by
 

Claire Buchanan, Senior Vice President, Global Field Operations, Bolero

To put things into perspective, there is no such thing as a SWIFT LC or a Bolero LC. Nor is it SWIFT versus Bolero. Both systems have their necessary functions inside the Letter of Credit world.

A Letter of Credit is a credit instrument that usually is issued in line with the International Chamber of Commerce’s UCP rules. An LC is typically used to finance an international trade. Therefore a cross-border communication is required between the various parties involved in the LC process, at minimum the Importer, Issuing Bank, Advising Bank and Exporter.

For reasons of speed and security it is preferable that cross-border communication takes place in an automated fashion using secure electronic messaging services. That, in combination with the desire to process information in the most automated manner possible, requires standards. These standards reflect conventions about the content and the structure of the information exchanges.

In the bank-to-bank space, SWIFT has defined such a standard This enables banks to communicate electronically with each other about the various LC related information flows.

The Category 7 SWIFT message is a bank-to-bank standard but there has been no standard for the application of or advising of LC’s from bank-to-corporate or corporate-to-bank. Until now, that is.

In the corporate-to-bank and bank-to-corporate space, Bolero has set the standard for secure electronic communication of LC’s and their related flows.

Bolero has set the standard for LC Application, Advices, Requests for Amendments, Presentations and so on, ultimately covering the entire lifecycle of the LC process between the corporate and the bank. Therefore, the Bolero Standard is a sound basis for full automation of the entire LC process.

It is worth noting at this point that Bolero has also available the full lifecycle for Guarantees.

In addition the Bolero Standard is fully interoperable with the ICC UCP rules and with the SWIFT Standard. This means that the Bolero Standard covers all types of ICC-sanctioned LC’s and that it can be used as the basis for corporate companies to communicate electronically with all of their banks, in the same format. Given then the interoperability between the Bolero and SWIFT Standard, the banks are in a position to integrate the information flows between them and their corporate customers with the information flows between them and their correspondent banks.

Finally, given that Bolero offers a many-to-many messaging service, any corporate connected to Bolero using the Bolero LC Standard, effectively has a multi-banking LC platform at its disposal. This means that by a simple connection, the corporate is now in a position to apply for import LC’s and be advised of Export LC’s using one Standard and one infrastructure, irrespective of who the Issuing and Advising Bank are.