MT527 Triparty Collateral Instruction

When MT527 is used

In triparty collateral management two trading parties agree a deal that needs collateral, such as a repo, a securities loan, a secured loan or margin for derivatives, and appoint a third party, the triparty agent, to manage the collateral: select eligible securities, value them, apply haircuts and limits, substitute and return them. The triparty agent is typically an ICSD, a CSD or a large custodian bank. The trading parties do not instruct individual securities movements; they tell the agent about the exposure with an MT527, and the agent works out and moves the collateral.

The sender is Party A, the collateral giver or the collateral taker (field 22H::REPR: PROV for the giver, RECE for the taker), or an account owner such as a global custodian or investment manager that holds the account at the triparty agent on the trading party’s behalf. The receiver is the triparty agent. For most instruction types both parties send an MT527 and the agent matches them before acting, for example when an exposure is opened or its principal is adjusted.

Field 22a::CINT says what the instruction does: INIT opens (initiates) a transaction, PADJ adjusts the principal (exposure) amount, CDTA changes or sets the closing date, RATA changes the rate, TERM closes the transaction; further codes cover margin, collateral, data and settlement adjustments and delivery by value. Field 22a::COLA gives the exposure type, for example REPO for a repo, SLEB for securities lending and borrowing, SLOA for a secured loan, CCPC for collateral for a central counterparty.

The flow around it: the agent acknowledges and reports matching and processing in the MT558 Triparty Collateral Status and Processing Advice, and reports exposures and the collateral held against them in the MT569 Triparty Collateral and Exposure Statement. The securities and cash movements the agent makes on your accounts are confirmed like any other settlement, with MT544 to MT547 and the usual statements.

Each triparty agent publishes its own usage guide: which CINT and COLA codes it accepts, which references are mandatory, how baskets and eligibility sets (13B::ELIG) are named, and whether it supports REPL. Read it before the first instruction. At least one agent notes that using the MT527 requires Message User Group (MUG) registration with Swift.

MT527 format: sequences and fields

Rules worth knowing

• Sequence B depends on the function: mandatory when 23G is NEWM or CANC, not allowed when 23G is REPL (network error E08, as reproduced in public usage guidelines).
• When sequence B is present and 22a::COLA is not SLEB, 19A::TRAA is mandatory (E65). The rule does not apply when COLA carries a data source scheme.
• All 98a qualifiers in sequence A are optional, but at least one must be present (D92).
• A cancellation repeats the instruction’s details and quotes the SEME of the original in 20C::PREV in sequence A2. To change an exposure, agents that do not support REPL want a cancellation followed by a new instruction.
• Matching instructions from both parties must agree on the exposure details (dates, amount, rate, exposure type, parties). A mismatch shows up as an unmatched status in the MT558.

MT527 example

ZagTrader Test Bank (ZAGTAEADXXX) has agreed a one-week triparty repo with BANKGB2LXXX: ZagTrader borrows EUR 50,000,000 and gives collateral. It sends the opening instruction to the triparty agent ICSDLULLXXX as collateral giver. BANKGB2L sends its own MT527 as collateral taker, and the agent matches the two before allocating collateral.

{1:F01ZAGTAEADAXXX0000000000}{2:I527ICSDLULLXXXXN}{4:
:16R:GENL
:28E:1/ONLY
:20C::SEME//ZT527-261020-01
:20C::SCTR//ZTREPO-0042
:20C::CLCI//OPEN-0042-001
:23G:NEWM
:98A::EXRQ//20261022
:98A::TRAD//20261020
:22H::CINT//INIT
:22H::COLA//REPO
:22H::REPR//PROV
:16R:COLLPRTY
:95P::PTYA//ZAGTAEADXXX
:16S:COLLPRTY
:16R:COLLPRTY
:95P::PTYB//BANKGB2LXXX
:16S:COLLPRTY
:16R:COLLPRTY
:95P::TRAG//ICSDLULLXXX
:97A::SAFE//TPA-COLL-0042
:16S:COLLPRTY
:16S:GENL
:16R:DEALTRAN
:98A::TERM//20261029
:19A::TRAA//EUR50000000,
:92A::PRIC//2,15
:16S:DEALTRAN
-}

Line by line

The agent answers with an MT558: first accepted and unmatched, then matched once BANKGB2L’s MT527 (with REPR//RECE) arrives, then the collateral allocation. The exposure and collateral appear in the MT569 from then on.

To close the repo early, ZagTrader would send a new MT527 with CINT//TERM; to change the amount, CINT//PADJ with the new TRAA.

All BICs, references and accounts are made up.

Common errors and rejects

1. Sequence B missing or not allowed

   A NEWM or CANC without sequence B, or a REPL with it, fails network validation (E08). Include DEALTRAN on new and cancellation messages; leave it out on a replacement.

2. Transaction amount missing

   With sequence B present and an exposure type other than SLEB, 19A::TRAA is mandatory (E65). Securities lending exposures are the exception because the exposure follows from the securities lent.

3. No date in sequence A

   Every 98a qualifier is optional on its own, but at least one must be there (D92). Most agents want EXRQ or SETT, and some reject a message that has both.

4. Instruction stays unmatched

   The agent waits for the counterparty’s MT527 and compares them. Different closing dates, amounts, rates, exposure types or party identifiers keep the instruction unmatched in the MT558. Agree the details with the counterparty and cancel and re-send the wrong one.

5. Message rejected by the agent for its own rules

   Agents publish which CINT, COLA and PRSS codes, references, baskets (13B::ELIG) and party formats they accept. A message that passes Swift validation can still be rejected for these rules. Check the agent’s guide and the reason in the MT558.

MT527 in ISO 20022

The ISO 20022 counterpart is colr.019 Triparty Collateral Transaction Instruction, one of the triparty collateral messages developed by Swift with the Eurosystem’s AMI-SeCo for the Single Collateral Management Rulebook for Europe. The status advice, allegement and reporting flows have their own colr messages in the same set.

Under the European triparty standards the ISO 20022 messages are mandatory for triparty agents, Eurosystem central banks and CCPs. Other collateral givers and takers may keep using ISO 15022 (MT527) for as long as their triparty agent supports it, which they agree bilaterally with the agent.

Related messages

• MT558Triparty Collateral Status and Processing Advice
• MT569Triparty Collateral and Exposure Statement
• MT544Receive Free Confirmation
• MT545Receive Against Payment Confirmation
• MT546Deliver Free Confirmation
• MT547Deliver Against Payment Confirmation
• MT535Statement of Holdings
• MT575Report of Combined Activity

MT527 questions

What is an MT527?

A Triparty Collateral Instruction: the message a collateral giver or taker sends to its triparty agent to open, adjust or close a collateralised exposure such as a triparty repo or securities loan.

What is the difference between MT527, MT558 and MT569?

The MT527 is your instruction to the triparty agent. The MT558 is the agent’s status and processing advice on it (accepted, matched, allocated, rejected). The MT569 is the agent’s statement of exposures and the collateral held against them.

Do both parties have to send an MT527?

For most instruction types, yes: the agent matches the collateral giver’s and the collateral taker’s instructions before acting, for example on opening or on a principal adjustment. Some agents offer one-sided instructions for certain events; check the agent’s guide.

What do CINT and COLA mean in an MT527?

22a::CINT is the instruction type (INIT, PADJ, CDTA, RATA, TERM and others). 22a::COLA is the exposure type, the reason collateral is needed (REPO, SLEB, SLOA, CCPC and others).

What is the ISO 20022 equivalent of the MT527?

colr.019 Triparty Collateral Transaction Instruction, part of the triparty collateral message set used under the European triparty standards.