The Society for Interbank Financial Telecommunication and the International Swaps and Derivatives Association said last week they have developed a new set of electronic message formats for trading interest rate and currency swaps.
Officials said the new messages improve trade confirmations and reduce operational risk in the settlement of swap transactions.
The new message types are for single-currency and cross-currency interest rate swap confirmations as well as swap reset confirmations.
The Brussels-based Swift network, which is owned by nearly 2,900 banks globally, now supports privately negotiated contract trades with its existing message types - but volume for such deals is nominal.
That's because Swift's existing formats do not conform to the derivatives association's Master Agreement, the industry-standard bilateral agreement used by trading counterparties, said an International Swaps and Derivatives Association official.
Despite the new message standards, Swift does not expect significant volume increases until it develops its automated matching and netting service for foreign exchange, money market, and derivatives transactions, officials at the New York City-based trade associaition said.
The transaction netting service, called Accord, should become available later this year.