International Organization for Standardization (ISO) 20022 was first introduced in 2004 and is an open standard for payment(financial) messaging exchanged electronically between financial institution(FI). It was developed and is maintained by ISO/TEC68 responsible for standardization in the field of banking , securities and other financial services.
ISO 20022 uses XML and ASN.1 schemas to exchange financial messages. ISO standard doesn’t depend on specific messages syntax or any technicalities of how data is exchanged but focuses on the content of the dictionary. The dictionary helps to translate different type of system message syntaxes into a meaningful and easily recognizable business components. Thus, It provides interoperability between different payment systems or syntaxes. .
There is a Global ISO 20022 program underway to assist all banks to adopt ISO 20022 for all payments and reporting exchanges by 2025.
High-Value Payments Systems (HVPS) worldwide have already migrated to ISO 20022 to capture these benefits, including those in Japan, Switzerland, and China. Other countries are on track to adopt the new common standard in the coming years. SWIFT is also in the process of adopting ISO 20022 and migrate its MT standard to new MX standard (known as ISO 20022) by November 2022.
SOME WIDELY USED EXISTING FINANCIAL AND REPORTING STANDARDS:
| ISO 15022 | Currently the predominant securities standard in cross-border settlement, reconciliation and corporate action processing. It was introduced around 1998 to replace ISO 7775, which was much less structured and often omitted crucial settlement information. The adoption of ISO 15022, mandated in 2003, has led to a dramatic increase in Straight Through Processing (STP) rates. In settlement messages, for example, it is common to come across STP rates of more than 95 per cent. One of the standard’s advantages is its data dictionary based approach, which enables reuse and standardization of data across all messages. About half of the 20 million messages that are exchanged on the SWIFT net- work every day are ISO 15022. |
| ISO 8583 | It is used for almost all credit and debit card transactions, including ATMs. Several hundred million ISO 8583 messages are exchanged daily between issuing and acquiring banks. |
| FIX | FIX is the predominant standard of the securities front office. Millions of indications of interest, trade instructions, executions and so on are sent each day using the FIX protocol. |
| FpML | FpML stands for Financial products Markup Language. It uses the XML syntax and was specifically developed to describe the often com- plicated contracts that form the base of financial derivative products. It is widely used between broker-dealers and other securities industry players to exchange information on Swaps, CDOs, and so on. |
| SWIFT proprietary | SWIFT proprietary, also known as MT messages, are the standard for messaging in correspondent banking, foreign exchange and documentary credits. Over 10,000 financial institutions around the world use this standard to exchange millions of messages per day over the SWIFT network. |
| Proprietary domestic standards | Proprietary domestic standards are also widely used. DTCC is an example of a market infrastructure using proprietary standards. Each day some 40 million messages are exchanged with DTCC to clear and settle US domestic securities trades. |
| XBRL | XBRL is a flexible XML based standard for exchanging business information, which specializes in providing easy automation for information found in unstructured documents. |
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