Real-time nostro group reveals utility service

Subscription-based service to provide greater visibility of cash movements globally unveiled at Sibos.

One year after the full working group first met at last year's Sibos, the banks involved in the development of an online service for the exchange of nostro information in real time revealed the fruits of their labour. The Real-Time Nostro (RTN) service has been driven by global telecom service provider Cable & Wireless, in partnership with UK software house Gresham Computing.

It is also being supported by major clearing banks ANZ Bank, Barclays, JPMorgan Chase and Mizuho Corporate Bank, which will act as a channel to market for the service and supply data for it.

The project has gone through several incarnations, and has grown out of the early IBIX initiatives of the Open Group. This effort was merged with similar work underway within SWIFT and the initiative is now managed by the Nostro Account Information (NAI) SWIFT working group. RTN is the first implementation of the SWIFTNet Cash Reporting Standard.

The subscription-based, online service will provide financial institutions with a real time, consolidated view of their international transactions and balance details. The service is designed to bring together all the major banks that provide nostro clearing services on a single browser access system. It will provide them with greater visibility of cash movements globally across all types of accounts held with their nostro account agents, including those for foreign exchange, commercial payments and securities settlements.

Gresham CEO Andrew Walton-Green says: "Considerable progress has been made towards this goal and at Sibos the capabilities and competitive advantages of RTN will be demonstrated to the wider banking community."

Gresham chairman Sid Green says the service is now undergoing advanced operational testing in readiness for full deployment and continues to be well received by the market. "Cable & Wireless has indicated that discussions are advanced with a number of further major financial institutions regarding data provision and use of the service," he adds.

Currently, Nostro account information is usually sent between banks over proprietary batch-based-systems. So banks with many relationships will have to draw in data from many sources at different times to calculate their positions, meaning it is impossible to know the position in real-time.

As other related areas of financial infrastructure have been set up to deal with real-time information flows, such as CLS Bank and real-time gross settlement (RTGS) systems for payments, the lack of real-time information on Nostros has become a glaring problem. The new RTN service will provide subscribers with real-time access to information on multiple Nostro accounts, which will enable them to find out the exact status of a transaction, when funds have been irrevocably credited and when an account balance has moved outside pre-set limits.

Because the RTN service does not handle transactions itself, but simply tracks their progress, it complements the CLS service in a number of ways, including enabling participant banks to know their positions in real time so they can meet their payment obligations for each of the pay-in windows during the CLS day.

The utility service is being hosted by Cable & Wireless and uses software developed specifically for the service by Gresham Computing that runs on servers provided by Sun Microsystems. Gresham says that when new banks join the service it will work with them to put in place a system for extracting and formatting the bank's Nostro account data in real time. This is formatted into XML, so when a correspondent bank requests data it is first sent to the Cable & Wireless hub from where it can be delivered to the requesting information via the internet or a private network. Work is also underway to offer RTN over SWIFTNet sometime next year.

Because of the XML formatting of data, it will be possible for banks to develop their own back-end systems to benefit from the real-time Nostro account information. Vendors of back-office payment and reconciliations systems are also interested in the possibilities of the RTN service, and some have already begun building capabilities into their products.

At a special interest session at Sibos on Wednesday October 22, members of the Steering Committee, including representatives from SWIFT, JPMorgan Chase and Barclays, related their experiences in piloting the service and the next steps in taking the utility live will be revealed. On the exhibition floor at Sibos there was also likely to have been a lot of talk among back-office vendors who see the launch of this service as an opportunity to attract interest in their product suites from banks.

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