What is S.W.I.F.T.?

The acronym stands for Society for Worldwide Interbank Financial Telecommunications. S.W.I.F.T. is
a co-operative society. According to Article 3 of its Articles of Association.

"The object of the Company is for the collective benefit of the Members of the Company, the study,
creation, utilisation and operation of the means necessary for the telecommunication, transmission
and routing of private, confidential and proprietary financial messages"

The Society's headquarters are situated in La Hulpe, on the outskirts of Brussels. S.W.I.F.T. also acts
as a United Nations sanctioned International Standards Body (ISO) for the creation and maintenance
of financial messaging standards.

S.W.I.F.T. was formed when seven Major International Banks met in 1974 to discuss the limitations of
Telex as a means of secure delivery of payment and confirmation information, primarily in the
Treasury and Correspondent banking areas. Telex suffered from a number of limitations due to its
speed (50 Baud or approximately 8 bytes per second), its free format (that made automation at the
receiving end almost impossible), and the lack of security, with Testkeys only being calculated on a
subset of the message content.

The decision was taken at that time to form the society and three years later in 1977, 230 banks in 5
countries went live. New countries and users were and indeed still are, added 4 times a year with
recent figures showing over 184 countries and 6700 institutions connected.

Over the years message type coverage has been greatly expanded to cover a much greater range of
financial transactions, and new message types are added to the system once a year between
September and November. The original network was superseded by an X.25 based network in 1990
to cope with the increasing message volumes which now stand at around 3,000,000 per day.
Uniquely, S.W.I.F.T. take full liability for each message once they have accepted it, and it is probably
this linked to the inbuilt security and robustness of the network (consistently better than 99.99% up
time every year) that has led to S.W.I.F.T.'s dominant position in the market.

Who uses S.W.I.F.T.?

Although originally the network was designed to support the requirements of Treasury and
Correspondent banking operations, it has over the years allowed other institutions access to the
services, albeit in some cases only to a limited degree. Currently the following categories of
organisation can access the service:

 Banks
 Trading Institutions
 Money Brokers
 Securities Broker Dealers
  Investment Management Institutions
 Clearing Systems and Central Depositories
 Recognised Exchanges
 Trust and Fiduciary Service Companies
 Subsidiary Providers of Custody and Nominees
 Treasury Counterparties
 Treasury ETC Service Providers

The Society is owned by its Members, and in order to become one the organisation must hold a
Banking Licence. In return Members own shares in the society and have voting rights. There are a
further two classes of user. Sub - members must be >90% owned by member and are typically
branches. Whilst they have full access to the system they do not have voting rights or shares.
Participants are usually other types of financial institution, and they have access to a limited set of
messages and no ownership.

All classes of member pay an initial joining fee and an annual support charge, although the amounts
differ for each class.

In addition users are charged on a per message basis by Unit lengths of 325 or 1950 characters
dependant on message type. The charges also vary depending on Volume tier and Route with the
amounts reducing for high volume users and those messages passing along the most common routes
such as U.K. to U.S.A..

The pricing is calculated to cover all of S.W.I.F.T.'s costs and investments with users then receiving
regular rebates after these are finalised.

S.W.I.F.T. services

S.W.I.F.T. operates a number of services, primarily:

GPA General Purpose Application, which only allows system messages, i.e.. messages
from a user to S.W.I.F.T. and vice versa, not from one user to another
FIN Financial Application, which is the user to user service comprising, System Messages
MT0nn, User to User Messages MT1nn through 9nn and Service Messages such as
Acknowledgements

Additionally, S.W.I.F.T. provide a number of services that are charged for over and above the normal
fees. In summary these are:
IFT (Interbank File For bulk file transfer of messages, for example low net value, high volume
Transfer) Retail payments
ACCORD A centralised confirmation matching bureau service
Directory Services An automated and centralised Standard Settlement Instruction service for
message enrichment that at present is limited to Treasury and Payment
information
RTGS (Y-copy) Mostly used for sending a copy of a message or parts thereof to a third
party, for example a Central Bank
Country Specific (e.g. Where S.W.I.F.T.are either the carrier of the messages or the supplier of
CREST, CHAPSEuro) additional network services

How does S.W.I.F.T. work?

The S.W.I.F.T. network has an architecture that supports the requirements for a fully redundant 24 x 7
secure operation that is also highly scalable.

There are a number of components to this X.25 protocol based packet switched network.

The System Control Processors are responsible for the operation of the entire system. This includes:

 Session Management
 Software and database distribution
 Monitoring all S.W.I.F.T. hardware and software
 Failure diagnostics and recovery
 Dynamic allocation of system resources.

These are located at Operating Centres, 2 in the US centre and 2 at the centre in the Netherlands.

The Slice Processors are responsible for:

 routing and safe storage of messages & history

 safestore Acknowledgements to Regional Processors
 generation of reports
 delivery and non delivery messages
 processing retrievals and system messages
 archiving, billing and statistics.
All messages are safestored on two media. The SP's are located in the operating centres.

The Regional Processors are the entry and exit point to S.W.I.F.T. and they support Leased line, Dial
up or Public Data Network connection. The most common method is primary leased line with dial-up
backup. They are usually in same country as the user and provide sequence number checking and
message validation, temporary safestorage, generation of Positive and Negative Acknowledgements
and verification of checksums

A Computer Based Terminal (CBT) that is also referred to as a S.W.I.F.T. interface is then located at
each user site. These terminals support the connectivity to the local regional processor and facilitate
both manual entry of messages and the bridge to originating applications. Some more detail on the
latter facility will be covered later. There are many vendors of these interface devices although
S.W.I.F.T. themselves have by far the largest market share. The following is a list of some of the more
common ones. A full list can be provided by S.W.I.F.T.:

Vendors CBT
S.W.I.F.T. Alliance Access (NT and Unix)
S.W.I.F.T. Alliance Entry (NT)
S.W.I.F.T. ST400 (VMS)
IBM Merva/ESA (Mainframe)
IBM(S.W.I.F.T.) Merva/2 (OS/2)
IBM(S.W.I.F.T.) Merva/AIX (AIX)
Logica Fastwire (Unix)
Logica Bess (Tandem)
Mint Mint
Netik TurboSWIFT (NT and Unix)

The diagram below shows the high level architecture.

As stated above, access to the network is via the CBT and Smart Card technology is used to access
secure functions. Many functions require dual user and password input.

Initially a User will LOGIN to the GPA service and receive a GPA Acknowledgement. The User then
SELECTS the application or service that they wish to use, for example FIN. The user can then send
FIN messages to other users and the Regional Processor will either send back a Positive (ACK) or
Negative (NAK) acknowlegement for each message after having safestored it.

The session then remains open for sending and receiving messages until the User QUITS. The Fin
service will acknowledge this before the User LOGOUT is selected. It is a requirement of S.W.I.F.T.
that the CBT is logged in to at least receive messages for at least 7 hours per business day. All of the
terms in upper case represent messages.

S.W.I.F.T. addresses

S.W.I.F.T. addresses are used to not only indicate the final destination of the message but to also
indicate parties within the individual message. It is the use of strictly codified addresses that enables
the automation of Straight Through Processing in conjunction with the fixed tag format of the
messages themselves. The term "S.W.I.F.T. address" actually only relates to a subset of Bank
Identifier Codes (BICs), in other words you do not have to be a user of the S.W.I.F.T. network to have
a BIC and these can therefore be used over other networks such as Telex. S.W.I.F.T. are, however,
the recognised ISO (International Standards Organisation) body for assigning these.

The following shows the general format of a BIC address.

AAAA BB CC (D) (EEE)

Bank Country Location LT Branch

The first four characters represent the Bank code, for example NWBK (NatWest), DEUT (Deutsche
Bank).

The next two characters represent the ISO Country code, for example GB (United Kingdom), DE
(Germany).

The next two characters are the location code with some larger financial centres such as London and
New York having two, 2L and 22, 33 and 3N respectively.

These characters, the first 8, represent the mandatory portions and commonly within the body of a
message this will be the normal format, for example NWBKGB2L (NatWest London), DEUTDEFF
(Deutsche Bank Frankfurt).

The presence of 0 (zero) in position 8 indicates that this is a test & training address. Test & Training is
a facility which S.W.I.F.T. gives its users to test new releases without interfering with live operations.
When an organisation first joins S.W.I.F.T. they must spend two months sending messages in test &
training before they are allowed to go live. S.W.I.F.T. monitor this!

Optionally a three character branch code can be added at the end of the address. For example
NWBKGB2LBIR might be the Birmingham branch. These codes are primarily used for internal routing
purposes within the bank, as the branches themselves do not have direct connection. Usage is often
more common in some countries than others such as the heavy use by Italian banks.

The Logical Terminal ID in position 9 will be present in the header of the message and identifies a
logical channel connection to S.W.I.F.T.. Some organisations may run more than 1 LT on the same
CBT and these will be referred to as A, B, C, etc. For example NWBKGB2LA. These are not
published in the BIC directory and so all addresses within a message identifying the sender or other
parties will not contain this character.

LTs will therefore always be padded out to 12 Characters by X's and S.W.I.F.T. addresses are
therefore either 8 or 11 characters.

The presence of a 1 in position 8 denotes that this is not a S.W.I.F.T. address but the organisation
has requested that an ISO identifier be allocated to them. For example NWBKGB21. Therefore, this
address can be included in the body of a message but you cannot send a message via S.W.I.F.T. to
them.

The presence of an X in position 8 denotes that the CBT which is processing traffic for this address is
not physically in the same country as the Country Code states.

S.W.I.F.T. FIN MT messages

S.W.I.F.T. messages are identified in a consistent manner. They all start with the literal "MT" which
denotes Message Type. This is then followed by a 3 digit number. The first digit represents the
Category. A category denotes messages grouped together because they all relate to particular
financial instruments or services. The full list is as follows:

MT0nn System Messages

MT1nn Customer Payments
MT2nn Financial Institution Transfers
MT3nn FX, Money Market & Derivatives
MT4nn Collections and cash letters
MT5nn Securities Markets
MT6nn Precious Metals & Syndications
MT7nn Documentary Credits & Guarantees
MT8nn Travellers Cheques
MT9nn Cash Management & Customer Status

The second digit represents the Group denoting that the messages are related to similar parts of a
transaction's lifecycle. For example:

MT200 Financial Institution Transfer, Own Account

MT202 Financial Institution Transfer, Third Party
MT521 Receive (Securities) Against Payment
MT523 Deliver (Securities) Against Payment

The last digit is the Type and denotes the individual message. There are several hundred message
types across the categories in total.

A special subset of Messages is known as the Common Group because the last two digits represent
the same message in each category. For example:
MTn99 Free format
MT299 Free format relating to transfers
MT599 Free format relating to securities
MT999 General free format

Other common group messages are:

MTn90 Advice of charges, interest, etc

MTn91 Request for Payment of Charges, etc
MTn92 Request for Cancellation
MTn93 Directory Services
MTn95 Query
MTn96 Answer
MTn98 Proprietary Message Envelope

Each message is assigned unique identifiers. A 4 digit session number is assigned each time the CBT
logs in. Each message is then assigned a 6 digit sequence number. These are then combined to form
an ISN (Input Sequence Number) from the CBT to S.W.I.F.T. or an OSN (Output Sequence Number)
from S.W.I.F.T. to the CBT. It is important to remember that terminology is always from the
perspective of S.W.I.F.T. and not the user.

The Logical Terminal Address (12 character BIC), Day, Session and Sequence numbers combine to
form the MIR Message Input Reference and MOR Message Output Reference respectively.

SWIFT MT message structure

We will concentrate on the structure of FIN messages as they are by far the most important for the
end user. They have the following general structure:

{1: Basic Header Block}

{2: Application Header Block}
{3: User Header Block}
{4: Text Block or body}
{5: Trailer Block}

Blocks 3, 4 and 5 may contain sub blocks or fields delimited by field tags.
Block 3 is optional. Many applications, however, populate this with a reference number so that when
the Acknowledgement is returned by S.W.I.F.T. it can be used for reconciliation purposes.
{1: Basic Header Block}

The Basic header block has the following format:

(a) (b) (c) (d) (e) (f)

Fixed Length, continuous with no field separators

a) Block ID - always '1:'

b) Application ID - F = FIN, A = GPA or L = GPA (logins, etc)

c) Service ID - 01 = FIN/GPA, 21 = ACK/NAK

d) LT address - 12 Characters, must not have 'X' in position 9

e) Session number - added by the CBT, padded with zeroes

f) Sequence number - added by the CBT, padded with zeroes

{2: Application Header Block}

The application header has a different format depending on whether it is being sent to or from
S.W.I.F.T..>/p>

The Input (to S.W.I.F.T.) structure is as follows:

(a) (b) (c) (d) (e) (f) (g)

Fixed Length, continuous with no field separators From user to S.W.I.F.T.

a) Block ID - always '2:'
b) I = Input

c) Message Type

d) Receivers address with X in position 9 and padded with X's if no branch

e) Message Priority - S = System, N = Normal, U = Urgent

f) Delivery Monitoring - 1 = Non Delivery Warning (MT010)

2 = Delivery Notification (MT011)
3 = Both Valid = U1 or U3, N2 or just N

g) Obsolescence Period - when a non delivery notification is generated

Valid for U = 003 (15 minutes)
Valid for N = 020 (100 minutes)

The Output (from S.W.I.F.T.) structure is as follows:

(a) (b) (c) (d) (e) (f) (g) (h)

Fixed Length, continuous with no field separators From S.W.I.F.T. to user

a) Block ID - always '2:'

b) O = Output

c) Message Type

d) Input time with respect to the Sender

e) MIR with Senders address

f) Output date with respect to Receiver

g) Message priority

{3: User Header Block}

This has the following structure:

{3: {113:xxxx} {108:abcdefgh12345678} }
(a) (b) ( c)

This is an optional block and is similar in structure to system messages.

a) Block ID - always '3:'

b) Optional banking priority code

c) Message User Reference MUR used by applications for reconciliation with

ACK

Other tags exist such as 119 which can contain the code ISITC on an MT521 or 523 providing the
sender and receiver are registered to do so with S.W.I.F.T.. This forces additional code word and
formatting rules validation of the body of the message as laid down by ISITC (Industry
Standardisation for Institutional Trade Communication).

{4: Text Block or body}

This block is where the actual MTnnn message is specified and is what most users will see. Generally
the other blocks are stripped off before presentation. The format is as follows:

{4:<CrLf>
:20:PAYREFTB54302<CrLf>
:32A:970103BEF1000000,<CrLf>
:50:CUSTOMER NAME<CrLf>
AND ADDRESS<CrLf>
:59:/123-456-789<CrLf>
BENEFICIARY NAME<CrLf>
AND ADDRESS<CrLf>
-}

The symbol <CrLf> is a control character and represents Carriage Return/Line Feed (0D0A in ASCII
hex, 0D25 in EBCDIC hex). It is a mandatory delimiter in block 4.

The example above is an MT100, Customer Transfer with only the mandatory fields completed. Fields
must be in the order as specified in the appropriate volume of the user handbook, there is one or
more for each message category. It is an example of the format of an ISO7775 message structure.
These are gradually being replaced by the newer data dictionary standard ISO15022 messages
discussed later.
The format of field tags is:

:nna:

nn - numbers

a - optional letter which may be present on selected tags

eg - :20: Transaction Reference Number

:58A: Beneficiary Bank

The length of a field is designated thus:

nn - maximum length
nn! - fixed length
nn-nn - minimum and maximum length
nn * nn - max number of lines times max
line length

The format of the data is designated thus:

n - Digits
d - Digits with decimal comma
h - Uppercase hexadecimal
a - Uppercase letters
c - Uppercase alphanumeric
e - Space
x - S.W.I.F.T. character set
y - Upper case level A ISO 9735 characters
z - S.W.I.F.T. extended character set

Some fields are defined as optional and if not required they must not be
present as no blank fields must be present in the message.
/,word - Characters as-is

[â?¦] - optional element

For example:
4!c[/30x] - fixed 4 uppercase alphanumeric, optionally followed by a
slash
and up to 30 S.W.I.F.T. characters

ISIN1!e12!c - code word followed by a space and fixed 12 uppercase

alphanumerics

In some message types certain fields will be defined as conditional, i.e. if a certain field is present
then another field may change from optional to mandatory or forbidden. Certain fields may contain
sub fields in which case there is no CrLf between them.

Certain fields have different formats dependant on the option which is chosen, which is designated by
a letter after the tag number, for example:

:32A:000718GBP1000000,00 Value Date, ISO Currency and Amount

:32B:GBP1000000,00 ISO Currency and Amount

It is important to note that the S.W.I.F.T. standards for Amount formats

are, no thousand separators and a comma for a decimal separator.
:58A:NWBKGB2L Beneficiary S.W.I.F.T. address
:58D:NatWest Bank Beneficiary full name and address Head Office
London

{5: Trailer Block}

A message always ends in a trailer with the following format:

It contains a number of fields that are denoted by keywords such as:

MAC: Message Authentication Code calculated based on the entire contents of the message using a
key that has been exchanged with the destination and a secret algorithm. Found on message
categories 1,2,4,5,7,8, Most 6's and the 304.

CHK: Checksum calculated for all message types

PDE: Possible Duplicate Emission added if user thinks that they may have sent the message
previously

PDM: Possible Duplicate Message added by S.W.I.F.T. if they think that a message may have been
transmitted previously.

DLM: Added by S.W.I.F.T. if an Urgent message has not been delivered within 15 minutes or a
Normal message within 100 minutes.

ISO 7775, 15022, 20022/UNIFI history and current SWIFT MT and MX standards

In the late 1990's S.W.I.F.T. realised that the original ISO7775 messages were too restrictive, did not
reflect the full complexity of modern trading instruments and were still too ambiguous to ensure that
full Straight Through Processing could be achieved.

Thus was born the ISO15022 standard based on a data dictionary approach. Initially (in 1997) these
were applied to the Securities message category as this represented the fastest growing usage of the
network. Old message types were replaced and many new ones introduced. Trade Initiation and
Confirmation messages were introduced in 1997 and Settlement and Reconciliation in 1998. There
was no standards release in 1999 due to Y2K distractions, and the old message types were removed
from the network in 2002.

It is still common for the original ISO7775 message types to be used for "off net" messaging outside of
the S.W.I.F.T. network. Typically older legacy applications may generate or consume these message
stuctures, and some firms private networks utilise specialised versions of these messages.

The major difference between ISO7775 and ISO15022 is in the structure of the tagged data in block 4
(note that all other blocks are unaffected). ISO15022 introduced the concept of Generic Fields. This is
aimed at uniquely identifying information. In the previous ISO7775 messages the same tag could
appear in a number of message types but with a different meaning. ISO15022 removes this ambiguity
by imposing the following structure.

Field Tag Field Format

:2n1a: :4a/8a/data
Where:
: Identifies the field as generic
4a Qualifier differentiates the business purpose of of the tag
/ Mandatory delimiter
8a Issuer code, when not S.W.I.F.T. defined these can contain market codes such as DTCY or
 CREST
/ Mandatory delimiter
data The contents of the field

For example:

Field Tag Qualifier Explanation

98a TRAD Trade date
Date/Time SETT Settlement date
generic field VALU Value date

The ISO15022 messages also introduced much more complexity with the concept of many iterating
repeating groups. These groups in turn can be nested and designated as mandatory, optional or
conditional. For example, :16R: Denotes start of a block or sequence, :16S: Denotes end of a block or
sequence, therefore 16R with contents SETPRTY denotes the start of the Settlement Parties
Sequence. 16S with SETPRTY denotes the end.

With the evolution of XML technology in the late 1990's work began on what was called ISO15022
2nd Edition (also known as SWIFTML or SWIFT XML). This evolved into ISO20022 using an
enhanced approach to standards based on business entity interaction behavioral models and XML
Schema based message data models for the transactional messages supporting these models. The
ISO20022 standard has further evolved to incorporate lessons from the first implementations of
ISO20022 Funds messages, FpML, FIX, ACCORD, MDDL and others providing examples of
successful best practice for ISO20022 to converge with. ISO has published a series of standards such
as ISO 15000 ebXML that overall ISO standards should become consistent with.

In 2004 a significant increase in scope was agreed for ISO20022, it was rebranded the "ISO20022 -
UNIversal Financial Industry (UNIFI) message scheme", and expanded from Securities and related
financial instruments to the broader scope of all Financial Services. Ownership of the standard itself
moved to ISO/TC68 (the Financial Service technical committee) from its SC4 (Securities and Related
Financial Instruments sub-committee). TC68 created WG4 (Working Group Four), to revise
ISO20022.

SWIFT then assumed the role of the Registration Authority (RA) for the ISO20022/UNIFI standards
with responsibility to ensure compliance of developed Repository items with the approved technical
specifications and to publish the Financial Repository on www.iso20022.org, on behalf of ISO.

SWIFT also introduced, or in the case of SWIFTNet Funds reintroduced, the "SWIFTNet Solutions"
products and standards covering specific business domains. The SWIFT implementations of the
ISO20022/UNIFI standards became known as the MX standards as compared to the older SWIFT
FIN standards being the MT standards. The SWIFT MX Standards are conceptually the same as the
ISO15022 standards, in that the respective ISO standard specifies the message payload and then
wraps this inside SWIFT specific header/footer envelope. For example the SWIFT FIN MT541 block 4
body part is the ISO15022 standard, while the complete MT541 with blocks 1,2,3 and 5 is...well...the
MT541. Similarly the SWIFT MX messages wrap the ISO20022/UNIFI payload or body inside the
SWIFTNet Solution Application header and the SWIFTAlliance envelope.

The further developments of the ISO20022/UNIFI standards, their technical convergence with other
standards, and the implementations in which they are used such as SWIFT MX, TWIST, the Single
European Payments Area (SEPA) are active areas of ongoing IONA development and participation
with the standardisers themselves. We remain very much involved in meeting the requirements of the
consumers of these standards.

The C24 technology is designed to bridge from the historical legacy standards, to the current, and the
next, all based on the same open model driven integration approach.

What are the integration issues?

Most users of S.W.I.F.T. have operations large enough in terms of transactional volumes that the
manual keying of data is not viable, even if the potential for human error is ignored. The main
challenge for organisations is therefore how best to automate the process. This broadly speaking
involves two main areas. Firstly how do you physically gain access to the transactional data that
underlies the message, in other words what is the transport going to be. Secondly, how best to format
the data.

The selection of transport will often be dictated by a number of variables.

 What the Interface Vendor supports

 Proprietary protocols and API's such as Alliance Developer Kit
 Standard protocols such as File transfer, FTP, IBM MQ Series
 Access to application source code
 Security
 Reliability
 Throughput
 Scalability
 Ability to support
 On going maintenance