Three securities trade processors are asking for details about the Society for Worldwide Interbank Financial Telecommunication's plans to expand links between banks and investment managers and broker-dealers.
Brussels-based Swift is a global financial messaging utility owned by nearly 2,000 banks. In an effort to increase traffic on its network, Swift is devising a proposal to add message formats for new securities trades and create new nonbank membership classes.
Ultimately, all services could be linked into a global electronic trade confirmation network.
But the three processors - the International Securities Market Association Ltd., the London Stock Exchange, and Thomson Electronic Settlements Group - said much of the plan remains unclear.
The processors, which together handle more than 90% of all electronic securities trade confirmations and affirmations, want to know if Swift aims to compete with "the current, trilateral bridge between the three vendors," according to Howard F. Edelstein, president of the Thomson unit. (His company is a unit of Thomson Financial Services, which also owns American Banker.)
They also wonder who will cover the cost of creating the electronic links, and how fees will be structured.
Thomson, the stock exchange, and the securities association offer post- trade services to broker-dealers, investment managers, and custodian banks. The vendors have connected their services in an alliance called Inter Vendor Link.
Swift refused to comment specifically on the processors' statement, confirming only that a proposal to support electronic trade confirmation over Swift will be considered at its June membership meeting.
But Stanley Young, head of service planning and development at the London Stock Exchange, said he suspected Swift's plan is of no benefit to the electronic trade confirmation community "because it does not allow access to the Swift banks."
Swift "wants to become another member" of the Inter Vendor Link, but has so far offered little in exchange, he said.
"What they could bring to the party has been specifically excluded from their proposal," Mr. Young said. Swift, he said, is seeking full access to Inter Vendor's data base but has not offered comparable access to Swift in return.
Officials at the three companies also were confused over Swift's broader intentions.
But they conceded that the proposed service would probably come together eventually.
"Our discussions with Swift to date have been encouraging," Mr. Edelstein said in a written statement.
