The Beijing meeting in perspective
Home from the Annual ICC Banking Commission Meeting in Beijing. It was a good meeting – basically following the same “template” as the last couple of years. And as always a perfect opportunity to meet old friends – and make new relationships.
In this blog post I will offer an overview expressing my perspective. During the next couple of weeks, I will elaborate more on some of the issues discussed at the meeting.
Regulatory Compliance
The first thing I will mention, is what seemed to be lacking: That was a good discussion about regulatory compliance in Trade Finance. Since the updated “Wolfsberg, ICC and BAFT Principles on Trade Finance” has just been released, it seemed appropriate to present / address that. However, that was not the case. That is interesting enough since ICC BC Chair Daniel Schmand said that it is important to distinguish between TBML (Trade Based Money Laundering) and Trade Finance. In fact, Trade Finance is part of the solution.
So at least the issue is on the radar of the ICC. Let hope that next year it will also be on the agenda.
The future of Trade Finance
Of course, part of the agenda was the “future of Trade Finance” – or as it is described these days: “Blockchain”.
I witnessed a panel with the title “Blockchain, innovation and digital transformation: Are we there yet?” I must admit, that the discussion was a bit too technical and abstract for me. From the discussions it was kind of hard to grasp how this is to work in practice. Somehow, this is really a pity because I know that for – as an example – we.trade (https://we-trade.com) there is 1) a solid business model and 2) a Rule Book as well as 3) 13 strong banks behind it. I would suggest that for next year’s meeting – the focus should be a bit more practical.
SWIFT update
Staying on the electronic track, I also took part in the GTR interview with Huny Garg (Head of Trade & Supply Chain, SWIFT). Garg was confronted with SWIFTs lack of Blockchain initiatives. His straight answer was that SWIFT’s focus was to solve problems for the community – not to promote a certain technology. Hurrah for that.
Huny Garg also announced that SWIFT has decided to “pull the plug” on the TSU (Trade Services Utility) end 2020. This will effectively make the URBPO redundant. This must have been a big and difficult decision. On my computer I managed to find a SWIFT presentation on the TSU dating back to Sibos, Atlanta, USA October 2004. URBPO were approved by the ICC national committees and entered into force on 1 July 2013. In other words; it is more than 15 years hard work – including the drafting of ICC Rules – that are now being stopped.
It is fair to mention that the URBPO could potentially work without the TSU. In the URBPO It is balanced so that the “Involved Banks have agreed to participate in an Established Baseline through the use of the same Transaction Matching Application (TMA)”. In reality however, I really doubt this. The TSU was huge work to develop, and it is not realistic that another party than SWIFT will do that … especially after SWIFT have given up on it.
eUCP and eURC
Following the electronic track, it was announced that the eUCP version 2.0 and eURC version 1.0 were approved: A total of 49 National Committee’s voted online with the outcome that the eUCP received 100% approval with two countries abstaining, and the eURC received 97.5% approval with one county voting “no” and two countries abstaining. Both sets of rules will come into force 1st July 2019
It is the first time the ICC Banking Commission used an electronic vote; the Simply Voting platform.
Following the announcement of the approval of the rules, a slide showing the “next steps” were shown. Those basically showed that the rules will be available for download (free of change).
What would have been really nice, would have been a kind of plan for how to broaden the usage of these two new sets of rules. Especially, the eURC would need some “start help” to get a place in the market. On one hand the potential is huge (yes! to getting rid of the physical documents). On the other hand, I have not met anyone who felt a big need for those rules. Some marketing effort could make a difference here.
Bill od Lading Fraud
Another great event was IMB’s Muku and Michael Howlett presentation of recent bill of lading fraud. Anyone working with bills of lading can learn a lot from that. If you have a chance – please make sure to get a copy of the slides.
Trade Finance practice
As always, the end of the meeting was dedicated to “practice”:
* The drafting of “International Standard Banking Practices for Demand Guaranteees” (ISBPG) was presented.
* There was a panel discussion covering the 3 following topics:
>>Should the application of ISBP 745 be widened?
>>Can the existing ‘Opinions’ process be improved?
>>Is there a business case to develop a ‘lite’ version of UCP 600?
(more about that later)
* The new Draft Opinions were presented, discussed and approved.
(more about that later)
The above was a quick overview. During the next couple of weeks, I will elaborate a bit more on some of the above issues.
Tunde in – and remember to take care of each other and the LC.
Kind regards
Kim