Swift, the international financial communications network that has brought huge cost savings and efficiencies to commercial banks over the past three decades, has grown in recent years to become a significant securities industry utility as well. In 2007, Swift's securities-related message volume soared 32 percent, to 1.39 billion. Its more mature banking-payments segment, though still accounting for a majority of Swift traffic, at 1.8 billion messages, increased at half that rate. Securities' share of total messages rose to 40 percent from 33 percent five years earlier. But the impressive numbers mask a shortcoming of the securities industry division that La Hulpe, Belgium-based Swift formed in 2000 to focus on that part of its market: It has fallen short of goals to bring the buy side into the fold, including hedge fund managers and hundreds of small and medium-size U.S. asset managers that have long resisted Swift's entreaties, mainly because of membership and transaction costs. By failing to reach these firms, Swift doesn't just lack the nearly universal coverage it has enjoyed in the global banking community. It loses out on potential transaction growth and fees. It also fails to fully realize the economies of scale that would result from having the maximum number of participants.
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