The SWIFT discussion paper assesses market readiness for the 2011 deadline and asks for industry feedback. The key question is how far the industry has progressed in adopting the Giovannini protocol and breaking down Barrier I.
The so-called Giovannini Protocol was designed to standardise communication within the European clearing and settlement landscape, and was produced by SWIFT in conjunction with the Securities Market Practice Group (SMPG) – along with a clear recommendation for mandatory implementation by all cross-border clearing and settlement players (financial institutions and market infrastructures) in the EU by a deadline of March 2011.
The Protocol made two sets of recommendations: those to be implemented by SWIFT as the international standards body, and those to be implemented by EU market participants - both institutions and market infrastructures.
The financial market landscape in 2009 within the EU and indeed globally is very different from the landscape of 2001. With the financial crisis and even before the crisis, the pace of change in the markets, driven by technology advances and the constant development of new business strategies - is rapid, creating many potential distractions from the issue of harmonising clearing and settlement.
A remarkable aspect of the Giovannini Protocol, as Andrew Douglas head of industry initiatives from SWIFT said “is that it remains as relevant today as when it was published. It is clear that although some market infrastructures are lagging behind with the adoption of the Giovannini Protocol, their customers - the financial institutions - do want to be able to use it, and believe it holds the key to improved clearing and settlement efficiency in Europe”.
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