Sibos issues Friday 13 October 2006 – page �

issues Friday

13|10|2006

The official daily newspaper of Sibos 2006 Sydney 9-13 October

www.swift.com/sibos2006

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ExcelStand B06

Euroclear friday 13 october 23/08/06 12:36 Page 1

Today at a glanceFriday �3 October

> 09:00-12:00 Exhibition

> 11:00-13:00 Brunch� Lunch�hall�behind�SWIFT�stand

Hotel to airport transfersDuring the morning coaches will depart each hotel (except the Sofitel Wentworth) every 30 minutes from 06:00 to 14:00. From 14:00 to 17:45 every 45 minutes (except the Sofitel Wentworth).

From the Sofitel Wentworth coaches will depart one every 1.5 hours from 06:00 to 13:30 only.

There will be no transfers from the Convention Centre to the airport.

continued on page 2

Banks in the closing plenary audience were urged to overcome the fear factor on several fronts: bringing their

corporate customers into their deliberations; tackling the challenges of non-bank involve-ment in payments and working closely with competitors to enrich the business environ-ment for all.

In a break from the tradition of closing speeches, CEO, Leonard H. Schrank invited a panel on stage to give their reactions to the key themes of the Sibos week. Mark Hodgkinson , general manager of Shell group treasury operations in Asia Pacific and Subramanian Ramadorai, CEO and man-aging director, Tata Consultancy Services were joined on stage by two SWIFT Board members, Jacques-Philippe Marson, CEO, BNP Paribas Securities Services and Lynn Mathews, Chairman of the Australian

National Member Group and Asia Pacific and Latin American Representative of CLS Services, Australia.

Mathews was most struck by the number of calls for collaboration heard throughout the week as well as the numbers participat-ing in the Standards Forum. As a corporate, Hodgkinson admitted that he initially found the experience of being surrounded by so many financial service providers a little overwhelming and that he was keen to “get beneath the skin” of the SWIFT community.

Having just flown in a few hours prior to the session, Ramadorai had nevertheless had time to visit the Tata stand and stroll around the exhibition floor. He was struck by the diversity of institutions represented and observed that “What we can achieve together is a most powerful theme.”

“It’s what we can achieve together that’s important.”

Subramanian Ramadorai, TATA Consultancy Services

continued on page 3

Bring your customers to Boston

Sibos closes with a call for intense collaboration

Closing plenary

Catastrophe planning is for realBuilding a culture of collective responsibility is the key to an effective disaster recovery plan

How do you plan effectively for catastrophe? In Thursday morning’s intense and sometimes emotionally-

charged interactive session on planning for disasters, terrorism, epidemics and fraud, delegates heard first-hand accounts of how it felt to be working inside the World Trade Center on 9/11 when the first plane hit; and of how it felt to be part of the FBI teams investigating not only the first attack on the World Trade Center in 1993, but also the bombing of the Federal Building in Okla-homa City in 1995 and the destruction of Pan Am flight 103 above Lockerbie in 1988. Such personal experiences reinforced the session’s core message: catastrophe plan-ning is for real.

What worries you most?But how do you create an effective ca-tastrophe plan? To begin to address that question, panellists were first asked to share

The first theme broached was the eco-nomic transformation underway in the BRIC countries and in particular China and India. Schrank asked panelists to identify risks and pitfalls as well as what the community as a whole could learn from these countries. In the case of China, Hodgkinson identified a problem for Shell and other firms in its peer group that general business growth was outpacing the infrastructure necessary to support it. Ramadorai, whose firm is also active in China, meanwhile pointed to the need for the regulatory framework to be re-visited. Marson struck a cautious note, but predicted that the risks for foreign partici-pants in the economy would be contained provided the political structure does not lag too far behind the economic reforms.

In India, Ramadorai pointed out, technology

Sibos issuespage 2 – Friday 13 October 2006

Conference

Publisher: Leonard H. Schrank, SWIFT

Editorial & production: Information Partners on behalf of SWIFTAdvertising: Denis Leclercq, SWIFT, e-mail: denis.leclercq@swift.com, tel: +322 655 3068Printed in Australia by SOS Printing

Copyright S.W.I.F.T. SCRL, (SWIFT) 2006. All rights reserved. Reproduction is however authorised with acknowledgement of the source, reference and date of publication, and all notices set out here. This publication is supplied for information purposes only, and shall not be binding nor shall it be construed as constituting any obligation, representation or warranty on the part of SWIFT. SWIFT, S.W.I.F.T., the SWIFT logo, Sibos and SWIFT-derived product and service names – such as but not limited to SWIFTNet and SWIFTAlliance – are trademarks of S.W.I.F.T. SCRL. SWIFT is the trading name of S.W.I.F.T. SCRL. Photographs feature SWIFT employees, customers and business partners.

Now the work beginsDelegates have taken on board the central message of Sibos that they must collaborate to ‘Achieve more together’

Achieving more together“The collaborative space will become an imperative for the industry. There is no other way to continue to supply clients with good products at good price points. SWIFT has been very successful in developing standards for the industry and by bringing corporates into the community, we will avoid technology spend. It’s all about simplifying, standardising and efficiency – bringing everyone round the table to see how things can be done in a bet-ter way. SWIFT can be a great communicator

that banks can leverage on a global scale by taking the lead on initiatives that are too big for banks to handle individually.”Francesco Vanni d’Archirafi, CEO, global banking services EMEA, Citigroup

“Competition versus collaboration has been the subject of a lot of discussion at Sibos. Banks that have traditionally done it all themselves are much more prepared to have conversations with other banks in various regions. It’s early days, but I’ve been encouraged by the open-ness of banks to do that. Given our geographic footprint, we’re very interested in central and eastern Europe for our trade business. The test will be to see at next year’s Sibos how many of these transactions actually get done.

Banks have traditionally spent a lot of time negotiating and debating. To keep up with the corporate world, we need to find ways of doing things a lot quicker.”

John Murphy, managing director, trade & transactions, ANZ Banking Group

Delegate feedback

“Banks are moving quickly in response to client demand. But they are carrying legacy systems and facing regulatory challenges. This leaves them with a lot of technical issues to address. They are competing every day and collaborating every day. The focus of the banks should be to achieve more together, which has been one of the central themes for Sibos this year. They must realise that if they don’t do it, someone else will – but they need to take col-laboration beyond the current level.”

N.G. Subramanian, vice president, banking practice, Tata Consultancy Services

SEPA“As a European payments service provider, the key issue for us is SEPA. At Sibos, it’s been interesting to learn how far financial institution clients have come in adapting their systems and service portfolios to SEPA. There is still a long way to go. It’s not only a question of IT. It’s a question of changing the mindset, overcoming national structures and opening up to the pan-European chal-lenge. In a number of countries, banks have said, ‘We will convert to SEPA, but we will keep it a closed shop in our community’. But you cannot have a Spanish or French SEPA, there can be only one SEPA.”

Manfred Schuck, general manager, marketing & sales, Equens

“This year has been about SEPA. For us, it’s been important for a couple of years but there are a lot of new developments.

We have clients based in the SEPA area who know what SEPA is about and we see that many of them aren’t ready yet. Clients outside the SEPA area are less aware and they need to be informed about what’s going on.”

Ronald Dieterman, vice president & regional sales manager, payments, ING

BRIC+“Banks in emerging markets such as central and eastern Europe are moving fast, some-times leapfrogging western European and US banks. Banks in China take a very radical but prudent approach; they know exactly what they want and there is often a greater sense of urgency than in some western

banks. Banks do not work in isolation, of course, change in China is being driven by the fast pace of the economy overall.”

Jens Hanker, partner, Accenture

“The perception that Russia is just an oil exporter is beginning to change. Our parti-cipation in Sibos this year has been the first step in showing the international commu-nity that Russia does have global banks.”

Tatiana L. Gudyrya, deputy director, Sberbank

Regulation“It’s been a very interesting week. We’ve had the occasion to speak to many people in the market and see how they interact. Normally the difficulty for regulators is that you get contradictory views coming from contradictory corners. At Sibos, they are all in the same room, therefore you really see the market and the industry and hear their requests. Nobody has lashed out against regulation, so I think our approach of going

with the grain of the mar-ket, understanding what the market wants, is really paying off.”Dr Mario Nava, head of unit, financial markets infrastructure, European Commission

Senior executive reach“One of the key takeaways for us is that the level of contact has been at a much higher level. Instead of the technical people tur-ning up to see what’s going on, we’ve had CEOs, CFOs and members of the board. The dialogue is at a much more strategic level.

Michael Burkie, vice president, global payment services, The Bank of New York

SWIFTSolutions“Both in the conference sessions and the more informal roundtables held around the conference, a lot of discussion has focused on the supply chain. Within that, payments transformation and corporate connectivity have been the major themes. You’ve got, for example, new evolving SWIFT standards on exceptions and investigations. Hopefully, bet-ween now and Boston we’ll see significant

take up. This is a hot topic, because banks are looking to reduce their processing costs to get in line with the reduction in fee-based revenue in the payments industry and they need to take the human element out of the

investigations process. You’ll see more take up of these kinds of solutions over the next 12 months.” Colin Day, vice president – business development, STeP, SunGard

Sibos“There is a creative tension between the general themes of Sibos, of driving forward the process of standardisation so that we can increase profitability, when in fact, in a good many cases, it’s the lack of standar-disation that gives us the root source of our profitability today.”

Mark Kirby, managing director, business model and harmonisation division, Euroclear

The next �2 months“What needs to happen before Boston? Much more active collaboration between banks and corporates to separate the priori-ties from the ‘nice-to-haves’ for new ser-vices in trade and cash management. While there are some early movers in true back office payment processing consolidation, there hasn’t really been a mass move in that direction yet. However, just about every bank we’ve spoken to recognises the need to re-duce the cost of payment processing in order to ensure they retain that business. Before Boston next year, a large number of banks are going to have to start making significant steps toward improving their back office operations.

SWIFT is seen to be doing a really good job on bringing together the message standards and really pushing for corpo-rate access. As a forum for debate Sibos plays a really important role. It’s really a question of more of the same.”

Pieter Heyn, global head of payments, Sun Microsystems

continued from page 1

was vital as a way to connect such a large population. Next year, he said, India would be spending USD 320 billion on infrastruc-ture alone. To succeed in the region given the pace of economic change, said Math-ews, SWIFT would have to change its busi-ness model. It is regarded as a European or American company, he suggested. “We have to change that perception,” he stressed.

The panel then worked its way though some of the other major themes of the week, including the processing problems arising from the explosive growth in OTC derivatives, the impact of corporate connectivity on the SWIFT community, and the progress towards SEPA, and ‘getting more from payments’. Delegates were heartened to hear a representative of the European Commission confirm from the audience the Commission’s support for banks own efforts to bring SEPA to fruition.

Underpinning the discussion was a general

sense of the need to broaden the range of stakeholders at the table “Would you bring along your corporates to Sibos?” asked Hodgkinson, who encouraged banks to “remove the fear factor” and to draw their customers into the industry’s principal fo-rum. Over the week, he said, he had heard a number of people claiming to speak on behalf of corporates, but few of them were actually from the corporate sector.

Also from the floor, Marilyn Spearing of Deut-sche Bank, a member of the SWIFT Board

and of the Corporate Access Group, acknowl-edged that banks have a tendency to be reac-tive, but faced with the achievement by, for example ICICI bank in reducing its operational costs to one tenth of those experienced by its peers in European and North American markets, banks would have to step up to the challenge. “Emerging markets will be critical in this journey,” Ramadorai concluded. <<

Leonard H. Schrank, SWIFT: What can the community learn from the BRIC countries?

Mark Hodgkinson, Shell: Remove the fear factor in engaging with corporates.

Jacques-Philippe Marson, BNP Paribas Securities Services: Doing business in China is not risk free.

Lynn Mathews, CLS Services: SWIFT must change how it is perceived in Asia.

Marilyn Spearing, Deutsche Bank: Banks must overcome their tendency to be reactive.

Sibos issues Friday 13 October 2006 – page 3

unsettling events that don’t even come close to being direct hits. To ask employees to work effectively when they are worried not only about themselves but also about their families could be unrealistic, he sug-gested. Gallagher also commented that an

early-stage network attack would look the same whether it sourced back to a hacker, a hostile intelligence agency, or a terrorist.

From here, the session moved into a discus-sion of what the priorities should be for ef-fective disaster-recovery planning. Recount-ing his experience of being in the World Trade Center on 9/11, Owens said, “When it happened, we didn’t fetch the manual and turn to page 50 to find out what to do. You have to practise, practise, practise.” Regular structured walk-throughs with staff and table-top exercises were essential. There was agreement that planning should be as holistic as possible, and that clear roles and responsibilities should be assigned. Com-munication was vital, as was providing for cooperation with outside entities.

But people were the main priority. “You need a life-safety plan,” said Owens. “Where do people go?” The point was made that even the best-prepared plan will fail if the people who should be imple-menting it are instead worrying about their families. “You need support systems for people who need to talk to people,” noted Gallagher. Qualities required in a catastro-phe were leadership and loyalty; the culture of the organisation should support the busi-ness recovery plan. “In the best-run com-panies, people know who the leaders are. They will follow the leaders,” said Owens.

Moving towards the conclusion that, as Fish put it, “resilience should be built into the DNA of the company,” the panel also dis-cussed the increasing tendency for custom-ers to assess potential banks and business partners on the basis of their business con-tinuity arrangements. As Gallagher noted: “One executive who doesn’t understand the plan and can’t provide the necessary comfort to customers – that’s what will kill you.” <<

Conference

continued from page 1

Central banks inaugurate change slowly – and they’re ill-equipped to do it alone. That was the conclusion of

yesterday’s panel session on the future role of central banks. One of the purposes of the session, according to moderator Leslie Martin, executive general manager of Com-monwealth Bank, was to discover “where there was a degree of traction.”

Martin’s starting point was a tripartite model of change incorporating regulatory mandates, business paradigm shifts and technological advances. “It’s the central bank’s role to see what needs to be done and do it, unless there’s an assessment by the wider community that the central bank isn’t doing what it needs to,” she said.

Central confusionThe problem is that central banks’ role is not globally defined. As the panel dem-onstrated, the remit varies from ensuring monetary and financial stability (the Bank of England) to regulating efficiency and com-petition (Reserve Bank of Australia).

All agreed that confusion over what a central bank should do can act as a barrier to change. Philip Lowe, assistant governor, financial systems, at the Australian central bank said that it was more difficult to gain industry support for non-stability-related re-forms. “Banks don’t always see it as in their commercial interest to help the process,” he said. “There’s a tension between the public and private interest.”

In contrast, Steve Barton of the payments division of the Bank of England outlined a

non-interventionist model of central bank-ing that focused on oversight and left the market to do the rest. “We set a very high threshold for intervention,” he said. “Our first presumption is that the market can sort it. Our primary role is in oversight, not in efficiency or operations.”

In some markets, notably the US, the issue is less the bank’s regulatory capacity than its dual role as regulator and competitor in the payments business. Jeff Neubert, CEO of The Clearing House, a private-sector pay-ments consortium, addressed the structure of the Federal Reserve, which effectively competes with The Clearing House as a payments provider. “It’s a unique relation-ship,” he said. “On the one hand, we com-pete but we also work together closely.” He cited close collaboration after 9/11 that ensured the payments system continued to function.

External forcesThe mention of 9/11 moved several of the panellists to observe that external events, rather than central bankers, were often the catalysts for change. Neubert noted the fact that, after three decades of debate over progress towards the ‘chequeless society’, Check 21 legislation brought it in within three years of cheque-carrying aircraft be-ing grounded in the aftermath of 9/11. “The technology was there, sure. But there was no impetus until 9/11. Then the regulators moved quickly to implement it.”

Chim Tantiyaswasdikul, assistant governor, IT group, at the Bank of Thailand, cited the recent military coup that removed Prime

Minister Thaksin Shinawatra. Reassurances were given quickly to international inves-tors. “The real disruption happened the day after the coup, when the generals declared a bank holiday,” he said. “No-one truly understands how the payments system is inter-related so we had to close down the entire system. We’re still evaluating the impact of that.”

The new military government also appoint-ed the central bank governor to the cabinet. “It’s a golden opportunity for technocrats like us,” said Tantiyaswasdikul. “At least there won’t be a bank holiday next time we have a coup.”

Will it take coup or catastrophe to propel change? With the possible – and yet to be

demonstrated – exception of Thailand, if central bankers are leading the business paradigm shift, it is at an unacceptably slow pace. “It takes us a long time,” said Martin, pointing to the almost 30-year gap between Bank Herstatt’s collapse and the launch of CLS. “Getting the industry organ-ised is a life’s work.”

The panel consensus was that central banks and commercial banks would have to work together to deliver industry change. Yet Tantiyaswasdikul said one of the main chal-lenges facing a central bank in an emerg-ing economy was to get commercial banks to cooperate. “The best thing would have been to be more patient. We should have locked them in a room, sent in food and water, and waited.” <<

Central banks cannot act alone as agents of changeCentral banks and commercial banks need to work together to enact change

“Our primary role

is in oversight, not

in efficiency or

operations.”Steve Barton, Bank of England

the risk that worried them most. “I worry that there could be a terrorist incident and upon reflection, we would find that either because of apathy or lack of preparation, we didn’t have an effective security pro-gramme that could have prevented it,” said

Neil Gallagher, senior vice president, Bank of America homeland security executive, Bank of America. He joined BoA after 25 years with the FBI.

“We are all reliant on technology,” ob-served Lester Owens, managing director, global cash and trade operations, Deutsche Bank. “My number one worry is making sure that we’ve got the right resiliency. Number two is how much we continue to rely on the emerging markets.” For Mike Fish, CIO and member of the executive committee of SWIFT, the key worry was everybody else in the room. “Knowing the kind of resilience and security that your in-stitutions need and expect from SWIFT, and knowing that we need to deliver it, that’s the focus.”

So two votes for resiliency failure, one for emerging markets and one for inadequate planning. Moderator Harry Newman, direc-tor marketing, SWIFT, invited delegates to digivote for their own priorities. Result: what mattered to a session audience comprising 58% bankers and 15% utilities was fraud first (46%), followed by natural disasters (22%), terrorism (17%) and epidemics (15%). Newman observed that there were clearly a lot of bankers in the room concerned about fraud.” Fish responded with the practical suggestion that effective network security required an ‘onion approach’, whereby a network attack would hit layer after layer of security, and eventually give up.

Collective responsibilityBut Gallagher was worried by the 17% that had identified terrorism as the main concern. Did it suggest that apathy was creeping in? “You don’t need to be hit directly to be impacted,” said Gallagher. Companies can be greatly affected by

“When 9/11 happened, we

didn’t fetch the manual and

turn to page 50 to find out

what to do. You have to

practise, practise, practise.”Lester Owens, Deutsche Bank

“One executive who doesn’t

understand the plan and can’t

provide the necessary comfort

to customers – that’s what

will kill you.”Neil Gallagher, Bank of America

David Cruikshank+1 212 635 8274

Alan Verschoyle-King+44 207 964 4034

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Sibos issues Friday 13 October 2006 – page �

dation. By the same token, interoperability is not simply a question of syntax but of business processes. Leibbrandt asserted that market practice harmonisation is one of the most fruitful avenues to pursue in creating an efficient standards environment. Finally, he said, there is a huge need for education and, where XML and UNIFI are concerned, to learn from practice and implementation.

To close the event, Johan Kestens, head of marketing, SWIFT, put the discussion in a SWIFT perspective, suggesting that stand-ards is probably the most valued aspect of SWIFT but also the most taken for granted. He unveiled his ‘four D’ submission to the ‘Richard Soley Annual Acronym Award’: design, discipline, diplomacy and determi-nation. As far as design was concerned, said Kestens, there is a need for balance between the lowest common denominator

and the highest common factor. Discipline too involves a balance between innovation and effectiveness. Diplomacy is necessary for the various participants and initiatives to interact effectively and, finally, determi-nation in a world of short-term objectives is essential. Kestens thanked those people present who had invested their own time and energy in standards development progress.

Soley meanwhile had one specific sugges-tion for next year’s agenda. “More peo-ple want to discuss technology,” he said. “Although I’m the strongest proponent here for developing standards from the business process down rather than from the technol-ogy up, there are still technology choices to be made. People end up buying products and therefore have to be able to evaluate products based on their requirements.” <<

The Standards Forum at Sibos in Sydney attracted a record attendance with a high degree of audience participation

from the outset. The session on the Truth about Standards made liberal use of the available digivoting facility – an innovation which Richard Mark Soley, chairman and CEO, Object Management Group, saw as a valuable addition to proceedings. “The hardest thing to do in this kind of event, where people come to be taught and edu-cated is to get people involved in the discus-sion,” he commented. “Although some of the questions were intended to be silly, they engendered an involvement in the audience which is tremendously valuable and I hope they do it again.”

The session, run by Dominic Hobson, editor in chief of Global Custodian and David Ban-nister, editor of Banking Technology, laid the groundwork for the discussions ahead. Just under half the audience were recorded as from the securities industry and 30% from the payments area. There appeared to be a notable difference in the appreciation of the importance of standards to business growth among the two groups with 70% of payments attendees rating standards as ‘very important’, compared to 55% of securities participants.

A thread running through several sessions at the Forum was the comparative role that competition and consensus should play in standards development. Hobson, for exam-ple, advocated a more ‘entrepreneurial’ ap-proach to standards. “You can test the suc-cess of a standard in the marketplace by its

rate of adoption and the network benefits it generates,” he told Sibos Issues. “It may, for example, be a sub-optimal standard but lots of people on the other side may use it.” Among the audience as a whole, however, there was a clear bias to continue a consen-sual approach to standards development (66%), while 34% of the audience favoured competition in the marketplace.

Among the prominent participants in the Forum, Gerard Hartsink, senior execu-tive vice president, market infrastructures, ABN AMRO Bank and chairman, European Payments Council, acknowledged that this distinction between what should lie in the cooperative space and what should be sub-ject to competition was likely to remain a live issue. “It depends to some extent what you are used to in your domestic environ-ment,” said Hartsink. “The Nordics have a different view from the Latin countries and there is difference between securities people and payments people. I would point out, however, that the war on chip cards in the Netherlands cost the industry USD 500 million down the drain.”

Lessons for actionGottfried Leibbrandt, SWIFT’s new head of standards, summed up a number of key les-sons of the two-day event. Drawing on the digivote in the opening session, he suggest-ed that committees and competition both had a role to play. Secondly, in promoting UNIFI, he stressed that people should not get carried away with issues of syntax and lose sight of the business modelling foun-

Is consensus good for standards?Whether there is a place for competition in standards setting was a theme running throughout the Standards Forum

So just what is interoperability? Yes-terday’s session on achieving ‘profit through interoperability’ began by es-

tablishing what it isn’t: Italian food. In turn, panellists showed slides of their current rela-tionships and infrastructure. In turn, they

conceded that what we were seeing on the screen was ‘spaghetti’. Early on, Mark Kirby, managing director, business model and harmonisation division, Euroclear, put up a slide representing a ‘simplified version’ of Euroclear’s CSD links as a set of multicol-oured circles connected by multicoloured dotted and solid lines. “This is connectivity, but it isn’t interoperability,” conceded Kirby.

Moderator Richard Soley, chairman and CEO, OMG, kicked off the session by declaring, “The nice thing about standards

is that there are so many to choose from.” Soley’s serious point was that the industry still needed to avoid the N+1 problem: too often, a new standard fails to replace old standards, but rather, adds itself to the list of standards. “To define interoperability, it is a stack of decisions from technology

architecture to executive viewpoint focusing on connecting systems.”

“The key point about interoperability is around agility,” said George Pilakis, CIO and head of technology payments systems, ANZ. It’s being able quickly to reach in and implement a solution to an issue.” The main problem, Pilakis suggested, was the relationship between legacy and innova-tion. “What we try to do is force interoper-ability.” This gives rise to inconsistencies. Showing his ‘spaghetti’ slide of a system negatively impacted by its own evolution, Pilakis explained that, “Each component is very complex, and any change to one component can have a vast impact on the system.” Such complexity can even make it difficult to launch new products. The prior-ity is progressively to move to a new para-digm where interoperability is a key feature of systems and components, said Pilakis.

“I think this must be the third or fourth Sibos where harmonisation and standards

Interoperability remains a complex equationInteroperability has to overcome the strained relationship between legacy and innovation

Standards Forum

have been one of the major themes,” said Kirby, introducing his presentation on interoperability between national markets rather than within organisations. Making a ‘provocative’ comment, Kirby pointed to the money that could be made by continuing to handle interoperability issues rather than

solving them. “If we’re honest with our-selves, the reality is that a good many of us here make our money by managing difficul-ties in accessing foreign markets,” observed Kirby. “There are entire industries whose raison d’être is managing lack of interoper-ability.”

Sylvia Steinmann, financial services IT part-ner, Swiss Re, had an answer to that. “In 1999, we were operating in 30 countries, with 71 offices and lots of legacy systems. On the investment side we had seven major hubs,” she said. Post-9/11, and Swiss Re’s first operational loss, the need to increase efficiency and raise asset management returns made STP a priority. “We made a set of tough choices. We decided to select our custodians on the asset management side, and our bankers for the payments side, solely and strictly on the basis of how much they could support our STP. There were a lot of custodians with whom we would not continue our business because of their non-interoperability.” <<

Swiss Re’s Sylvia Steinmann on the complexities of interoperabilityIs interoperability just a matter of pulling the plug on non-interoperable business partners?No. Interoperability is a management mindset. It’s not technical. It’s about how you apply it, about the business choices you have to make.

How do you achieve that mindset?In the session, we heard from Mark Kir-by that there is a whole industry to tell you nothing else but we can make eve-rything work with everything. They’re right, but there’s a price attached. If you’re not willing to pay that price, you have to talk to your top management and pull out from under the rug the total cost of ownership of this very, very complex system landscape. For once, don’t make a complex problem simple. Make it look complex. That’s the only way you can convince your manage-ment to do something about it.

What do you want to achieve next?My dream? On Wednesday, I attended a session on the Trade Services Utility. I was sitting there wondering, why on earth can I not have an Insurance Serv-ices Utility? In the insurance world, other than what I have in my financial services arm, we have point-to-point, spaghetti, legacy systems, all the players and no connectivity.

“The key point about interoperability is around agility. It’s being

able quickly to reach in and implement a solution to an issue.”George Pilakis, ANZ

Richard Soley, OMG: There are still technology choices to be made.

Sibos issuespage 6 – Friday 13 October 2006

Conference

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At the SWIFTNet Exceptions & Investigations session on Thursday, a heavyweight line up of banks and

corporates gathered to talk about their experiences piloting the new SWIFTNet Exceptions & Investigations (E&I) initiative.

Moderator Bud Wolfe, vice president, treas-ury services, JPMorgan Chase opened ses-sion by introducing some sobering statistics. JPMorgan alone processes some 300,000 payments a day, of which 7,000 involve exceptions and investigations and require 270 people to process. On an industry-wide

level, it is estimated that E&I absorbs over 80% of all payment processing resources. The payment back office, with its free-for-mat messaging, diversity of communications channels and non-standardised industry practices, lags behind the front office in the automation stakes (which boasts STP rates in excess of 90%) and costs up to four times more than the front office in opera-tional expense.

The implications are clear: disrupted STP, high running costs and sub-optimal cus-tomer satisfaction. It might, as an example,

take a bank’s customer a couple of weeks to contact them about a delayed payment. But it may take another two months before they get a response back because of the communication delays with correspondent banks.”

The case for STPThree years ago SWIFT and five partner banks decided to inject some STP into E&I. “When we began,” explained Eddie O’Donoghue, global head of operations control, ABN AMRO, “we identified four enquiry types most suitable for automa-tion: Beneficiary Claims, Unable to Apply, Request for Cancellation and Request for Amendment. We now expect to be able to achieve 100% automation with the first two and 80% in the others.” Ultimately, it is anticipated that SWIFTNet E&I will increase STP from the current 5% to over 60%.

Need for critical massThe panel was unanimous that if SWIFTNet E&I was going to work, it needed a critical mass of banks committed to a straight-through network. To those inclined to ‘wait and see’, Wolfe suggested that getting in early gave them an opportunity to shape the project’s future. Frank Behlmer, manag-ing director, head of funds transfer division at The Bank of New York stressed the ben-efits of E&I automation as a service differ-entiator: “Clients expect a rapid response to their enquiries.” O’Donoghue also pointed

out that it was important to have a big view and not to see E&I as a standalone project. It plays a critical role in the bank’s overall payments operation and has a major impact on the initiation to resolution lifecyle. The more efficient E&I can be made, then the more staff can be freed up for more value-added tasks.”

It was also emphasised that E&I automation is not just a matter for the banks. The panel (and a few delegates from the floor) made a call for members of the vendor community to get on board by providing cost-efficient solutions for the modification of back office systems, especially for the smaller banks.

Paul Burstein, managing director, opera-tions services, strategic initiatives, General Electric, as the sole corporate on the panel, saw E&I automation to play a strategic future role in customer self-care. “Within five years,” he suggests, “bank customers and corporate supplier partners may well be making their payment enquiries and receiv-ing instant responses directly from their provider’s website.”

Wolfe wrapped up the session with a vi-sion of the future. “When the first tel-ephone was introduced, it was mounted on the wall as a decorative curiosity. Eventually, of course, it found its place as an indispensable communication tool. In the same way, E&I automation will be em-braced as the indispensable payment tool of tomorrow.” <<

Injecting STP into E&ISWIFTNet E&I promises to deliver a twelve-fold increase in STP rates

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Sibos issues Friday 13 October 2006 – page �

Conference

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“In years gone by, people standing here would have been talking about Letters of Credit. We certainly can’t

make Letters of Credit as sexy as the Trade Services Utility (TSU),” said David Hennah, senior product manager, trade services at SWIFT. He went on to explain why “we want you, TSU.”

At the highest level, the TSU (a bank-to-bank central matching and rules-based engine) establishes an initial baseline by comparing purchase data submitted by the buyer’s and seller’s bank, he said. When the TSU receives a submission, it pushes it through to a second bank to find a match. “Once we have a match we have an estab-lished baseline and can track the transac-tion. We can follow the movements and delivery of goods,” said Hennah.

The TSU will help banks re-intermediate themselves back into the supply chain by allowing them to play an enlarged role in open account trading between buyers and suppliers. Under open account trad-ing, partners are able to connect more efficiently with one another, reducing the need for banks to facilitate and manage the transaction.

Enabling banks to enhance their existing service offerings and develop new services for their corporate customers, the TSU pro-vides support for open account transactions and “allows for the gradual deployment of new services,” Hennah added.

Project statusPiloting began as planned in February 2006. “Testing has been progressing well and we have received nothing but positive feedback from the banks,” said Hennah. He stressed that SWIFT and the pilot banks remain firmly committed to the SWIFTNet TSU. More time is needed though to ensure the resilience, reliability and robustness of the system. “We’re more than 90% of the way there but until all our ‘Go Live’ criteria are 100% met we won’t go live,” said Hennah. SWIFT has not announced a release date yet.

Banks’ perspective“We believe the TSU supports all banks in developing new value-added services for clients and positions us for future business growth,” said Peter Tijou, vice president, business development, JPMorgan Chase. Of a long list of benefits the TSU brings to banks, he cited standardised XML data formats as the highlight. “They facilitate STP and offer handling efficiencies to create an industry-standard approach to doing business,” he noted.

Other benefits include the automation of the matching process and the joining up of two isolated functions (transactions between the buyer and buyer’s bank, and between the seller and seller’s bank) to facilitate an end-to-end, transparent solution. SWIFT, as a third-party provider of services, is bank-neutral. “Banks trust the service delivery and resiliency model,” Tijou added. Depending upon bank capabilities, corporates can ben-efit from improved working capital, greater visibility in the supply chain, improved buyer and seller financing, inventory finance and event management. “We want all banks to join TSU,” he concluded. <<

“Banks trust the service

delivery and resiliency model.”Peter Tijou, JPMorgan Chase.

SWIFTNet TSU helps banks meet supply chain challengeData matching and workflow engine gives banks the opportunity to

add value to their offerings to clients

In today’s session on the Evolution of the SWIFTAlliance portfolio and SWIFT con-nectivity products Peter Vanderauwera,

SWIFT and Paolo Bernini, SWIFT focused on one of its latest communications interface products, SWIFTAlliance Release 6. Release 6 has been designed to give enriched secu-rity and relationship management capabili-ties to the users of SWIFTNet Phase 2. This means that not only does it deliver technical advantages (security), but Release 6 also of-fers business related (CRM) benefits. “One of the best parts,” he added, “is the fact that Release 6 is offered as part of a SWIFT customer’s standard maintenance contract.”

A single service windowVanderauwera went on to talk about SWIFT’s latest messaging solutions. “Our users will be pleased to know that SWIFTAl-liance Entry is now able to automate the latest MX-based messaging as well as FIN. Our desktop interface, Messenger, is an

ideal way for customers to begin using their new SWIFTSolutions manually.” Essentially, the SWIFTAlliance portfolio offers a wide range of ways to provide a single window to all SWIFTNet services, counterparties and providers. “The great benefit of this,” he explained, “is that customers can now re-duce the time it takes to deploy and access services, while also providing a harmonised messaging platform to access solutions at an industry-wide level.”

Bernini then took up the baton and talked about the fact that Release 6 includes a number of improvements specifically de-signed to ensure SWIFT customers are ready for technology advances and upgrades. These could include enhanced security, a web services host adapter and monitor-ing capabilities. “Implementation has been made easier as well,” he noted. “SWIFTAl-liance Messenger is now available with an embedded application server which makes deployment much easier.” <<

Empowering SWIFTNet Phase 2How SWIFTAlliance Release 6 enriches security and relationship management

Sibos issuespage � – Friday 13 October 2006

Conference

The thorny problem of automation in post-trade settlement and clearing was the principal theme tackled by speakers in the focus session Global movement in the post-trade arena. With global STP still far from complete, the debate examined the reasons for this deficiency and looked at how the industry can adopt more efficient process-ing. “We need to get out of the email, out of the spread sheet and out of the fax machine,” declared Adam Bryan, president and CEO of Omgeo. “An automated trade is around 20 times cheaper to process than a service that’s coming in and has to be rekeyed.”

To illustrate the low levels of automation take-up, Harry Turner, division director, information services, Macquarie Securities, revealed that his company has only two clients sending in allocations via FIX even though the technology has been in place to support that for four years. “It’s not due to a lack of technology – there’s a lot out there to handle automation,” he said. “But how do you sell technology to a fund manager who types up a Bloomberg email to us, and just ships it through? He doesn’t see any kind of huge cost-base there.”

If the principal barrier to processing auto-mation is the unwillingness of clients to adopt the technology, how do you convince the buy-side to get on board? One way forward, suggested moderator Dominic Hobson, editor-in-chief, Global Custodian, could be for the sell-side and banks to start differentiating pricing of their services based on automation versus non-automation.

However, Margherita Piliero, global head of network management and post-trade

services, UBS, warned that this practice could be counter-productive. “You’ll soon lose clients if you change the fee because they are insufficiently automated,” she said. “The client might use your bank for many more products, so in light of the broader relationship, it would be crazy to antagonise them on one product.”

Getting the buy-side to focus on post-trade automation remains as problematic as ever

The best approach, suggested Taylor Bod-man, partner, Brown Brothers Harriman, was one of education. “When you take time to create visibility of the back office inef-ficiencies, the buy-side responds,” he said. “But if you are just going to show up with a penalty charge, it’s going be a very short conversation.” Another way forward, said

Bryan, could be the outsourcing to IMOs in order to bring clients to more central solutions and utilities. “IMOs offer more than just the processing. There is value in the whole package. If a lot of investment managers outsource to IMOs we’ll start to get a lot more uptake as well.”

Regulation rebuffedWhat if none of this works? Is regulation the only remaining option? As a delegate put it from the floor: will any significant post-trade efficiency happen without a regulatory mandate, or a threat of regula-tion?

Rejecting the notion, Piliero pointed to the complexity and length of time that would be involved in implementing regulations, particularly in Europe. Complaining that the industry was already bogged down with too many rules, she believed it could deliver its own solutions. “On a whole range of things, the industry has moved forward. We shouldn’t be asking for additional regula-tions. We should be taking the lead.”

SWIFT moves outsideThe panel admitted, however, that a single across-the-board messaging standard was not on the horizon. But Bodman at least took some comfort from developments at this year’s Sibos. “One of the great things we heard about this week was SWIFT’s M&A work with FpML,” he said. “SWIFT has found a way to merge with a standard outside of what it manufactures. This is a space in which SWIFT can do great work for us – and help accelerate adoption in the industry.” <<

Asset managers must engage with the post-trade space

“When you take time to create visibility of the back office inefficiencies, the buy-side responds… but if you are just going to show up with a penalty charge, it’s going be a very short conversation.”

Taylor Bodman, Brown Brothers Harriman

Sibos issues Friday 13 October 2006 – page �

Conference

When you started at SWIFT, did you see industry transformation as a journey without end or were you expecting to be able to say at some point, ‘we’ve done our job. Let’s go home.’?When we started, the focus was specifi-cally on the payments side of the business and on Western Europe, Canada and US. I remember putting my name to a business plan that said SWIFT’s traffic would prob-ably not exceed 300,000 transactions a day. That was one consultant’s prediction that was proven wrong!

Looking back, it was probably the last time we had such a transformational event, involving a radical rethinking of the way we would do this sort of busi-ness. It is also interesting to note that we were not driven by regulation. The gen-esis of SWIFT was in competition. There was one major American bank – Citibank at the time – that was launching a way of running correspondent banking using a structured telex system with a set of standards. SWIFT was originally a reac-tion by the Europeans to this competitive threat from a very big player. The found-ing banks then realised that, because most of correspondent banking was to-wards the US and the dollar, you needed to draw the major US banks in, including Citibank.

From a restricted group of banks at the outset, other participants in the financial services industry now come under the SWIFT community umbrella. How smooth was the transition?The first securities participants were Cedel and Euroclear, who came in as depositories. The major breakthrough in that area was bringing in the broker-dealers – a long and arduous process. There was a push by the universal banks, primarily the Swiss and the Germans, to expand into the securities business. However, there was also strong resistance from some US and French banks, in particular, who thought that admitting securities brokers to the network would be a threat to their custody business.

Once we had brought in the broker-dealers, however, it then made sense to bring in the fund managers, though that also took some time.

How did the vendors and solution providers initially see SWIFT and vice versa?In the beginning, SWIFT was focusing on getting the network up and running. Then we realised that to a certain extent we ran the risk of having this fantastic network, but having no one to talk to it, because there was no packaged solution that would allow the banks to get both a technical and logi-cal interface into the system.

At that stage, SWIFT itself, together with three vendors, brought in its own line of interfaces, the SIDs. We actually approached IBM, which had the lion’s share of the mainframes in the major banks, but they were originally just not interested. It took a campaign by one individual in IBM Germany to pioneer their involvement and IBM then brought out a product called Direct SWIFT Link (DSL). Gradually others then developed interfaces to SWIFT and extended their functionality.

SWIFT now has a large universe of partners which I think is good. No bank today is go-ing to go and develop its own interface to SWIFT. If SWIFT does not have the vendor community working with them, their serv-ices are not going to be used.

If you look at where SWIFT is today and what you first joined are you surprised by the difference?

Not really. I see three parallel tracks. One was geographical expansion. Second was new business domains within international banking and then there’s the evolution of the network itself. Sometimes you have to slow down slightly on one of these tracks to allow one of the others to catch up.

The introduction of SWIFT was a major industrial transformation. Since then, we’ve had technological progress and broadened areas of application. It’s been more of the same, but better, faster, more secure. But we haven’t rethought the way we’re doing business. Now we need to begin a second transformational change. Now that cor-porates can access the network, we have to ensure that everyone derives value. What we really ought to look at is how to integrate the logistics and financial chains. This is the next challenge and to meet it, we really ought to rethink the way we are run-ning the business. <<

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Industry perspectiveOver the past three decades Alec Nacamuli has been directly involved in the transformation of the global financial services industry, from his time as a SWIFT executive at its inception to his current position in IBM’s Global Transaction Management team, responsible for business development and strategy. As he approaches retirement, he looks back with Sibos Issues on his expectations for the industry.

“It’s a long way, but worth it when you get here,” is how Patrik Neutjens, director of Sibos and corporate events, sums up the popular view on Sydney 2006, the second-largest Sibos, with delegate numbers just a few hundred shy of the 6,000 benchmark set last year at Copenhagen. “In earlier days, there was a little dip, when we came to the Asia-Pacific region, but that hasn’t been the case this year and the good thing is that we’ve maintained the quality.”

Seventy-five percent of this year’s delegates were drawn from senior management. For the first time, a higher proportion of delegates were responsible for business development strategy than sales. “Sibos is now a networking event rather than an operational conference. It has found its place as the global networking event of the financial industry,” says Neutjens.

Global is the key word here as far as Neu-tjens is concerned. Among first-time exhibi-tors at Sibos 2006 are Jordan’s Arab Bank and Russia’s Sberbank. With the growing role of the ‘BRIC+’ countries on the eco-nomic and financial stage, it was also ap-propriate that banks from China and India were prominent among a large Asia-Pacific contingent. Australia’s banks have also been keen to make their local presence felt, providing 450 delegates as well as speakers across many of the week’s sessions.

A big change for 2006 has been the use of ‘digivoting’ to introduce an interactive ele-ment to the sessions and debates. “We’re now not just sharing information with the del-

egates, we’re engaging them in a dialogue,” says Neutjens, who sees the immediate feedback provided by digivoting as support-ing SWIFT’s role in advancing industry debate. “The interactive element of this year’s Sibos has been very well received.”

Boston 2007Next year means Boston and the glory of the New England fall, something of a contrast to springtime in Sydney. As well as a change in the temperature, Neutjens predicts a slight shift in demographics. “Twenty-six per cent of this year’s attendees were from a securities background. 2007 in Boston means a larger presence from the asset management sec-tor,” he says. “I’d also expect a greater pres-ence from corporates, especially given the enthusiasm and progress made on corporate access this year.” <<

What an event!

“Sibos has found its place as the global networking event of the financial industry.” Patrik Neutjens, SWIFT

Patrik Neutjens, SWIFT

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Sibos issues

Business @ Sibos

Standard Chartered embraces SWIFTSolutions in trade, payments and securities in support of their transaction banking strategy.

The bank will integrate SWIFTNet Cash Reporting and E&I, TSU and Proxy Voting in its portfolio of services and extend the use of SWIFTNet for corporates. <<

Standard Chartered leverages SWIFTSolutions

Karen Fawcett, Standard Chartered and Lázaro Campos, SWIFT

Friday 13 October 2006 – page 11

The final day of Sibos in Sydney saw payments services provider Voca sign up for a multi-purpose SWIFTNet channel. The Voca SWIFTNet Transmission Service (STS), which is fully SEPA compliant, will launch in March 2007. Voca STS is designed to utilise SWIFTNet File-Act and FIN and will support Voca’s new real-time payment service, which is scheduled for launch in November 2007.

“This new channel opens up international access, providing a complete solution for banks which need to cope with the introduction of SEPA on top of their existing systems,” said Marion King, CEO, Voca. “Reusing the SWIFT infrastructure makes perfect business sense.” <<

Voca’s SWIFTNet solution for EuropeLeft to right: Gary M. Bertone and Michael King, SWIFT; Marion King, VOCA; Peter Hazou, HSBC

Left to right: Ed Adams, SWIFT; Gary Bertone, SWIFT; Juan José Garcia Mateos, BBVA; Hank Farrar, CHIPS; Fred Slavin, SWIFT; Juan Martinez, SWIFT

Left to right: Gary Bertone, SWIFT; Ed Adams, SWIFT; Taylor Bodiman, BBH; Roderick Brush, SWIFT; George Thomas, CHIPS; Mark Del Col, SWIFT

Left to right: Fred Slavin, SWIFT; Gary Bertone, SWIFT; Sandra Peterson, HSBC; Hank Farrar, CHIPS; Ed Adams, SWIFT

Left to right: George Thomas, CHIPS; Ed Adams, SWIFT; Diane Valcic, SWIFT; Fred Slavin, SWIFT; Thomas Halpin, JPM Chase; Hank Farrar, CHIPS; Scott Murray, JPM Chase; Gary Bertone, SWIFT; Roy Decicco, JPM Chase

A tale of two networksMore banks sign up for CHIPS on SWIFTNet

“Most large banks have chosen to adopt the SWIFT and CHIPS IP network infrastruc-ture in response to the news that The Clearing House (TCH) will unplug its aging X.25 network in March 2007,” said Fred Slavin, senior manager, SWIFT.

Most banks have chosen to move their traffic through a combination of the CHIPS pri-vate IP network and the SWIFTNet IP network, said Gary M. Bertone, director of market infrastructures. “If you can leverage two strong, secure and robust networks, you’ll be in a better position to deal with any problems that may arise than you would be with just one network,” he noted.

“Many banks wanted to share their final decision about which connectivity option they will adopt with the community at Sibos. It’s a win-win situation for the community,” said Slavin. <<

NTTData and SWIFT will jointly conduct a feasiblity study on building a payment data infrastructure

Partnership agreements signed at Sibos by SIS, the Swiss international central securi-ties depository, solutions firm Incentage and SWIFT will pave the way for a fully-compatible clearing and settlement service

offering for the Swiss financial sector. “SWIFT is now in the position of filling the gap in the Swiss market in the areas of SIC and SECOM,” said Klaus Schritt, regional manager, SWIFT. <<

SIS settles for partnership

Left to right: Felix Huber, Incentag; Klaus Schritt, SWIFT; Peter Sam, SIS Group

The World Savings Banks Institute (WSBI) and Eurogiro are to jointly market Eurogiro remittance solutions and the Eufiserv ATM Switching service.

Eurogiro’s network reaches 200 countries and handles 30 million financial transfers a year, while the WSBI has retail bank mem-bers in over 100 countries that provide

money transfer services. “Our members all over the world can now offer efficient, cost-effective transfer services to clients,” said Chris De Noose, chairman of the WSBI management committee. “Our combined distribution networks now enables us to achieve better remittance reach to those in less developed countries,” commented Eurogiro managing director Henrik Parl. <<

Teaming up on global remittances

Sibos issuespage 12 – Friday 13 October 2006

Navigate the Changing Landscape of Payments

Topstrip1 copy.qxd 21/9/06 11:53 Page 1

STEP

A new world of payments is taking hold.Are your operations up to the task?

Visit SunGard at Booth E05 to map your course www.sungard/payments

SibosSTEP.bottomstripv2.qxd 21/9/06 12:22 Page 1

Eating out

> Collits Inn RestaurantHartley Vale Road, Hartley Vale NSW 2790

Tel: 02 6355 2072

Built in 1823 to serve the first explorers over the Blue Mountains, this venue has won several awards including 2003 Best European Restaurant in Australia. It serves traditional French country food, an example being grilled salmon fillet with potato gnocchi, winter vegetables and sweet garlic sauce. Tempt your tastebuds with soft-cen-tred chestnut pudding and crème fraiche ice cream while watching the wallabies and kangaroos which graze nearby in the evenings.

> Echoes Boutique Restaurant3 Lilianfels Avenue, Katoomba NSW 2780

Tel: 02 4782 1966

Views of the mountains, cliff edges and rainforest valleys surround you as you are served modern Australian produce infused with Asian sauces and garnishing. The luxurious, light-filled and spacious dining area is the perfect setting to sample dishes such as leaf spinach baked with reggiano parmesan and mascarpone in tart pastry, potato cream with rocket and tomato water.

> Roberts RestaurantHalls Road, Pokolbin NSW 2325

Tel: 02 4998 7330

This early settler’s slab cottage is home to a five-star gourmet experience which has won several awards. Famed for its fresh oysters, crabs and scallops, homemade pastas and risottos, you can taste exqui-site food such as thin venison steaks on a beetroot and baby onion confit with muscat sauce.

> Esca Bimbadgen790 McDonald’s Road, Pokolbin NSW 2320

Tel: 02 4998 4666

This award-winning restaurant is found up the rose-clad drive of Bimbadgen Estate, with its bell tower and acres of vines and gardens. Fresh, modern Australian cuisine is served here, dishes such as soy poached foreloin of pork with sweet potato and garlic chive dumplings, chilli and tamarind sauce and coriander salad. Admire the view as you savour baked ginger bruleé with saffron poached pears and a lime crisp.

> DisclaimerSunGard is not responsible for the content of this page.

Time off-site

If the sight of the Opera House and the Harbour Bridge no longer fill you with awe, head for the Blue Mountains for

stunning views of an altogether different kind. The haze which gave the mountains their name is due to the oily mist given off by the eucalypts and when seen from a distance makes the ranges appear blue.

There are three national parks in the region: Wollemi is New South Wales’ largest forest-ed wilderness area, and with its limited ac-

cess is so isolated that a species of pine tree was only discovered here in 1994; Kanan-gra-Boyd is great for bushwalking, limestone caves and the Kanangra Walls Plateau which is surrounded by sheer cliffs and is reached by a rough road; and the most accessible and popular is the Blue Mountains National Park, with breathtaking scenery, bushwalks, Aboriginal engravings, canyons and cliffs.

More than three million visitors come each year to this park which is part of the Great-

er Blue Mountains World Heritage Area, nominated due to its diverse range of flora and fauna, outstanding natural values and its beautiful natural landscapes. Depend-ing on how energetic you are feeling, you can find a lookout and absorb the views over the sandstone outcrops and hazy blue forests, or you could walk or cycle along the clifftops and down into the valleys, follow-ing paths discovered thousands of years ago by Aboriginal hunters.

Over 140km of tracks take you through native gardens, to the Blue Gum Forest, the Grand Canyon Track, stone staircases and forests. If you fancy a different view of the region, take the zig-zag railway or even a flight in an open-cockpit biplane.

Make a break of it and find somewhere to stay, allowing you to take in the scenery over a few days. The tourist information centre for the area can be contacted on 02 4739 6266, for details of accommoda-tion ranging from youth hostels to bed and breakfasts to luxury hotels.

Did you know... ?

Only one and a half hours’ drive to the northwest of Sydney lies Kurrajong, a tranquil place where you can enjoy

the view of the mountains, wander around browsing the antique shops and stop for a relaxing coffee whilst admiring the scenery. There are also plenty of bed and breakfasts if you feel like taking a short break here.

If you like the idea of something a little quirky, then Kurrajong’s annual Scarecrow Festival could be for you, taking place this year on 27-29 October. There will be a photo exhibition, music, entertainment and market stalls and on the Sunday dozens of scarecrows are positioned in Memorial Park for the ‘Spectacle of the Scarecrows’, the winner becoming the proud owner of a gold trophy.

Fancy a tipple?

For the wine-lovers amongst you, a visit to Hunter Valley is a must for tasting novices and old hands. The oldest wine

region in Australia, it is best known for its Semillon and Shiraz with over 90 wineries in the Lower Hunter (mainly around Cessnock and Pokolbin, about 40km west of Newcastle) and approximately six in the Upper Hunter.

Vines were first planted in the 1820s but the wineries declined over the years until the 1960s when wine making again became an important industry. You can wander through

Feeling fruity

How many of you knew that Granny Smith was a real Australian pioneer? In 1868, Marie Ann Smith grew by

chance, not design, a crop of tangy green apples on her farm in Eastwood, and the locals haven’t stopped celebrating.

In her hometown, North Sydney’s largest annual event, the Granny Smith Festival, is held. This year it will be on 21 October and offers all-day activity with a street parade, carnival rides, market stalls, a designated youth area, four stages which are host to a huge variety of entertainment (including the Rolling Stones tribute band ‘Satisfac-tion’), an apple-baking competition and a fireworks display to round off the evening. If you want some carnival action, get yourself along to the city of Ryde and join in the fun!

the vineyards at your leisure or with a tour guide, or take a helicopter trip over the area to see things from a different angle.

On Saturday 28th October, Jazz in the Vines gives you the opportunity to relax with a picnic amidst the beautiful scenery, listen-ing to mellow music against the backdrop of the Brokenback Mountains (no cowboys in sight!) Accommodation is available in the area, and contacting the tourism centre on 02 4990 0900 should enable you to book a place to stay or a vineyard and tasting tour.

Exploring further afield