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ICC issues 'Trade Financing and COVID-19’ paper

22/05/2020

In a new paper issued on 20 May 2020, the ICC is estimating that as much as US$5 trillion in market capacity will be needed to return trade volumes close to 2019 levels in 2021. With the World Trade Organization projecting that the effects of COVID-19 could cause merchandise trade to drop by over 30% this year, the ICC has cautioned that a rapid economic recovery will only be possible if sufficient credit is available to bring trade close to its pre-pandemic trend over the next 18 months.

The paper can be found here


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Latest Question

URDG 758 article 2 defines ‘presenter’ to include a party acting on behalf of the beneficiary. The same article defines ‘demand’ to be a document signed by the beneficiary. With this in mind, I noticed that one of the many proposed changes by SWIFT with respect to the MT 7xx message series is the introduction of the MT 765 (‘Guarantee/Standby Letter of Credit Demand’). The proposed MT 765 makes perfect sense when a bank is the beneficiary of a demand guarantee. But apparently this proposed new message may also be used by a bank/financial institution acting on behalf of the beneficiary. I can’t see how a non-bank beneficiary would no longer be required to sign a demand document, but instead could instruct a presenter (their bankers) to send a MT 765 to the guarantor. My understanding was that the only party entitled to perform/draw under a demand guarantee by making a demand, is the beneficiary. It is one thing for a bank to act as a presenter, by agreeing to remit the beneficiary’s demand to the guarantor and quite another for a bank to make a demand on behalf of the beneficiary. Furthermore, I can’t see how a demand communicated by means of a MT 765 would be deemed a complying presentation if the demand guarantee, subject to URDG 758, did not expressly provide for electronic presentations or was silent on this point (in the latter case, sub-article 14 (e) would apply). Please could you explain 1. how the proposed MT 765 will work in the case of a non-bank beneficiary, and 2. how a bank communicating a demand by means of a MT 765 on behalf of a beneficiary, is compatible with URDG 758.