The Swift System

The membership of the Swift System enjoys a secure platform for sending and transmitting financial messages between banks and financial institutions. The memberships of swift are provided with a set of syntax over the swift network plus standards for financial messages, connection services and software that allows the actual transmission of messages.

Obviously in the financial world security is paramount. Swift guarantees all messages that are transmitted between banks and financial institutions are validated verified and authenticated. All banks will have a send and receive terminal(s) which are manned by professionally trained operators.

A designated swift address or code is given to each member. Thus, JP Morgan Chase Bank New York, has a swift code/address Chasus33 and the swift address/code for Deutsche Bank AG Head Office Madrid is DEUTESM1. So, if Deutsche Bank Madrid wish to communicate with Jpmorgan Chase New York, the swift operator at Deutsche Bank will enter the code Chasus33. This will ensure that the message will go to the correct company.

On a point of interest, the Financial Times in 2018 criticised the Society for Worldwide Interbank Financial Telecommunications for inefficiency. Swift took notice of this criticism and hurriedly introduced the Global Payments Innovation, (GPI), and now most payments are being successfully completed in under thirty minutes. Today, GPI is being utilised by over 1060 banks and financial institutions dealing in in excess of 150 currencies.

It should be noted that financial conversations tend to get muddled if technical jargon relating to swift are referenced.

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Every swift message that is transmitted between members has a specific designation peculiar to that message. All messages are designated with the letters MT, (message type), followed by 3 numbers. For example, a MT799 and MT760 are both related to bank instruments such as Bank Guarantees, Standby Letters of Credit and Documentary Letters of Credit.

The official swift handbook informs all members as to how all swift messages should be formatted.

Examples of swift messages are shown below:

MT799 has been designed as a pre-advice of Bank Guarantees, Standby Letters of Credit and Documentary Letters of Credit by one bank to another. Essentially this message type informs the receiving bank that they will receive one of the above bank instruments in favour of one of their clients.

MT760 is the actual message that delivers from one bank to another a Bank Guarantee, Standby Letter of Credit or Documentary Letter of Credit.