MT940 and MT942, account statements

The MT940 is a customer statement message that provides the end of day statement for an account, usually a nostro or vostro account held with another bank. It lists the opening balance, all transactions during the day with their references and amounts, and the closing balance. The MT942 is an interim transaction report that provides intraday information about transactions that have occurred since the last statement. Together, they allow a bank to reconcile its nostro accounts, to monitor its liquidity, and to identify any missing or unexpected transactions. The MT940 is structured with fields for the account, the statement number, the opening and closing balances, and then a repeating block for each transaction. Each transaction block includes the value date, the debit or credit mark, the amount, the transaction type, the reference, and supplementary details. The format is compact but complete, and it is designed for automated reconciliation. A bank that receives an MT940 can match each transaction to its own payment records and identify breaks where a transaction is missing, duplicated, or for a different amount. The MT942 is particularly useful for intraday liquidity management, because it lets a bank see its position during the day rather than waiting for the end of day statement. In a real time settlement environment, intraday information is essential for managing liquidity and for ensuring that payments can be settled. As banks migrate to ISO 20022, the MT940 and MT942 are being replaced by camt zero five three for end of day statements and camt zero five two for intraday reports, which carry richer data and structured references. An analyst who understands MT940 and MT942 will find the camt messages familiar, because the business concepts of opening balance, transactions, and closing balance are the same. Work through a real statement. A bank holds a US dollar nostro account with its correspondent in New York. The MT940 for Tuesday opens at USD 2,400,000. During the day there are 18 transactions, a USD 250,000 debit that funds a customer payment, a USD 180,500 credit from an incoming cover payment, and 16 smaller items. The statement closes at USD 2,330,500, and the arithmetic is exact. 2,400,000 Minus 250,000 plus 180,500 equals 2,330,500. The reconciliation team matches each of the 18 lines against its own payment records by value date, amount, and reference. One line does not match. A USD 12,400 credit appears twice, once in the morning file and once in the afternoon file. That is a break, and it goes into the exception queue with the statement number and the transaction reference, so the correspondent can confirm whether it is a genuine duplicate or two separate payments that happen to share an amount. The MT942 earns its keep during the day, not after it. At 11 in the morning the treasury team pulls an MT942 and sees the nostro balance at USD 1,850,000, with three large customer payments still to go out before lunch. They move USD 500,000 in from another account before the balance runs short, and the afternoon payments settle on time. Without the intraday report they would have discovered the shortfall at the end of the day, when it is too late to fix. As banks move to ISO 20022, the same information arrives as a camt zero five three end of day statement and a camt zero five two intraday report, with richer structured references. In practice many banks still receive MT940 files every morning while their camt zero five three feed is being built, so an analyst must be able to read both formats and to write the mapping between them, field by field, for the reconciliation team.