Photo of Ken Bogert and Marco Brähler from Roche, Klaus Mueller, SAP.

This solution is described by Roche as first-in-class and perhaps best-in-class, STP SWIFT messaging solution on a single standard software system. It was facilitated by Roche’s unique treasury operating model and their ERP’s IT treasury capabilities.

Roche Treasury Operations already utilises SAP and SWIFT to operate a highly-automated, full-service in-house bank, providing a complete range of services to 175 affiliates worldwide. Its foreign exchange (FX) and asset management colleagues wanted to optimise their use of the in-house banking system.

Their aims were to:

• Reduce FX risk and hedge costs while managing more currencies centrally.
• Reduce default risk by diversifying placement of smaller FX, money market (MM), and securities trades with more counterparties/issuers.
• Take advantage of latest trading platforms: smaller deals, high volumes, auto-pilot, supersonic speed. Treasury operations recognised that the middle and back office could actually support this extended front office scope cost-effectively by extracting more value from its existing SAP and SWIFT infrastructure.

As Marco Brähler, Head of TOP Operations, explains: “We embarked on building a high quality seamless straight through processing (STP) confirmation machine inside our existing TRM system. Now we confirm 100% FX & MM time deposits via SWIFT. We also just went live with SWIFT messaging for securities confirmation and settlement. SAP’s Correspondence Monitor manages all message traffic in and out and matching processes in a fully automated way.”

Benefits:

• Efficiency gain for confirmation process and counterparty risk reduction, this is what today’s group treasurers want to see: increased policy compliance with stable headcount.
• No custom solution in place, could be easily deployed by other corporates: SWIFT network as a communication channel and SAP EhP5/6 as TRM system used.
• Wide range of products covered: securities, MM and FX – including non-deliverable forward (NDF) fixings.
• Stable, highly automated process including automated exception management and workflow.
• Automatic confirmation rate of approximately 98%.
• Trade volumes doubled from more than 1,000 to more than 2,000 per month without any constraints. Ready for more currencies and other diversification.

The trades are being entered in the trading platform (like 360T or FXall). These deals are transferred to the SAP Treasury System via FTP and BAPI calls (SAP standard customer enhancements). Each deal created in SAP spawns a correspondence object in the new SAP correspondence monitor as well as an outbound SWIFT message to be delivered to the counterparty (for their confirmation). Corresponding incoming SWIFT messages from the counterparties are imported into correspondence monitor. A matching engine is looking to find pairs of incoming and outgoing messages, based on Roche defined fields. Upon a successful match, the deal is automatically confirmed and settled within SAP and posted in SAP’s FI module.

Automated exception handling detects:

• Message delivery problems.
• Re-confirms deals in case of changes.
• Processes cancellations, and
• Invalidates superseded messages.

To meet daily (even hourly) bank deadlines (multiple banks and currencies), automated alerts and reports are produced/delivered indicating unconfirmed deals. At that point, a person may even pick up the phone again like in the old days, “Mr Banker, please send us your SWIFT”.

Brähler concludes: “This first-in-class and maybe best-in-class STP swift messaging solution on a single standard software system was facilitated by Roche’s unique treasury operating model, the dedicated in-house IT team and SAP’s treasury capabilities.”