Setting up the Treasury Correspondence integration with SWIFT Network (3QM)

The scope item Treasury Correspondence Integration with SWIFT Network uses SAP Multi-Bank Connectivity to integrate treasury correspondence with the SWIFT network.

SWIFT messages for treasury OTC transactions can be delivered to the counterparty's SWIFT code using SAP Multi-Bank Connectivity.  SAP Multi-Bank Connectivity acts as a hub and forwards the message to the SWIFT network. 

Meanwhile, the SWIFT messages can be sent back from their counterparty via SAP Multi-Bank Connectivity, and relevant incoming correspondence objects are generated automatically in the SAP client. Once the incoming correspondence object is matched with the outgoing correspondence object with confirmation, the OTC transaction is settled accordingly. This function currently covers MT300 for Foreign Exchange instruments and MT320 for Debt and Investment instruments.

This process allows you to exchange Treasury correspondence with your counterparties using MT300 and MT320 SWIFT messages for your FX and money market transactions.

On a high level the Treasury Correspondence process with the SWIFT Network comprises the following steps:

1. Create a financial transaction (FX transaction, FX option, or money market transaction).
2. The correspondence object is created automatically.
3. Send the correspondence object using Schedule Treasury Back Office Jobs app, Send Correspondence app, or Process Correspondence - Monitor app.
4. The SAP S/4HANA Cloud system automatically creates the MT300/MT320 file including SWIFT parameter according to the assigned format mapping. The file name is Format + CO Key.
5. The SAP S/4HANA Cloud system sends the MT300/MT320 file to SAP Multi-Bank Connectivity.
6. The correspondence object gets the Acknowledgment Awaited status.
7. SAP Multi-Bank Connectivity generates the SWIFT message by adding a SWIFT envelope around the received files for MT300 / MT320.
8. SAP Multi-Bank Connectivity sends the SWIFT message to the SWIFT infrastructure.
9. SAP Multi-Bank Connectivity gets a response from the SWIFT infrastructure and passes the response to SAP S/4HANA Cloud system
10. If an error occurred and the counterparty did not receive the SWIFT message, the non-acknowledge (NACK) response is sent from SAP Multi-Bank Connectivity automatically to SAP Cloud system. The system matches the response to the correspondence object and updates status to Error. Analyze the error and correct the financial transaction data or the correspondence object. Send the correspondence object again.
11. When the counterparty received the SWIFT message, the acknowledge (ACK) response is sent from SAP Multi-Bank Connectivity automatically to SAP Cloud system. The system matches the response to the correspondence object and updates status to Delivery.

For the incoming process the below steps are performed in the SAP Multi-Bank Connectivity and the SAP S/4HANA Cloud System.

1. If the SAP Multi-Bank Connectivity gets a SWIFT message from one of your counterparties, it automatically sends the message to SAP S/4HANA Cloud system.
2. The SAP S/4HANA Cloud system automatically analyzes the incoming MBC file and creates an incoming correspondence object.
3. If the correspondence objects are matched correctly, the status of the outgoing and incoming correspondence objects should be changed to Matched or Completed according to the system setting.

Create a deal with the app Create FX Spot/Forward or Create IR Instrument and save the information in the SAP S/4HANA Cloud System. Depending on the settings the deal automatically creates a correspondence object with the channel Multi-Bank Connectivity.

After the deal is created you can check the status of the correspondence object via the Fiori app Process Correspondence - Monitor (FTR_COMONI). This will, according to your selection criteria, show you the status of the correspondence object and also the processing channel Multi-Bank Connectivity.

When the counterparty received the SWIFT message, the acknowledge (ACK) response is sent from SAP Multi-Bank Connectivity automatically to SAP Cloud system. The system matches the response to the correspondence object and updates the status to Delivered.

The SAP S/4HANA Cloud System is receiving a SWIFT Message and matched that to the relevant correspondence object. It also sets the status to Completed for that item.

The matched deal is updated with the status Contract Settlement in the SAP S/4HANA Cloud System.

There are two major tasks to finish in order to get to the Treasury Correspondence Integration with the SWIFT Network.

The first one is the set up of the integration scenario (SAP_COM_1002) which is generally used for Multi-Bank Connectivity. After that there are several configuration steps in the Self-Service Configuration that need to be performed.

For communication via SWIFT, the receiver, the sender, and the kind of message must be identified explicitly:

• Receiver ID
  • Outbound process: Bank identifier code (BIC) of the counterparty
  • Inbound process: BIC of your company

• Sender ID

  • Outbound process: BIC of your company
  • Inbound process: Bank identifier code (BIC) of the counterparty

• Message ID

  Outbound process: ID of correspondence object

For more information on how to set up the integration scenario, see the Treasury Correspondence Integration with SWIFT Network (3QM) scope item in the Best Practices Explorer. A detailed description of the steps to be performed is given there.

For the correspondence process it is relevant to assign the bank identifier code to the company codes. The BIC identifies the counterparty and is needed for sending and receiving SWIFT messages.

This configuration step is relevant for the sending of correspondences to your counterparties via SWIFT messages. You need to assign format mappings for the SWIFT formats MT300 (for FX transactions and FX options) and MT320 (for MM transactions) as a function of business partner group and country.

The format mapping is needed to transfer the data from the correspondence object to an MBC file.

You can use the SSCUI task Assign Format Mappings for Inbound Processes to assign format mappings for incoming message types as a function of sender ID and format.

This configuration step is relevant for the receiving of correspondences from your counterparties via SWIFT messages. You need to assign format mappings as a function of the message type, sender ID, and SWIFT formats MT300 (for FX transactions and FX options) and MT320 (for MM transactions).

The format mapping is needed to transfer the data from the MBC file to a correspondence object.

You use the Map Treasury Correspondence Format Data app to define the rules for mapping data to outgoing treasury correspondence formats in accordance with the requirements of your financial institution. You use this step to define how the system fills data in the treasury correspondence format to generate the final file that you send to the bank.

You can create new format mappings or copy from existing ones, display the details of your existing format mapping, and import, export, edit, check, delete, and release these mappings.

The Map Treasury Correspondence Format Data configuration app has been changed as follows:

• The new Action node type is available for incoming format trees. This node type represents one or more actions that are performed each time the node is reached while the input file is being processed. You can now use the action node to append a new line in the selected output table.
• In Format Mapping Properties or in the properties of records, under the Attributes section, the new selection option Delimiter Always Used (for example, CSV) is available for the Default Field Separation field.
• The user interface has been enhanced as follows:
  • The menu icons next to the nodes in the format mapping tree have been removed and replaced by icons on the top of the tree that can be used to perform actions for the nodes in the tree. These actions are now also available from the context menu when you right-click a node.
  • On the Version Management screen, the icons for displaying or editing versions have been removed and you can now navigate to a version by clicking the link on the version directly.
  • For incoming format mappings, the Output Data and Input Data sections have been renamed to Output Specification and Input Specification respectively.