Introduction

Upon the establishment of VPS (1985), no international standard relevant to use for securities transactions between VPS and its customers existed. Therefore, VPS had to establish its own standards and interfaces relevant to its customers. These interfaces have developed into being the national standard of today. However, they are not known or used abroad.

Foreign participants increasingly influence the Norwegian securities market. This development necessitates further requirements to the solutions that VPS offer its customers. On this background, VPS will start a development permitting customers in the future to choose between ISO 15022 or continue using existing solutions. VPS has decided to start offering the international standard related to settlement of trades. Customers may continue to use today’s interface, but by this decision, VPS signals the direction of future developments.

VPS will keep the market informed of developments through our Internet pages, which over time will contain technical descriptions of the messages.

As noted, use of the new standard will function with today’s interface, giving the customers choices. SWIFT will use ISO 15022 in its network, SWIFT FIN and later in SWIFT NET.

Customers may send 15022 through the existing VPS-networks or they may utilize the SWIFT-network.

The contents of each message may vary considerably between customers. As member of SWIFT, VPS has participated in the Norwegian SWIFT User Group, SMPG (Securities Market Practice Group). The group has come up with a common minimum type of template that the Norwegian users must require from their customers. On this background, VPS will continue its work to develop the type of fields in the individual messages that VPS needs in order to execute correct processing.

The implementation of a new interface to VPS, which contains all services, will be implemented in phases stretching over a long period of time. The first phase includes the following items:

1. The first phase will not include messages related to corporate actions or money transfer. At this moment, VPS has no concrete plans for the development of these messages.
2. Prices of the services are not yet determined, but if VPS is debited costs related to its use of network or by SWIFT, these costs will be included. As far as the services involve new functionality, VPS will put a price on them and include them in its list of prices. Prices of the new services will be announced before they are started.
3. In case customers would like to use ISO 15022 XML types of messages, VPS is positive to developing them. Further development in the area will depend on customer demand and need.
4. Standard messages that VPS will process in the first place are related to these types of securities:

This means that buying/subscribing and selling/redeeming options and securities funds may not be processed with 15022-messages yet.

Trades related to ISIN in euro and USD use the same standard as ISIN in NOK.

The priorities of development

VPS will prioritise the development of 15022-messages as follows:

• Reporting of status
• Trade instructions
• Allegement of instructions
• Statements, reports at day end

If changes of premises do not occur, these plans will be implemented during 2002.

Reporting status

VPS will create the message MT548 Settlement Status and Processing Advice based on how far the processing of trade transactions has occurred. The following will be reported:

1. When transactions are matched
2. When control of coverage has taken place
3. When settlement day has passed, and transactions are placed on hold for the next settlement
4. When the VPS-system finally rejects the transaction, ten days after settlement date
5. When securities account is not established

We will send these messages immediately upon the transaction achieving its new status. Thus, when more than one settlement per day occurs, the messages will be made and sent a corresponding number of times per day.

Other messages related to any new status, such as upon annulments, may be developed (reported) at a later stage when the customers and VPS have obtained experience using these types of messages.

Only customers that have an agreement with VPS will receive the messages.

Messages related to trade

Messages to VPS from customers contain the trading transactions themselves related to buying and selling with or without payment.

• MT540 Receive free
• MT541 Receive Against Payment
• MT542 Deliver Free
• MT543 Deliver Against Payment

The information fields, mandatory or optional for the different instructions will be published in the technical documentation. VPS will produce this documentation consecutively and publish it on our Website.

Upon the settlement of instructions, VPS will immediately create a message confirming the fact that the transactions are settled. VPS will create the following messages:

• MT544 Receive Free Confirmation (MT540)
• MT545 Receive Against Payment Confirmation (MT541)
• MT546 Deliver Free Confirmation (MT542)
• MT547 Delivery Against Payment Confirmation (MT543)

When multiple net settlements per day take place, these types of messages will be created a corresponding number of times per day.

Allegement

Occasionally, the counter party has not registered its transaction. In such circumstances, the VPS-system will create messages called allegement. If not rectified, this transaction will be rejected. Therefore, it is incumbent upon the members to monitor these messages, as rejections regularly result in delayed settlement and the perception of foreign investors that the Norwegian market functions less than optimally. VPS sends this message to the counter party:

• MT578 Allegement

Enquiries

VPS will provide real time enquiries to enable specific data to be returned at any point of time throughout the day. The following messages per investor account will be available:

• MT535 Statement of Holdings
• MT536 Statement of Transactions
• MT537 Statement of Pending Transactions

The message MT 549 Request for statement will be available to enable the retrieval of the statement messages.

Re. MT535 Statement of Holdings

This message shows the latest updating of all holdings on the investor’s account.

Re. MT536 Statement of Transactions

This message shows all transactions that have impacted the holding during this day. It also includes all types of transactions related to term transactions and corporate actions.

Re. MT537 Statement of Pending Transactions

This message shows all transactions related to the investor’s account which are still pending settlement on the daily ledger upon the latest updating of the account.

Technical requirement of the customer

VPS has installed IBM MQ, Messages and Queuing, related to the use of the SWIFT-network. For customers that will not communicate with VPS via the SWIFT-network, VPS will require that they use IBM MQ to utilise a dynamic push technology. Using MQ will enable VPS to send messages instantly upon creating them, thereby securing delivery to the customers. One is not dependent on the customer keeping the system active during delivery. This principle refers to deliveries both ways and may be compared to using e-mail; you receive it when opening your mailbox.ISO 15022