Financial Markets Standards Board Consults on Transparency Draft Standard for Sharing of Standard Settlement Instructions

The Financial Markets Standards Board has commenced consulting on a transparency draft of a standard for sharing of standards settlement instructions. The standards settlement instructions specify the "where" of delivery/settlement after the execution of any financial transaction. The most significant cause of fails at the settlement stage, after lack of inventory, is incorrect or missing standards settlement instructions. The FSMB is proposing the standard to mitigate increased inefficiency risks as jurisdictions move to T+1 settlement. The standard aims to increase the adoption of electronic solutions that allow for standardization and pre-authentication of settlement instructions, and which facilitate "straight-through-processing" to improve efficiency of standards settlement instructions management by recipient counterparties and reduce settlement fails through incorrect standards settlement instructions. Where such electronic solutions are not legally or operationally feasible, the standard incorporates templates for manual sharing of standards settlement instructions which incorporate an industry-standard taxonomy (based on ISO 20022), which should minimize ambiguity. The proposal is structured in two main parts: (i) the standard, which sets out core principles for the channels, processes, and governance around sharing of standards settlement instructions; and (ii) standardized templates, based on industry-standard taxonomy, for use in residual cases where standards settlement instructions are sent manually. The deadline for comments is October 18, 2024.

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