ICC launches first-ever rules for open account trade
The International Chamber of Commerce (ICC) today launched the Uniform Rules for Bank Payment Obligation (URBPO), a 21st century standard in supply chain finance that will facilitate international trade. The rules were developed by the Banking Commission of the International Chamber of Commerce (ICC), with a partnership established with financial messaging provider SWIFT to take into account the legitimate expectations of all relevant sectors.
Set to revolutionize trade finance transactions, BPO is an irrevocable commitment made by one bank to another that payment will occur on a specified date after a specified event has taken place. It is an alternative instrument for trade settlement, designed to complement existing solutions and not to replace them. Reflecting consensus of the industry, the rules were unanimously adopted at 100% during a meeting of the ICC Banking Commission meeting taking place in Lisbon this week.
“This is a golden age for trade finance. All banks wish to better engage in open account transactions and the BPO will make it happen. It is vital that the industry aligns on enhanced rules and tools and by benefiting from ICC and SWIFT standards, banks will be better equipped to carry out their trade business,” said Kah Chye Tan, Chair of the ICC Banking Commission and Global Head of Trade and Working Capital at Barclays. “The ICC Banking Commission views the development of the BPO rules and the related International Organization for Standardization (ISO) 20022 messaging standards as strong foundations for banks to provide modern risk and financing services aligned with today’s technology evolution,” he added.
The BPO provides the benefits of a letter of credit in an automated and secured environment, and enables banks to offer flexible risk mitigation and enhanced financing services to their corporate customers.
Gottfried Leibbrandt, CEO, SWIFT said: “The BPO, with the underlying ISO 20022 standards, is shaping the future of the trade industry and is a key opportunity for banks to innovate in the services they offer to their corporate customers.”
Responding effectively to meet market needs on a global scale, the rules were carefully prepared over a period of 18 months, and are the result of a collective effort by a number of ICC constituent groups, in particular the ICC Banking Commission who led this project and its members who made pertinent suggestions on the text.
Thierry Senechal, ICC Senior Policy Manager and Banking Commission Executive Secretary said: “The landscape of world trade has changed dramatically during the past decade. Borders and barriers have been broken down through widespread liberalization in emerging markets. The market has demanded new solutions to help deal with increasing cost pressures and changing risk dynamics. The URBPO are a solution provided by ICC to respond to these new market needs.”
URBPO will be implemented on 1 July 2013. An official ICC URBPO launch and training event will take place in Paris on 17 May 2013. Please see the programme at the following link: http://www.iccwbo.org/training-and-events/all-events/events/2013/official-launch-of-the-icc-bpo-rules/