The Society for Worldwide Interbank Financial Telecommunications, the payment messaging network, will vote soon on a much-debated proposal to give access to nonfinancial firms.
The Swift board will make the proposal at its June 14 shareholders' meeting.
"The board will be going to the shareholders of Swift to seek approval for corporate access for foreign exchange confirmations," said Yawar Shah, the Chemical Banking Corp. senior vice president who recently became a Swift director.
Swift, which has been in service since 1977, is owned by more than 2,400 financial institutions in 115 countries.
The network links about 4,000 financial institutions worldwide for the exchange of payment-related messages in standard formats.
Swift is not a payment system but does facilitate the exchange of payment notices. On an average day, 2.5 million funds transfers involving $2.3 trillion are initiated over the network.
Until now, participants consisted of banks, securities firms, stock exchanges, and clearing associations, with securities-related messaging being the fastest-growing category of Swift traffic.
Corporate access has always been a contentious issue among Swift's financial institution owners.
The access dispute, which has been a brewing for years, came to a head during the organization's annual conference in Boston last year as more bankers openly debated the benefits and pitfalls of nonfinancial access.
Businesses have long clamored for access, particularly for foreign exchange confirmations.
Mr. Shah said corporate access reduces settlement risk by allowing faster processing through quick delivery of trade confirmations between the banks and their corporate customers.
There are several ways that banks and their corporate customers currently exchange this information, including by fax, telegram, telex, telephone, and proprietary systems built by corporations and their trading counterparties.
Mr. Shah said confirmations over Swift can ensure the accuracy of deals that are performed with banks and other counterparties before any money is moved and the deal is settled.
"It's a mutually beneficial event," said Mr. Shah, adding that security of the global payments system was "the real issue" for bankers.
"Anytime you introduce nonfinancial institutions, you have issues of corruption, in terms of interloping," Mr. Shah said. "I'm talking about interloping from unregulated entities."
Mr. Shah said banks, which own and operate numerous payment systems, are well-regulated, experienced entities with legitimate concerns about allowing access to nonregulated firms.
To that end, officials said, Swift is in the process of developing systems that separate its core financial messaging service from nonbanks through the use of a software "gateway" and separate hardware.
In a related move, last month the Swift board approved, in principle, the development of new financial trading services that member banks could in turn market to their corporate customers.
As part of that decision, corporations could gain access to Swift's central matching and netting service for foreign exchange and money market deals.
