The International Chamber of Commerce (ICC) Banking Commission has issued new electronic rules (eRules) to advance the digitalisation of trade finance practices.
The ICC Banking Commission has released electronic supplements to the existing Uniform Rules for Collections (URC 522) and Uniform Customs and Practice for Documentary Credits (UCP 600) rules.
The new eRules, which came into effect on 1 July, will provide rules for banks operating in today’s increasingly digital trade finance system.
In June 2017, ICC formed the “Digitalisation in Trade Finance” Working Group to evaluate challenges faced by banks as trade finance progresses toward a paperless future. The Working Group examined the applicability of ICC banking rules and considered the development of minimum standards for the digital connectivity of service providers. The Working Group also conducted a legal survey to determine the legal liability of electronic documents and to understand the rights of third parties using paper and electronic documents. As ICC rules underpin over US$1tn of transactions each year, adapting rules to the digital era will enable banks to capitalise on new technologies.
After an initial consultation and review process, ICC’s Banking Commission instructed the Working Group to update the existing eUCP version 1.1 and create a eURC for collections to ensure that ICC’s most used banking rules are digitally compatible. The revised eUCP and eURC establish rules for electronic records associated with existing trade finance products.
David Meynell, Co-Chair of the Working Group and Owner, TradeLC Advisory said: “Extending the mitigation of risk from a paper environment to the electronic milieu safeguards the applicability of ICC rules whilst guaranteeing relevance in a constantly evolving digital trade world.”
The eRules will be continually monitored and updated to reflect future technological developments and trends that emerge in trade finance. By embracing a paperless future, this safeguards the applicability of traditional trade solutions in a digital environment. ICC will ensure that the eRules remain relevant and applicable to banks and other trade finance institutions.
By acknowledging their significance, ICC has made the full text of both eURC and eUCP available online for the use of trade finance professionals everywhere. ICC has also published an article-by-article analysis of eUCP version 2.0 and eURC version 1.0 to guide banks on the new rules. This guidance provides an in-depth explanation for each rule, as well as the preparation and drafting process.
ICC is committed to making trade work for people and planet. In line with this objective, the ICC Banking Commission works to reduce barriers for those participating in today’s digitalised trade finance environment. In addition to the launch of the eRules, the ICC Banking Commission Executive Committee also approved a proposal to draft a new set of rules under the working title “Uniform Rules for Digital Trade (URDT)” in December 2018. The objective of the URDT is to develop a high-level framework outlining obligations, rules and standards for the digitalisation of trade finance.
Several Drafting Group meetings have already been convened, resulting in the development of an initial framework, with the intention of sharing a first draft of the rules with ICC regional bodies (known as national committees) before the October 2019 Banking Commission Technical Meeting in Paris.
“The digitalisation of trade is becoming more and more a reality. By releasing the new eRules, ICC is taking another step in the right direction to ensure that our rules are adapted to new realities,” said Olivier Paul, ICC Director for Finance Development. “In combination with the upcoming URDT, these pioneering rules will continue to anticipate the evolution of trade finance and allow for better access for all.”