| TWIST Standard: Frequently Asked Questions |
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TWIST is a not-for-profit industry group delivering open, XML - based, standards in the following interlinked, financial processes:
TWIST has an end-to-end process focus, and aims to facilitate the adoption of good practice through the use of standard processes and messages. TWIST has the support from its key constituencies:
TWIST develops practical standards thataimed at ensuring interoperability between its user base and at achieving efficient and properly controlled industry-wide straight through processing of transactions. TWIST offers win-win situations for all its members, and the focus is on pragmatism and the applicability of the standards to both small and large organisations, irrespective of their role in the marketplace. TWIST members include many software vendors committed to implementing the standards in their systems, which will help reduce the costs of integration. Where TWIST can be applied throughout the transaction process, similar communication software can be used for the various messages, requiring only fairly simple middleware. TWIST avoids solutions that depend on single suppliers, and practices that are not widely used. For example, it does not restrict transport to any particular network, or authentication services to any one provider. What is the cost of joining or using TWIST? The annual membership fee for Individuals is £150 and for Legal Entities it is £1,500. There is no charge for using the TWIST standards. TWIST is an open organisation and welcomes all members who share the common philosophy of delivering open standards for improving financial transaction processing. If you are interesting in TWIST membership or endorsement please visit the Joining TWIST page under About TWIST. Is TWIST relevant only to large organisations? TWIST is relevant to both large and small organisations, whether corporate or institutional clients, banks or other market participants. TWIST has a modular design, allowing organisations to prioritise implementation of those standards which are most relevant to them. In wholesale markets, large corporate and institutional treasuries, which act as price makers towards their subsidiaries or clients, and as price takers towards their banks, and / or with high volumes or stringent control requirements, are able to use a comprehensive suite of messages, spanning the whole process, as well as the appropriate control requirements. Small treasuries can simply use the messages that are relevant to them, for example deal capture, while ignoring other aspects such as the use of data transfer and rejection controls. TWIST also focuses on pragmatic solutions which can be supported by current infrastructures, and do not depend on single service providers or unstable solutions. For example, TWIST incorporates recommendations of the ebXML standards with regards to controls, but does not go so far as to recommend the full ebXML specification. In the context of TWIST, the main difference between corporates and financial institutions tends to be in the instruments they use, rather than the operational transaction processes. For the fund management community, TWIST's focus on straight-through processing, and support for various components of the transaction process, complements the FIX or FpML deal capture standards. Who are the key companies involved with TWIST? TWIST members span almost the full range of market participants, and so far include Royal Dutch/Shell Group, Association of Corporate Treasurers - Singapore, Nokia, ABN Amro, Barclays Capital, JP Morgan Chase, The Royal Bank of Scotland, Standard Chartered Bank, Bloomberg, City Networks, CrossMar, Currenex, EBS, ICAP, Reuters, Tullett & Tokyo Liberty, Alterna Technologies, Cognotec, Exidio, Integrity Treasury Solutions, RCP, Richmond Software, SAP, Selkirk Financial Technologies, SimCorp, tapX, Trema, Wall Street Systems, XRT, Ernst & Young, FT Knowledge, KPMG and PricewaterhouseCoopers. In addition, endorsements have been received by the UK, Singapore and Dutch Associations of Corporate Treasurers, GlaxoSmithKline, and Sara Lee / D.E. How will the TWIST standards benefit the wholesale financial markets? TWIST's protocols, and its alignment with other standards such as FpML, will make it easy for companies to originate their wholesale financial market transactions using one provider's risk management system, execute trades with banks or multi-bank exchanges, send the trade results directly to another provider's back-end system and thence to its settlement bank(s). By enabling low cost, rapid and effective integration of systems across the lifecycle of trades, TWIST will give companies the maximum degree of efficiency, speed and business flexibility. TWIST aims to identify and encapsulate best practices in its standards, and facilitate the optimisation of processes. Where is TWIST in the process of creating open standards for the wholesale financial markets? In October 2002 TWIST published a complete set of messages that cover the entire trade life cycle, covering the set up of trade relationships, trade origination, negotiation, execution, confirmation, settlement, reconciliation and reporting. This relates to FX spot, forward, swap, options as well as loans and deposits. Further work is in progress on interest rate derivatives and on commercial paper and bonds. Why are there so many competing standards and standards bodies? The work done by the various XML - based standards bodies in the financial transaction processing field is generally complementary rather than competitive. As an example, in the wholesale financial markets area, TWIST's end-to-end focus is perfectly complementary to the market data definitions work done by MDDL. Where there is overlap, TWIST has adopted a complementary, collaborative, rather than competitive, approach. As an example, in the commercial payments area, TWIST argued for a core payment kernel to be adopted by the relevant interested bodies (SWIFT, TWIST, IFX and OAGI). When it became apparent that one member could not support a core payment kernel which included a beneficiary bank value date field, the four bodies agreed that this should be covered by a TWIST extension, rather than the bodies having competing standards. This approach will serve as a model for all future work where there are overlapping standards. TWIST, as part of its collaborative philosophy, is seeking to pull together the efforts of all the relevant players in the field. How does TWIST differ from the other XML - based standards bodies? TWIST's approach is based on an analysis of the end-to-end process, in three significant, interlinked, financial processes:
As an example, in the wholesale financial markets area, TWIST has identified the following sub-processes:
For each of these sub-processes, individual process steps can be identified. For each of these process steps, TWIST has defined the necessary XML messages for automated communication. TWIST believes that where the various standards bodies have a complementary focus, they can prosper in parallel. Full merger between standards bodies in the current stage of development seems unlikely due to their differences in focus and origin, but close co-operation and resulting inter-operability should mutually strengthen the various standards in their respective market domains. TWIST has chosen a co-operative and complementary approach, which allows it to take a consolidating role with the various standard initiatives. Each of the other bodies has a somewhat different area of focus and overlap, as follows: FIX (the Financial Information exchange) protocol is a messaging standard developed specifically for the real-time electronic exchange of securities transactions. In addition to defining messages for communicating transactions, FIX also defines the session-level interaction between two FIX applications. The FIX protocol started out as a tag-based protocol, with data identified by a code number. More recently, FIX has introduced an alternative XML representation. FIX shares many of the goals and attributes of TWIST. TWIST has sought alignment with FIX messages in its design of FX and money market messages, and will also do so in relation to securities such as bonds. For further information see www.fixprotocol.org FpML (Financial products Markup Language) is a protocol for complex financial products. TWIST, in its wholesale financial markets work, and FpML have designed deal capture and confirmation messages in close co-operation with each other. However, TWIST, with its end to end process focus, also covers such things as the exchange of standard settlement instructions (SSIs), credit controls, price negotiation, netting of settlements, and the way in which payment message standards like S.W.I.F.T.'s MT103 can be used to automate the payment and reconciliation process between banks and their clients. FpML shares many of the goals of TWIST. Both attempt to facilitate the communication of firms in the financial markets. Ultimately both will allow for the electronic integration of a range of services, from electronic trading and confirmations to portfolio specification for risk analysis. There are a number of organisations and people present in both the TWIST and FpML working groups, and efforts are continually made to ensure that the standards borrow from each other where appropriate, and do not deviate greatly. A key difference between the two initiatives is that FpML is largely driven by the financial industry and the major sell-side market participant firms, while TWIST originated on the buy-side with the emphasis on bringing the benefits of electronic integration to corporate treasuries and fund managers. FpML started out by tackling interest rate derivatives area, and has moved to FX and FX options, and equity derivatives, whereas TWIST has concentrated on FX, money markets, and fixed income instruments. Also, FpML has focused on communication and confirmation of transaction details in particular for derivatives, whereas TWIST has focused on those messages that support straight through processing throughout the trade life cycle, including trade origination, trade execution, trade confirmation, settlement, reconciliation and reporting. For further information see www.fpml.org IFX (The Interactive Financial eXchange Forum) was formed in 1997 to create a messaging standard for financial services that would address the challenges faced with the advent of network-based computing models. It has working groups on ATM/POS, Electronic Bill Presentment & Payment, Business Banking, Credit Application Processing and Web Services. TWIST and IFX have worked together closely on the core payment kernel. For further information see www.ifxforum.org MDDL (Market Data Definition Language) is an XML-based interchange format and common data dictionary on the fields needed to describe 1) financial instruments, 2) corporate events affecting value and tradability and 3) market-related, economic and industrial indicators. TWIST actively supports MDDL's market data model and the two bodies have an increasingly common requirements management process. For further information see www.mddl.org OAGi (The Open Applications Group) is a not-for-profit industry consortium focused on promoting interoperability among business applications and creating business language standards to support this goal. TWIST and OAGi are working together closely on the core payment kernel. S.W.I.F.T ., the international banking messaging and network co-operative, is a supplier of messaging services as well as a highly regarded standards setting organisation, focused on financial institutions. The network is not fully open for corporates, although it has made important steps to start servicing corporates under "member administration" arrangements with S.W.I.F.T. members, i.e. banks. Its standards setting organisation has an historical focus on confirmation matching and settlement messages. TWIST is working in conjunction with S.W.I.F.T. in a number of areas and has adopted a number of the S.W.I.F.T. payment messages, and is providing extensions to these messages where required. TWIST and S.W.I.F.T.'s scopes are complementary - for a graphical illustration of this, click here. For further information see www.swift.com . Where is TWIST in the process of creating open standards for commercial payments and working capital finance? TWIST has made significant progress in this area. With respect to Payments, TWIST has adopted the relevant ISO 20022 Standards. With respect to Financial Supply Chain processes, TWIST now has a comprehensive package of standards, covering the Ordering (including Quotations), Invoicing and Supply Chain Financing business processes. More information is provided under the Payments and Financial Supply Chain sections. What is so different about TWIST? There are a number of standards initiatives that define specific kinds of electronic messages for communicating transactions between two parties in the financial markets. Each defines the formats of the messages. Each provides a neutral data exchange mechanism to allow software developers to design applications which are able to exchange data. Some (eg FIX) also define session-level interaction between applications. TWIST is unique in two respects, its end-to-end process focus and its work to ensure collaboration amongst all these standards, so that the end customer has one globally accepted set of standards to use, rather than a set of competing standards. Is TWIST an alternative to XML? No, TWIST uses XML for the rendering of its standards. XML (eXtensible Markup Language) is a standard meta-language for describing data shared between applications. Essentially, it is a simple low-level set of rules defining how to write a data-description language. The simplicity and reusability of XML have made it attractive for use in many different business areas, wherever data is shared between the parties to a commercial transaction. XML allows industry-specific data descriptions to be created in a standard way, and allows common understanding and tools to be developed. TWIST uses XML to codify the protocol descriptions emerging from its work. The benefits of common tools, resources and professional knowledge inherent in using XML then flow to TWIST. Data integrity When stored as XML files, data can be easily shared and transferred across various systems, be they systems internal to an organisation, or external systems ranging between different organisations. Whilst the same can also be said of proprietary data formats, flat files and comma-separated-files (CSV), etc, XML brings with it an additional dimension designed to increase data-integrity. Consider the case of Company A supplying Company B with product data in CSV format. Should Company A inadvertently 'slip' some bad data into the CSV file, the chances are that the CSV file will be imported into the system of Company B and processed either with no knowledge of the bad data, or worse still, the bad data will cause the Company B system to crash. XML on the other-hand is self-checking in that an XML file 'knows' how data should be presented to it, and will complain should any system attempt to provide it with bad data. This is possible because of the XML Schema Document (XSD), which goes hand-in-hand with an XML file and describes the exact make-up of the data within that XML file. Data hierarchy When Company A wants to send a CSV data file to Company B detailing hierarchical data, such a list of invoices and their 'child' line items, this can often lead to over complicated data-file designs, such as multiple files representing the same data, etc. XML overcomes this unnecessary over complication by providing design mechanisms with which hierarchical data can be defined within a single file. XML "attributes" allow the data designer to define nested "consists of" relationships, whilst "nested elements" accommodate ancillary or "meta" information. XML is object-oriented in the sense of being suitable for describing objects of the real world or any abstract problem domain by modelling their properties as they are, instead of enforcing a normalized decomposition into various tables linked by relations. This makes XML documents more intuitively understandable and thereby reduces both the time required to design and implement systems based on XML. Humanly readable Whilst it may not appear to be a major advantage, the ability for a human to read XML data can greatly improve general support and even development efforts. As an example, try to find the error in this data: GBPNABB20031204335423 And now this data: GBP NAB 2003 12 04 33 54 23 XML is being widely adopted by the computer industry One key factor in the success of the Internet was the wide adoption of the TCP/IP protocol suite by many corporations. This resulted in huge sales volumes and consequently ever decreasing prices for all network components used. XML is already widely accepted and implemented by many vendors; this fact will result in higher volumes and lower prices for software components. This is why XML's predecessor, SGML, was never successful on a broad scale. SGML products were typically priced in the ten-thousand dollar range, whereas XML products are today priced in the hundreds. XML is Global To better understand the attention that XML has received, it is useful to recall another widely-adopted data standard that everybody takes for granted today: ASCII, the American Standard Code for Information Interchange. While ASCII was restricted to a certain alphabet and writing system, it was still crucial in allowing different computer types and operating systems to freely exchange data. With the adoption of Unicode 1.0 and its continuing evolution, the idea of ASCII was expanded to encompass all languages and writing systems of the world. Today, it is taken for granted that computers are capable of reading and processing text documents based on ASCII or Unicode. XML takes this approach one step further, by building on Unicode and defining a universal way to describe structured data for all different purposes. All XML documents are per definition Unicode-based, but may be stored on disk or transmitted over the network in various different "encodings", such as ISO-8859-1 or UTF-8. This is why some people today call XML the "ASCII of the future". What have TWIST's initial points of focus been? TWIST has focused on three significant, interlinked, financial processes:
Within these processes, the initial points of focus have been: In the wholesale markets, FX and money market transactions, since these are the largest marketplaces, and are central to the liquidity management of all organisations that operate in more than one country. Because of their size, and the commoditisation of their instruments, FX and money markets were the first markets to introduce electronic trading platforms and STP. With respect to commercial payments and cash management, TWIST has focused on corporate-to-bank payment initiation and billing of bank services. In the financial supply hain domain, TWIST has developed a globally interoperable standard from Quotation to Ordering, Invoicing and Financing. The TWIST community meet regularly at the TWIST Events where they get an update o TIST activities and where they debate topical industry issues and suggest new work items to the TWIST Management Team. The TWIST Working, User and Pilot Groups meet as often as required to complete their work schedule. In 2006, the Financial Supply Chain Working Group met 25 times in just four months. What is next on TWIST's agenda? TWIST is currently involved in an EU-sponsored project to lift barriers to mass adoption of electronic invoicing. TWIST is actively participating in the various Workstreams. Additionally, TWIST has also reconvened the Bank Mandate Working Group to look into the next phase of standards development. This is related to the opening, maintenance and closing of bank accounts and the management of signatories. Furthermore, TWIST is currently reviewing the most recently finalised ISO 20022 payments and reporting standards for inclusion in the TWIST Portfolio. Finally, TWIST is also in the process of setting up a User Group for the Bank Services Biling Standard. |