upfront considerations that you must take note of before joining SWIFT. This post will cover some of the admin and hoops that you must jump through in order to join SWIFT.

1. Who can join SWIFT?

Banks
Payment, securities and treasury market infrastructures
Broker/dealers
Custodians
Investment managers
Fund participants
Corporates
Exchanges
Matching utilities
Clearing houses

Read here for further information about who can join SWIFT.

2. SWIFT User Categories:

Joining SWIFT requires your organisation to register itself as an authorised SWIFT user under one of the following categories. Read here to understand the different eligibility criteria for each user category – but i have indicated a quick (but incomplete) overview below of the categories that are most relevant to corporates:

Supervised Financial Institution (SUPE)
- An entity that is involved in payment, securities, banking, financial, insurance, or investment services and either licensed, authorised, registered or supervised by a Financial Market Regulator
Non-Supervised Financial Entity active in the Financial Industry (NOSU)
- An entity that is involved in payment, securities, banking, financial, insurance, or investment services
- Is not supervised by a Financial Market Regulator
- Is an entity that is:
  - Incorporated
  - In good financial standing
  - Subject to regular audits
- An entity:
  - Majority owned by a Supervised Financial Institution.. or…
  - Recommended by 3 independent Supervised Financial Institutions
Closed User Group and Corporate entities
- For each Closed User Group an administrator is responsible for the rules, services and admission criteria to each of the following user categories:
  - Corporate (SCORE – Standardised Corporate Environment)
    - Corporate must be:
      - Listed on the stock exchange of a Financial Action Task Force (FATF) country
      - Majority owned by an entity that is listed on the stock exchange of a Financial Action Task Force (FATF) country and be
        
        Incorporated
        
        In good financial standing
        
        Subject to regular audits
      - Recommended by a SCORE financial institution located in a FATF country
  - Financial Market Regulator (REGU)
  - Payment System Participant (PSPA)
  - Securities Market Data Provider (SMDP)
  - Securities Market Infrastructure System Participant (SSPA)
  - Service Participant within Member-Administered Closed User Group (MCCO) (MCFI)
  - Treasury Counterparty (TRCO)

Read here for further information about SWIFT User Categories.

3. Which SWIFT Messages can the various SWIFT User Categories Send?

Supervised Financial Institutions
- Are able to send/receive ALL message types
Non-Supervised Financial Entity active in the Financial Industry
- Is able to send all message types to Supervised Financial Institutions
- Is not able to send/receive payment messages to/from other Non-Supervised Financial Entities
Closed User Groups
- Message types that can be sent/received are defined by the administrator of the Closed User Group

4. What is the Admission Process for Joining SWIFT

The procedure for joining SWIFT is a lot more detailed than what i describe below, but to give you an idea… Note the applicant or organisation must register itself as a SWIFT User which:

Must meet the criteria indicated within the SWIFT user categories (see above) and comply with the following conditions
Be located in a country/nation that is recognised by the international community
Must follow the onboarding tool procedures found at SWIFT.com
Provide evidence of compliance to the eligibility criteria
SWIFT may follow up with local authorities, regulators, etc for additional information regarding your application
SWIFT may inform authorities if it believes your application is fraudulent
Must sign a SWIFT Undertaking stating that you will follow SWIFT rules
Once approved SWIFT will notify the applicant and the representative of the National Member Group of the new SWIFT user
The SWIFT User must subscribe to SWIFT services and products within 3 months
SWIFT will inform the National Member Group and the Board of Directors of new SWIFT members
The National Member Group may validate with the SWIFT user their eligibility criteria
Once admitted the SWIFT Users can join National Groups for awareness of SWIFT news
SWIFT Users must inform SWIFT of any changes in its legal status / eligibility criteria
If SWIFT rejects any application, the applicant will be notified

5. Which SWIFT Messages can Corporates under SCORE User Category Send?

Corporates under SCORE can send the following SWIFT message types (Ref: MT Message Allowed in SCORE):

Category 1 – Customer Payments & Cheques

Corporate to Financial Institution
- MT 101 Request for transfer
- MT 104 Direct debit and request for direct debit
- MT 192 Request for cancellation
- MT 195 Queries
- MT 196 Answers
- MT 199 Free format message
Financial Institutions to Corporate
- MT 195 Queries
- MT 196 Answers
- MT 199 Free format message

Category 2 – Financial Institution Transfers

Corporate to Financial Institution
- MT 210 Notice to receive

Category 3 – Foreign Exchange, Money Markets & Derivatives

Corporate to Financial Institution & Financial Institution to Corporate
- MT 300 Foreign exchange confirmation
- MT 303 Forex/Currency option allocation instruction
- MT 304 Advice/Instruction of a third party deal
- MT 305 Foreign currency option confirmation
- MT 306 Foreign currency option confirmation
- MT 320 Fixed loan/deposit confirmation
- MT 330 Call/Notice Loan/Deposit confirmation
- MT 340 Forward rate agreement confirmation
- MT 341 Forward rate agreement settlement confirmation
- MT 350 Advice of loan/Deposit interest payment
- MT 360 Single currency interest rate derivative confirmation
- MT 361 Cross currency interest rate swap confirmation
- MT 362 Interest rate reset/Advice of payment
- MT 364 Single currency interest rate derivative termination/Recouponing confirmation
- MT 365 Cross currency interest rate swap termination/Recouponing confirmation
- MT 370 Netting Position Advice
- MT 390 Advice of charges, interest and other adjustments
- MT 391 Request for payment of charges, interest and other Expenses
- MT 392 Request for cancellation
- MT 395 Queries
- MT 395 Queries
- MT 396 Answers
- MT 399 Free format message
Financial Institution to Corporate only
- MT 321 Instruction to Settle a Third Party Loan/Deposit

Category 5 – Securities Markets

Corporate to Financial Institution
- MT 502 Order to buy or sell
- MT 509 Trade status message
- MT 517 Trade confirmation affirmation
- MT 527 Triparty Collateral Instruction
- MT 540 Receive free
- MT 541 Receive against payment
- MT 542 Deliver free
- MT 543 Deliver against payment
- MT 549 Request for statement/Status advice
- MT 565 Corporate action instruction
- MT 568 Corporate action narrative
Financial Institution to Corporate
- MT 509 Trade status message
- MT 513 Client advice of execution
- MT 515 Client confirmation of purchase or sale
- MT 535 Statement of holdings
- MT 536 Statement of transactions
- MT 537 Statement of pending transactions
- MT 538 Statement on intra-position advices
- MT 544 Receive free confirmation
- MT 545 Receive against payment confirmation
- MT 546 Deliver free confirmation
- MT 547 Deliver against payment confirmation
- MT 548 Settlement status and processing advice
- MT 558 Triparty collateral status and processing advice
- MT 564 Corporate action notification
- MT 566 Corporate action confirmation
- MT 567 Corporate action status and processing advice
- MT 568 Corporate action narrative
- MT 569 Triparty collateral and exposure statement
- MT 578 Settlement allegement
- MT 586 Statement of settlement allegements

Category 6 – Commodities, Syndications & Reference Data

Corporate to Financial Institution & Financial Institution to Corporate
- MT 600 Metal trade confirmation
- MT 601 Metal option confirmation

Category 7 – Documentary Credits & Guarantees

Corporate to Financial Institution & Financial Institution to Corporate
- MT 798 Trade envelope

Category 9 – Cash Management & Customer Status

Corporate to Financial Institution
- MT 920 Request message
- MT 995 Queries
- MT 999 Free format message
Financial Institution to Corporate
- MT 900 Confirmation of debit
- MT 910 Confirmation of credit
- MT 940(1) Customer statement message
- MT 941 Balance report
- MT 942(1) Interim transaction report
- MT 950 Statement message
- MT 996 Answers
- MT 999 Free format message

References:

SWIFT – Corporate Rules