Roche have created a SWIFT based solution to send out MT502-messages (order to buy or sell) which are delivered to the MMF providers directly, the MMFs return a MT509 (trade status message) followed by a MT515 (Client Confirmation of Purchase or Sale) message. In close collaboration with SWIFT, the project was successfully delivered within a short time frame of just six months.

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Roche utilises SWIFT MT5XX series for MMF solution

The challenge

The Roche treasury department already used short-term investments, commercial paper and long-term investments with time deposits (up to 12 months). Although processing is implemented fully STP with SWIFT messaging exchange and automatic matching of confirmations, the selection of the right mix in terms of counterparty diversification due to risk considerations is rather time consuming.

Marco Brähler, Head of Treasury Back Office explains, “In today’s low interest environment our asset management was looking into a more efficient and more flexible way to manage these short-term investments.” The ideal solution would be same-day investments into money market funds (MMFs); but only if the whole investment process could be as lean as possible for both front and back office.

Having worked with SAP and SWIFT over recent years, Roche identified an opportunity to capitalise further on this expertise and created a project to automate the transfer and reporting of their investment fund transactions directly with their preferred MMF providers. A prerequisite for the project was to only use the existing TMS for the whole life cycle of the investment as follows:

Initiate the purchase → payment of the investment → performance/dividend tracking → dividend payment → initiate the sale of the MMF investment and rewinding the cash.

The solution

Roche created a SWIFT-based solution to send out MT502-messages (order to buy or sell) which are delivered to the MMF providers directly, the MMFs return a MT509 (trade status message) followed by a MT515 (client confirmation of purchase or sale) message. At this point the book value is recorded and used as the basis for measuring the performance of the investment on a daily basis with MT535 (statement of holdings funds) which are automatically generated each day and recorded in the Roche TMS.

Best practice and innovation

An important aspect of the Roche treasury mission is to maximise its existing investments in technology and realise all potential benefits available from the integration of their SAP financial system and their financial communication network provider, SWIFT.

The investment solution is automated to the maximum possible, but supported by a workflow process and a four-eye sign-off principle for the cash payment, to secure and track the different status of the cash flow.

The process of adopting the new ISO 20022 compliant MX messages is now expected to be a smooth transition for Roche, given the success of this project. The challenges of integration and automating new processes, procedures and third parties have already been resolved and Roche is now ready for the future, with the confidence that it has already paved the way for embracing new standards and the benefits that these will bring.

“From our point of view, this project has been a success and we can see the value of our investment. Our relationship with our technology partners continues to develop and is enriched by successfully delivering innovative solutions like this,” said Brähler.

The impact of the timing of the SWIFT decision to migrate MT messages to MX messages to conform to ISO 20022 could have had a negative impact on the project and to even be a ‘show-stopper’, but with the extensive treasury process and finance technology knowledge combined with a close collaboration with SWIFT, the project was successfully delivered within a short time frame of six months.

Key benefits

• Integrates seamlessly with existing SAP system, ensuring timely updating of financial records.
• Automates Roche buy and sell orders with chosen money market fund providers.
• Enables daily investment performance management and tracking.
• Extends Roche’s use of industry-recognised financial messaging standards.
• Ensures flexibility and control over their investment portfolio.

Key learning points

The right centralised strategy, in house treasury technology expertise and a long-term partnership with SWIFT were the success factors for this project. It was all about connecting the right people on many ends to overcome the major hurdles along the implementation path.