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Trade for Corporates Overview

Facilitating multi-banking solutions


in documentary trade finance using
SWIFTs MT 798 standards
SWIFTs Corporate and Supply Chain Markets team
June 2013
supplychain@swift.com
Join our LinkedIn group Supply Chain on SWIFT

Content

Rationale for MNCs to adopt multi-bank solutions in trade finance


Role of standardisation bodies
Portfolio of industry standards
Scope of SWIFTs MT 798 standards
Use of SWIFTs FIN and FileAct
Adoption by corporates, banks and vendors
Best practices for corporates
Future developments
Benefits
Training and Consulting Services
Conclusion
Contacts
2

Trade Finance for Corporates

MNCs and multi-banking in


trade and supply chain finance

SWIFT and your


payments business

Corporate challenges with traditional trade


instruments (1/2)
Export documentary credit

Import documentary credit

Difficult to manage advices of export L/Cs

Treasury lacks visibility to the allocation of

and amendments received from multiple


banks in paper form and via different banks
portals

Internally, difficult to collaborate between


treasury and various business units on L/C
allocation and preparation of documents

Lack of visibility of each step in the


transaction process

Too many discrepancies, slowing down


document compliance checking

Delayed receipt of payment

credit facilities to business units for import


L/C issuance

Lack of standardised approval process for


import L/C issuance

Delays in import L/C issuance

No electronic global data base of import L/Cs


for real time reporting of outstanding L/Cs.
Ideally by Business Unit, Bank, Product,
Counter Party

Difficult to link import L/Cs with export L/Cs


for back to back transactions

Challenging to set up permanent and


transactional alarms on key L/C dates

Corporate challenges with traditional trade


instruments (2/2)
Standby L/C and Demand Guarantee
Management is decentralized and handled independently by each subsidiary
Difficult for central treasury to monitor the terms and the availability of Standby L/C and
Guarantee facilities and improve the diversification of business allocation between the
banks

How to offer flexibility for subsidiaries but enforce standard policies moving forward?
Reconciliation of related data and settlement of fees is time consuming and prone to errors
Complex documentation management will result in increased charges

Transparency is not optimal and will result in differences between the banks and treasurys
records

With different technology solutions, more challenging to on-board subsidiaries and banks

Rationale for MNCs to adopt multi-banking


solutions for trade finance
Digitise and
automate

Improve
control

Accelerate
decisions

Consolidate
information

Standardise
bank
interface
6

Trade Finance for Corporates

Role of ICC, SWIFT and ISO

Industry standards
Developed by international standardisation bodies
Trade Finance instruments
(E.g. UCP 600, URDG 758, ISP98, URC 522, URBPO)

MT standards
(for L/Cs, Demand Guarantees, Collections)

ISO 20022 standards (for BPOs)


ISO 9362 Business Identifier Code (BIC)
ISO Country codes, Currency codes,
Industry standards are industry-owned and technology-neutral.
They offer a dependable legal and operational framework.
8

Trade Finance for Corporates

Portfolio of Industry Standards

SWIFT and your


payments business

Industry standards for L/Cs and Guarantees

MT 798

MT 7XX

Documents

UCP 600
URDG 758
ISP98

MT 798

Documents

Buyer

Seller
Buyers
bank(s)

Sellers
bank(s)

SWIFT's MT 7xx are industry owned and technology


neutral standards in support of ICC's rules for L/Cs,
Standby L/Cs and Demand Guarantees

FIN MT 7xx
FIN MT 798
FileAct

Public Domain

2
Industry standards for Bank Payment Obligation

Bank
Payment
Obligation

Commercial

Buyer

Seller
Any channel /
any format /
any solution
Bank portal
SWIFT's SCORE
Paper

Trade
Matching
Application
SWIFT's Trade Services
Utility (TSU)
Any other inter-bank
trade matching
application (TMA)

Any channel /
any format /
any solution
Bank portal
SWIFT's SCORE
Paper

ISO 20022 optional


ISO 20022 mandatory

11

Industry standards support end-to-end flows


MT 798
ISO 20022

MT 7XX
ISO 20022

MT 798
ISO 20022

Internet

Internet
Buyers

Issuing banks
Application,
amendment,

Advising / confirming banks

Inter-bank flows

Sellers

Advice, confirmation,
amendment,

Streamline the L/C, Guarantees and open account trade transactions


Automate workflow of the trade life cycle to reduce cost
Accelerate handling of discrepancies and settlement
Move to paperless transaction processing
Enhance visibility on credit lines
12

Industry standards enable competitive vendor


solutions to interoperate
MT 798
ISO 20022

MT 7XX
ISO 20022

MT 798
ISO 20022

Internet

Internet
Buyers

Issuing banks
Application,
amendment,

Advising / confirming banks

Inter-bank flows

Sellers

Advice, confirmation,
amendment,

Business process-level interoperability between various software solutions


Increased choice of vendor solutions in competitive space
No need for banks to join multiple corporate portals
Reduced technical, operational and legal costs
No vendor lock-in
13

Trade Finance for Corporates

Scope of MT 798 standards

SWIFT and your


payments business

14

IMPORT DOCUMENTARY CREDITS

Corporate-to-Bank
Bank-to-Corporate

Import Documentary Credits

Applicant
MT 798<770>
MT 798<700>
MT 798<701>

Bank

APPLICATION

ISSUANCE NOTIFICATION

MT 798<772>
MT 798<707>

MT 798<771>
MT 798<700>
MT 798<701>

AMENDMENT REQUEST

AMENDMENT NOTIFICATION

AMENDMENT ACCEPTANCE

NOTIFICATION

DISCREPANCY ADVICE

MT 798<749>

COMPLIANCE

MT 798<773>
MT 798<707>
MT 798<736>
MT 798<748>
MT 798<750>

DISCREPANCY ADVICE RESPONSE

ADVICE NOTIFICATION

MT 798<753>
MT 798<754>

DISCHARGE ADVICE NOTIFICATION

MT 798<731>
MT 798<732>

REFUSAL ADVICE NOTIFICATION

MT 798<733>
MT 798<734>

PAYMENT ADVICE NOTIFICATION

MT 798<755>
MT 798<756>

IMPORT PAYMENT

SETTLEMENT ADVICE

MT 798<757>

15

EXPORT DOCUMENTARY CREDITS

Corporate-to-Bank
Bank-to-Corporate
Bank
MT 798<774>
MT 798<700>
MT 798<701>
MT 798<776>
MT 798<707>

Beneficiary

Export Documentary Credits


CREDIT ADVICE

AMENDMENT ADVICE

AMENDMENT ACCEPT/REFUSAL

ADVICE

MT 798<735>

MT 798<780>
MT 798<710>
MT 798<711>

THIRD BANK ADVICE

MT 798<737>

PRESENTATION RESPONSE

MT 798<751>
MT 798<752>

A U T H O R I S A T I ON A D V I C E N O T I F I CA T I O N

MT 798<753>
MT 798<754>

COMPLIANCE

ADVICE

NOTIFICATION

MT 798<731>
MT 798<732>

DISCHARGE ADVICE NOTIFICATION

MT 798<733>
MT 798<734>

REFUSAL ADVICE NOTIFICATION

MT 798<755>
MT 798<756>

PAYMENT

ADVICE

NOTIFICATION

TRANSFER REQUEST

MT 798<782>
MT 798<720>
MT 798<721>
MT 798<758>

MT 798<722>

TRANSFER ADVICE

EXPORT PAYMENT

SETTLEMENT ADVICE

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GUARANTEES / STANDBY LETTERS OF CREDIT

Corporate-to-Bank
Bank-to-Corporate

Guarantees/Standby Letters of Credit

Applicant

MT 798<761 or 784 >


MT 798<760>

APPLICATION

NOTIFICATION

MT 798<763 or 786 >


MT 798<767>

MT 798<762 or 785 >


MT 798<760>

AMENDMENT REQUEST

AMENDMENT NOTIFICATION

MT 798<764 or 787 >


MT 798<767>

EXTEND / PAY QUERY

MT 798<777>

MT 798<778>

EXTEND / PAY RESPONSE

CLAIM NOTIFICATION

MT 798<779>

CLAIM / CHARGES SETTLEMENT

MT 798<781>

MT 798<783>

Bank

REDUCTION / RELEASE REQUEST

REDUCTION / RELEASE ADVICE

MT 798<766 >
MT 798<769>
17

GUARANTEES / STANDBY LETTERS OF CREDIT cont.

Corporate-to-Bank
Bank-to-Corporate
Bank

Guarantees/Standby Letters of Credit

MT 798<745 or 746 >


MT 798<760>

ADVICE

MT 798<743 or 744 >


MT 798<767>

AMENDMENT ADVICE

PAYMENT CL AIM

MT 798<714>

Beneficiary

MT 798<712>

CLAIM ACKNOWLEDGEMENT

18

COMMON GROUP

Corporate-to-Bank
Bank-to-Corporate
Applicant

Bank
C H A R G E S S E T T L E M E N T N O T I CE

CHARGES SETTLEMENT REQUEST

MT 798<788>
MT 798<799>

MT 798<793>
MT 798<790>
MT 798<794>
MT 798<791>

F R E E F O R M AT

MT 798<789>
MT 798<799>

FREE FORMAT

Corporate-to-Bank
Bank-to-Corporate
Bank
MT 798<793>
MT 798<790>
MT 798<794>
MT 798<791>

Beneficiary
C H A R G E S S E T T L E M E N T N O T I CE

CHARGES SETTLEMENT REQUEST

MT 798<788>
MT 798<799>

F R E E F O R M AT

MT 798<789>
MT 798<799>

FREE FORMAT
19

Trade Finance for Corporates

Use of FIN and FileAct

20

Use of FIN and FileAct for C2B trade flows


(in Score)
Use of FIN

Use of FileAct

Facilitates the exchange of


structured MT 798 messages
between banks and
corporates
Enables higher level of
automation and back-office
integration
Specifications are instrumentspecific (LCs, Standby LCs,
Demand Guarantees) and
define the vendor labeling
criteria.

Facilitates the exchange of


electronic copies of documents
between banks and corporates
Any document type in any
format:
Stand-by L/Cs & Guarantees:
Draft guarantee text
Scanned copy of the issued or
received guarantee/amendment

Export L/Cs:
Commercial documents

Also supports ISO 20022 for


BPO.
21

Use of FileAct request types


tsrv.xxx.lettersofcredit to group L/C messages with
documents
tsrv.xxx.gteesstandbys to group Guarantee/Standby
messages with documents
tsmt.xxx.tradedocuments for bills of lading,
certificates of origin etc
tsrv.fin.mt7xx.lettersofcredit to group L/C FIN
messages (+ documents)
tsrv.fin.mt7xx.gteesstandbys to group
Guarantee/Standby FIN messages (+ documents)
22

Trade Finance for Corporates

Adoption of MT 798 standards

SWIFT and your


payments business

23

Corporates adopting the MT 798 standards


Some are already using SWIFT for payments but this is not a pre-requisite
Corporates

Use of
MT 798 for

Use of
MT 798 as

Live
Usage

Multi-bank
Solution

ArcelorMittal
International

Export LCs

Exporter

Live

Misys

Alcatel-Lucent

Guarantees

Exporter

Live

Surecomp

Saudi Aramco

Export LCs

Exporter

Live

In-house

Metro Group
Buying

Import LCs

Importer

Live

In-house

Mets Finance

Export LCs

Exporter

Live

GlobalTrade
Corporation

Reliance
Industries

Import LCs
Export LCs

Importer and
Exporter

2013

In-house

Safran

Guarantees,
LCs

Importer and
Exporter

2013

GlobalTrade
Corporation

Voith

Guarantees,
Export LCs

Importer and
Exporter

2013

Surecomp

Additional corporates are gradually


disclosing their adoption of MT 798

24

35 banks adopting the MT 798 standards


13 from the top20 Trade banks

Market adoption of the MT 798 standards

and more

25

All leading Trade Finance vendors are


accredited by SWIFT (2012)
SWIFTReady
Trade Finance

SWIFTReady for Corporates


Trade and Supply Chain
Finance

Bank-to-bank standards
Corporate-to-bank standards
Corporate-to-bank standards Bank
Vendor

Trade Finance
Solution

Vendor

China Systems

Eximbills Enterprise

China Systems

Customer Enterprise

CSI

BankTrade

GTC

Misys

Trade Innovation
Plus

@GlobalTrade
Corporate

Misys

Misys Trade Portal

Pinnacle
Solutions
Incorporated
(PSI)

Synergy Trade
Services Corporate

Surecomp

COR-TF

MIT

CREDOC

Sopra

Evolan IB

Pinnacle
Solutions Inc.
(PSI)

Synergy Trade
Services

Surecomp

DOKA 5, IMEX

(conformance statement)

Corporates

Trade Finance
Solution

26

Trade Finance for Corporates

Best practices for multi-banking

27

Best practices for multi-banking in trade finance

Rules
Messages

ICC Banking Commission's rules

MT Cat4/7 standards
ISO 20022 standards

Identity

Business Identifier Code for banks and


corporates (BIC or ISO 9362)

Channel

SWIFT for bank-to-bank (FIN)


SWIFT or Internet for corporate-to-bank

Solutions

SWIFTReady vendors
In-house development

Industry standards enable banks and corporates to increase efficiency and


minimise costs when respecting all of the above best practices
28

Issues with proprietary formats and rulebooks


Avoid proprietary solutions and vendor lock-in
Some Trade Finance vendors have been trying to impose their technologyspecific formats and proprietary rulebooks in the C2B trade finance space
Their goal is to intermediate the corporate-to-bank contractual relationship,
which is actually not necessary as their role is at technology level
They also wish to force banks into their systems using corporate pressure
Corporates and banks adopting such platforms are locked into the vendorspecific rules, formats and technologies
Software solutions should be independent of each other and interoperate
using Industry Standards (as it is the case for payments)
Global Trade banks have resisted adopting those proprietary solutions as each
implementation generates huge implementation and running costs (software,
legal, operational, technical); usually most fees are charged to the banks
whereas those solutions target the corporates
Using Industry Standards, any change of software solution performed by one
party is not impacting the other party (technology independence).
Market adoption of the MT 798 standards

29

Issues for banks with non standardised multi-bank options


Scenarios:

Major issues
for banks:

Corporate using a
vendor platform
forcing banks to
adopt proprietary
formats, security
and rules

Corporate reusing its FI BIC


and the MT7xx
messages on the
bank-to-bank FIN
service

Corporate using a
vendor BIC and the
MT798 standards
on the bank-tobank FIN service

Corporate using MT
798 standards with its
own BIC in SCORE

Increased
vendor and
technical costs

Additional fees for


banks to pay to the
vendor; additional IT
integration

Increased
operational
costs

Additional vendorspecific operational


processes for
limited number of
clients

Additional
customer-specific
operational
practices for banks
to develop

Increased
legal
complexity and
costs

Parties need to
develop vendorspecific contractual
arrangements

Parties need to
develop corporatespecific contractual
arrangements

Parties need to
develop vendorspecific contractual
arrangements

Standardised SCORE
agreement for cash and
trade

Increased KYC
risks

Depends on vendorowned legal


frameworks

Lack of visibility on
corporate identity,
resulting with likely
KYC issues

Lack of full visibility


to end-corporate
identity, resulting
with likely KYC
issues

Standardised SWIFT
registration for corporates
and re-use of BIC by
corporate

Market adoption of the MT 798 standards

No fee for banks to re-use


SWIFT and SCORE for
trade finance
Single trade-specific
process for all multi-bank
corporates

30

Issues for corporates with non standardised multi-bank options


Corporate using a
vendor platform
forcing banks to
adopt proprietary
formats, security
and rules

Corporate re-using
its FI BIC and the
MT7xx messages
on the bank-tobank FIN service

Increased
vendor and
technical costs

Need for multiple


solutions when any
of the banks
required do not
support the vendor
platform

Proprietary
development: so
packaged solutions
and costs cannot be
shared

Not following
industry
standards and
best practices

Dependency on
single vendor
solution: less
competition and
technical lock-in

Not able to benefit


from full MT798
functionality

Corporate does not


benefit from
SWIFT's FIN
Responsibility and
Liability (R&L)

Single process with all


banking partners

Increased
legal
complexity and
costs

Parties need to
develop vendorspecific contractual
arrangements

Parties need to
develop corporatespecific contractual
arrangements

Corporate cannot
benefit from
standardised legal
documentation

Standardised SCORE
agreement for cash and
trade

Increased KYC
risks

Depends on vendorowned legal


frameworks

Lack of visibility on
corporate identity,
resulting with likely
KYC issues

Lack of full visibility


to corporate
identity, resulting
with likely KYC
issues

Standardised SWIFT
registration for corporates
and re-use of BIC by
corporate

Scenarios:
Major issues
for
corporates:

Market adoption of the MT 798 standards

Corporate using a
vendor BIC and
the MT798
standards on the
bank-to-bank FIN
service

Corporate using MT
798 standards with its
own BIC in SCORE

Re-use SWIFT
connectivity in use for
treasury and cash
management

31

Trade Finance for Corporates

Next MT 798 features

32

Version 4 of MT 798 standards


General
Publication Jan 2013
Effective Nov 2013 (aligned with Standards Release 2013)
Incremental changes
Further clarification
Editorial corrections
Lead Bank Model
Addition of 3 optional fields at the end of every MT 798 Index
Message
Customer Identifier
Processing Bank Identifier
Lead Bank Identifier
33

Lead Bank Model Applicant side


Issuing Banks
Bank-to-Bank
MT 798

Web GUI / Host-to-Host /


FIN / FileAct

Bank-to-Bank
MT 7nn

Processing Bank 1

Advising Bank 1

Applicant

Lead Bank

Processing Bank 2

Advising Bank 2

Processing Bank 3

34

Lead Bank Model Beneficiary side


Advising Banks
Bank-to-Bank
MT 7nn

Bank-to-Bank
MT 798

Processing Bank 1
Web GUI / Host-to-Host /
FIN / FileAct

Issuing Bank 1

Processing Bank 2

Lead Bank
Beneficiary

Issuing Bank 2

Processing Bank 3

35

Trade Finance for Corporates

Benefits

36

Win-win benefits for corporates and banks


Benefits

Corporates

Banks

Consolidated Trade finance positions and increased visibility


Single multi-bank & multi-business channel
Dematerialization & standardization
Re-use bank-to-bank FIN MT7xx data fields with Corporates
Re-use of FileAct for any needed documents
to be included in the information flows
Overall cost reduction

Improved straight-through processing end-to-end


Improved overall transaction time
Only one interface development to integrate to Bank back
office (no need for vendor-specific interfaces, procedures,
contracts, formats)
Corporates and banks can make independent decisions
on technical platforms and implementations

37

Trade Finance for Corporates

Training and Consulting


Services

38

Training and Consulting Services


On-site courses on MT 798 standards
SWIFT Consulting Services puts at your disposal a dedicated
team of experts who provide extensive knowledge of financial
markets, message standards and back office integration
Our consultants can lead and support every phase of your
project:
From assessment and analysis of your processes and needs
Design and implementation of the right solution
Support you through go live and maintenance following
launch
Great asset if you decide to up-grade and integrate your inhouse systems
39

SWIFTs Consulting portfolio


Do you need knowledgeable and dedicated
assistance during your SWIFT projects?

Common problems, unique solutions


Business
How to use SWIFT
data to get to strategic
insights?

Do you need help


with optimal usage of
Standards?

Do you have
Redundant & manual
interventions?

How to get to 5x9s


operational
excellence?

How can you further


reduce your Cost of
Ownership?

Who can guarantee


risk-free installations
and field services?

Can you provide me


peace of mind post
go live?

Technical
What is the right
sourcing model for
SWIFT infrastructure?

Implementation
How to get to an easy
integration of your
applications & SWIFT

40

Trade Finance for Corporates

Conclusion

41

Conclusion
Multi-banking in trade finance is now a reality
All trade banks in the world use SWIFT's MT7xx standards with
their correspondent banks
The leading trade finance banks are now extending the use of
those standards to the corporate world through the MT 798; all
leading vendors have adopted the MT 798
The MT 798 can be used on any channel (Internet, SWIFT) and
with any software solution; the SWIFTReady certification ensures
inter-operability between competitive vendor solutions
The growing adoption by all leading players confirms the
immediate relevance of the MT 798 industry standards to the trade
finance market
Avoid vendor lock-in by pushing back on proprietary portals/formats
42

Trade Finance for Corporates

Contacts

43

Contact the MT 798 bank product teams


Banks adopting MT 798

Country

MT 798 Product contact

Bank of America
Banque Saudi Fransi
Bayerische Landesbank
BHF Bank
BNP Paribas
BNY Mellon
Citibank
CM CIC
Commerzbank
Crdit Agricole CIB
Danske Bank
Deutsche Bank
Gulf International Bank
HSBC
ING
JP Morgan Chase
KBC
LBBW Landesbank Baden Wrttemberg
Natixis
Nordea
RBS
Riyad Bank
Samba
Socit Gnrale
Standard Chartered
The National Commercial Bank
UBS AG
Market adoption of the MT 798 standards
Unicredit

US
SA
DE
DE
FR
US
US
FR
DE
FR
DK
DE
SA
HK
NL
US
BE
DE
FR
FI
US
SA
SA
FR
SG
SA
CH
AT

Paul Johnson
Shafeek H. Al-Manameen
Florian Seitz
Edith Babuscio
Eric Henry
Andres Ramos
Fran Martell
Tony Croizer
Sven Mueller
Patrick Boiteau
John Enemark
Frank Bothe
Mathew Silva
Kate Han
Egbert Jansen
Merlin Dowse
Karen Sterckx
Rolf Seidel
Olivier Laborde
Soren Andresen
Deborah Seliski
Medhat Sanuri
Abdulkader A. Bazara
Corinne Bakok
Ashutosh Kumar
Omar Yassine
Erwin Freiburghaus
Markus Wohlgeschaffen

44

Contact our SWIFTReady Trade Finance


2012 partners
Partner

Solution

Contact
Joel Schrevens, Digby Bennett
joel@chinasystems.com
digby@chinasystems-me.com
+32 475 904413
Selene Chan, James Tindall
schan@banktrade.com
jtindall@banktrade.com
+ 44 7941 325716

Misys TI Plus

Stphane Nouy
Stephane.Nouy@misys.com
+33 (0)1 53 00 70 13
Jean-Luc Spinardi
sales@mitsa.ch
+ 41 213 188 181

Evolan IB
DOKA 5, IMEX
Pinnacle
Solutions
Incorporated (PSI)

Synergy Trade Services

Marina Singlard
msinglard@sopragroup.com
+33 5 6573 4651
Murray Freeman
Murray.freeman@surecomp.com
+1 201 716 1236
Ralph Carbone
Pinnacle Solutions Inc.
PSIXRCA@psi-nj.com

45

Contact our SWIFTReady for Corporates Trade Finance 2012 partners


Partner

Solution

GlobalTrade Corporate

Misys Trade Portal

Pinnacle
Synergy Trade
Solutions
Services (TS) Multi-bank
Corporate Site
Incorporated (PSI)

COR-TF

Market adoption of the MT 798 standards

Contact
Jacob Katsman, Nick Pachnev
katsman@globaltradecorp.com
pachnev@globaltradecorp.com
+1 416 627 8520 / +1 416 661 8520
Olivier Berthier, Stphane Nouy
Olivier.Berthier@misys.com
+65 6416 4095
Stephane.Nouy@misys.com
+33 (0)1 53 00 70 13
Ralph Carbone
Pinnacle Solutions Inc.
PSIXRCA@psi-nj.com

Murray Freeman
Murray.freeman@surecomp.com
+1 201 716 1236

46

Join our "Supply Chain on SWIFT" group on


Email us at supplychain@swift.com to register to our
frequent information mailings
Join our frequent Webinars

Market adoption of the MT 798 standards

47