Declaration of Cooperation paves way for market acceptance of the Bank Payment Obligation instrument
New York, N.Y., September 21, 2011 – SWIFT, the financial messaging provider for more than 9,700 financial institutions and corporations in 209 countries, and the Banking Commission of the International Chamber of Commerce (ICC) have signed a Declaration of Cooperation that will enable industry-wide adoption of the Bank Payment Obligation (BPO), according to ICC’s American national committee, the United States Council for International Business (USCIB).
The ICC Banking Commission is a global rule-making body for the banking industry and a worldwide forum of trade finance experts whose common goal is to facilitate international trade finance.
The BPO will offer an alternative means of settlement in international trade and will provide the benefits of a letter of credit in an automated environment. It enables banks to offer flexible risk mitigation and financing services across the supply chain to their corporate customers.
Both ICC and SWIFT believe that by working together and leveraging their respective positions across the trade finance community, the BPO will have an important role to play in the development of international trade by addressing cost pressures in the face of increased automation and changes in the regulatory environment.
“Trade finance is a critical banking service supporting the world economy,” said Kah Chye Tan, chair of the ICC Banking Commission and global head of trade and working capital with Barclays. “It is vital that the industry aligns on enhanced rules and tools in support of trading counterparties whether large or small. The ICC Banking Commission views the development of the BPO rules and the related ISO 20022 messaging standards as strong foundations for banks to provide modern risk and financing services aligned with today’s technology evolution.”
Michael Quinn, chair of USCIB’s Banking Committee and managing director at JP Morgan Global Trade Services, elaborated: “The Bank Payment Obligation will facilitate significant operating process improvement for corporations involved in Trade Finance while preserving the risk mitigation attributes of the traditional letter of credit. The ICC-SWIFT work on BPO rules and standards leverages the expertise of the respective organizations to help broaden the availability of trade finance for bank customers, an important driver of economic growth at a time when it’s vitally needed both here in the U.S. and abroad.”
Industry forecasts indicate that merchandise exports will reach $33 trillion (U.S.) by 2020, from $6 trillion in 2000, explained Gottfried Leibbrandt, head of marketing at SWIFT. “ICC and SWIFT are best positioned to help the banking industry facilitate further growth of trade using innovative solutions,” he said. “SWIFT is committed to helping its member banks deliver innovation in trade finance to the corporate world.”
The declaration, signed at Sibos in Toronto, confirms the framework for collaboration between SWIFT and ICC to publish and maintain a set of contractual rules that will establish uniformity of practice in the market adoption of the Bank Payment Obligation (BPO) and the related ISO 20022 messaging standards.
About the ICC Banking Commission
The ICC Banking Commission is a leading global rule-making body for the banking industry, producing universally accepted rules and guidelines for international banking practice, notably letters of credit, demand guarantees and bank-to-bank reimbursement. ICC rules on documentary credits, UCP 600, are the most successful privately drafted rules for trade ever developed and are estimated to be the basis of trade transactions involving more than one trillion dollars a year. The Banking Commission is equally a worldwide forum of trade finance experts whose common aim is to facilitate international trade finance across the world. With over 500 institutional members in 85 countries, many of them emerging, the Banking Commission is one of the largest ICC Commissions.
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 9,700 banking organizations, securities institutions and corporate customers in 209 countries. SWIFT enables its users to exchange automated, standardized financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.
USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and prudent regulation. Its members include top U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network encompassing leading international business organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.