The Swift network, in a move to lure members, has reduced its initial membership charge, called the joining fee, by 70%.
The international banking cooperative, formally known as the Society for Worldwide Interbank Financial Telecommunication, maintains a network connecting 4,300 organizations around the world, including banks, broker-dealers, investment managers, securities exchanges, central securities depositories, and clearing organizations.
The network provides communications for cross-border payment instructions, trade finance, foreign exchange, money markets, and securities trading.
The fee reduction is expected to lead to an increase in new connections among financial institutions. For many of these potential participants, including those in developing countries, the connection fee was difficult to justify economically, said Euan Sellar, a Swift spokesman.
The reduction will be an added incentive for those organizations and emerging markets to join the network, he said.
Seeking Securities Members
The decision also enhances the board's drive to increase the number of securities participants on the network, Swift officials said. Growth in the Belgium-based society's securities-related business exceeded 100% in 1993, a pace that's expected to continue this year, said officials. Last year, more than 21 million securities-related messages were sent via the network.
In a decision supporting the fee cut, the Swift board approved a 5% rebate to customers on 1994 message traffic. The network also will supply equipment free of charge to support the rollout of its security enhancement program.
The program involves increasing the level of security on the network by introducing smart cards to control the log-on function.
The network will also be enhanced for electronic generation and exchange of authentication keys, which verify the identity of the sender and ensure that messages have not been tampered with.
This will replace the paper-based correspondence required by today's key exchange. The board hopes to complete adoption of the security enhancements by 1995, said Mr. Sellar.
Combining reduction in the one-time joining fee, the rebate, and a message price plan introduced last year should increase the attractiveness of the Swift network package, said officials. The message price plan brought the base message price as low as 17 cents.
Swift, owned by 2,200 banks, processes more than 450 million messages a year.