UFJ completes CLS transformation

Following the incorporation of broker matching functionality, the Japanese bank makes the move to SWIFTNet Accord.

In the finance technology world what really matters is the efficiency, cost and accuracy for the vendor, client and counterparties. As a global leader in standardized messaging services and interface software world, SWIFT is on the cutting edge of settlement and reporting technology, as demonstrated through its Accord solution.

Accessed through its IP network, SWIFTNet Accord is marketed as a fail-safe matching and exception handling solution for foreign exchange, money market and derivative confirmations. The solution can be accessed from any location around the globe and unlike some local solutions that are domestic applications, is 100% fraud resistant. It also features the must-have standard of the CLS world, the broker matching functionality, and allows matching of exchanged confirmations with all counterparties, regardless of whether they are SWIFT clients.

Currently, Accord is used by central and commercial banks alike and is starting to find a footprint in Asia, especially in efficiency-mad Japan.

Japan's UFJ Bank had been touted as a prospective Accord sign-up since 2003, when the idea was first introduced. However, initially the implementation of the Accord platform for UFJ was delayed, as the bank was waiting for the broker matching functionality to come online.

"When we first pitched the Accord platform to UFJ in 2003, Accord did not have a broker matching functionality," explains Yuko Ochi, vice president, SWIFT Japan. "Before transforming to Accord, UFJ had to match their own trades with the brokers. They were waiting for the broker matching functionality to be added to Accord before signing on."

When this functionality was introduced to the Accord platform, SWIFT approached the bank and UFJ immediately took steps towards implementation. In August 2004, UFJ officially came online and immediately benefited from the increased trading efficiency of Accord.

Aside from the broker matching functionality, three factors surrounding UFJ's transformation were earmarked as components of a successful transition. Firstly, as UFJ already used SWIFTNet services and had installed the necessary infrastructure, the cost of Accord implementation was significantly cheaper and the transition smoother. Secondly, the bank was very receptive to the ASP - the almost total elimination of machinery and software and minimal involvement of the client's IT staff - provided by SWIFT. Whereas UFJ's former local matching service provider required updating and maintenance by its own IT support staff, SWIFTNet Accord did all the work the bank, setting up the server for matching.

Thirdly, UFJ believed that it could leverage off the data processed from the remote server and the subsequent reporting function supplied by SWIFT. The enhanced business continuity and 24-hour dependability in light of disruptions like 9/11 also ensured a UFJ implementation of Accord. Evidently, UFJ has taken the transformation from its old system to Accord to heart, especially given the fact that since implementation matching rates have increased from 75% to 95% between itself and counterparty bankers.

Following implementation, UFJ even went as far to publicly explain how Accord has benefited its back office business. At a regional trading conference, members of its payment solutions and strategy department extolled Accord for its real-time trading capacities, enhancement of contingency plans, archival services and its function that converts emails into the MT399 settlement and messaging function.

"UFJ is extremely pleased to have an enhanced matching rate and access to real time execution," says Ochi. "For UFJ, Accord has been able to raise efficiency and make less work for the back office."

The future for SWIFT's Accord in Japan appears bright too. Recently, the Bank of Shizuoka and Resona Bank both moved to transform their back office capabilities to the solution.