Industry Standards are industry owned and technology neutral
Industry Standards for LCs, Guarantees and Open Account 3
Issues with proprietary formats and rulebooks
AMENDMENT ACCEPTANCE
NOTIFICATION
DISCREPANCY ADVICE
MT 798<749>
DISCREPANCY ADVICE RESPONSE
COMPLIANCE
ADVICE NOTIFICATION
MT 798<753> MT 798<754> MT 798<731> MT 798<732> MT 798<733> MT 798<734> MT 798<755> MT 798<756> MT 798<757>
Developed by international standardisation bodies
• Trade Finance instruments
• MT standards • ISO 20022 registration authority • ISO 9362 BIC registration authority, … • ISO 20022 Financial Industry standards • ISO 9362 Business Identifier Code (BIC), …
1 Industry Standards for LCs and Guarantees
MT798
Documents
MT7xx
MT798
Documents
1
Buyer
Buyer’s bank(s)
2
3
Seller
Seller’s bank(s)
SWIFT's MT7xx are industry owned, technology neutral standards in support of ICC's UCP600 and URDG758 rules Industry Standards for LCs, Guarantees and Open Account
Industry Standards enable banks and corporates to increase efficiency when respecting all of the above best practices
Industry Standards for LCs, Guarantees and Open Account 5
La Hulpe, 1 December 2011
Trends
Digitisation
Regulation
Innovation
Collaboration
Industry Standards for LCs, Guarantees and Open Account
2
Industry standards
• SWIFT's MTs for LCs and Guarantees • ISO 20022 for open account • Business Identifier Code (BIC or ISO 9362) for banks and corporates • SWIFT for bank-to-bank (FIN or TSU) • SWIFT or Internet for corporate-to-bank • SWIFTReady vendors • In-house development
REDUCTION / RELEASE ADVICE
MT 798<766 > MT 798<769>
9
Industry Standards for LCs, Guarantees and Open Account
GUARANTEES / STANDBY LETTERS OF CREDIT cont.
7
DISCHARGE ADVICE NOTIFICATION
REFUSAL ADVICE NOTIFICATION
PAYMENT ADVICE NOTIFICATION
Industry Standards for LCs, Guarantees and Open Y M E N T I M P O R T P A Account
EXTEND / PAY QUERY
MT 798<777>
MT 798<778>
EXTEND / PAY RESPONSE
CLAIM NOTIFICATION
MT 798<779> MT 798<781>
CLAIM / CHARGES SETTLEMENT
MT 798<783>
REDUCTION / RELEASE REQUEST
Industry Standards for Letters of Credit, Guarantees and Open Account
André Casterman
Head of Banking, Trade and Supply Chain – SWIFT Co-Chair "Bank Payment Obligation" Project – International Chamber of Commerce
Industry Standards for LCs, Guarantees and Open Account 4
Best Practices for banks and corporates
Rules Messages Identity Channel Solutions
• ICC Banking Commission's rules
NOTIFICATION
APPLICATION
MT 798<762 or 785 > MT 798<760>
MT 798<763 or 786 > MT 798<767>
AMENDMENT REQUEST
AMENDMENT NOTIFICATION
MT 798<764 or 787 > MT 798<767>
CREDIT ADVICE
Beneficiary
AMENDMENT ADVICE
AMENDMENT ACCEPT/REFUSAL
ADVICE
MT 798<735>
MT 798<780> MT 798<710> MT 798<711> MT 798<737> MT 798<751> MT 798<752> MT 798<753> MT 798<754> MT 798<731> MT 798<732> MT 798<733> MT 798<734> MT 798<755> MT 798<756>
Avoid proprietary solutions and vendor lock-in
• Some Trade Finance vendors have been trying to impose their proprietary formats in the C2B trade finance space; such vendors intermediate the corporate-to-bank contractual relationship by imposing their own rulebooks • Corporates and banks adopting such formats are locked in into the vendorspecific platforms; this increases operational risks for users as software solutions should be independent of each other and interoperate using Industry Standards • Global Trade banks have resisted adopting those proprietary vendor solutions as each implementation generates huge implementation and running costs (software, legal, operational, technical); usually most fees are charged to the banks whereas the main value proposition targets the corporates • Due to customer pressure, some banks have been forced to implement those formats and suffer from high vendor-specific fees and usage costs • The benefits of multi-banking are therefore limited and never fully achieved neither by corporates, nor by banks.