April is here and the Supplement for Electronic Presentation to the ICC’s UCP 500 (eUCP) is now in force.
eUCP accommodates presentation of electronic records alone or in combination with paper documents. Are the banks ready? L/C Monitor spoke to bankers in Canada, Germany and Singapore to find out.
David Meynell, Vice President Trade & Risk Services Deutsche Bank and member of the eUCP Working Party said, ‘This is an important development on the road to achieving collaborative electronic solutions in the world of documentary credits. The ICC have provided the guidelines and it is now up to all parties within the supply chain to ensure that interoperable solutions are established and implemented, thereby allowing us to take advantage of the unique knowledge management benefits of the internet.’
A prominent Canadian banker said that most banks in Canada are not ready yet. ‘If the bank receives a documentary credit subject to eUCP after April 1st 2002, the standing instruction is to go back to the issuing bank requesting an amendment to delete reference to eUCP in the credit. There is no system at the moment to accommodate electronic presentation, said the banker who wanted to remain anonymous. A couple of banks in Canada have signed up with TradeCard but this has nothing to do with eUCP and documentary credits.’
An influential German banker stated that a similar situation exists in Germany at the moment and that some banks are considering CCEWeb’s @GlobalTrade solution while others are evaluating the option of setting up bilateral agreements with the large customers. ‘This may be very expensive since they would need to set up their own certification authorities and infrastructure. Some banks have invested in Identrus but Identrus has yet to be accepted as an international standard. The challenge with digital certificates is that, although from the technology point of view they are not a problem, they become a problem when they need to be integrated with the bank’s overall infrastructure. The market demand is not yet there to warrant the expenditures.’
A senior Singaporean banker said, ‘L/Cs issued by banks in Asia will still be subject to the UCP 500 after the implementation of eUCP from 1 April 2002 as they are not ready for the eUCP. It may take time for banks as well as traders here to take part in the eUCP. However, the government in Singapore is more proactive than the private sector. Who knows, one day the government of Singapore may provide tax incentive for banks, traders, as well as trade service providers to move towards paperless presentment of trade documents.’
One banker commented that ICC would need to do more education about eUCP, recounting a story about an e-mail received from a correspondent bank where the author of the email stated he was happy with the fact that now all credits that were issued subject to UCP 500 were automatically subject to eUCP as well. ‘I had to go back on the e-mail to reply that in fact just the opposite was true. Some banks will start putting eUCP into their credits just because it is new not knowing exactly what is behind it.’
eUCP Consulting
On March 13, 2002 CCEWeb Corp. (www.cceweb.com), the parent company of this publication, announced that it will offer eUCP Consulting services addressing issues that financial institutions have to deal with in order to start accepting electronic presentations. Such issues include:
1. How can secure electronic addresses be
provided
to accommodate eUCP definition
for a place of
presentation?
2. How would customers ‘sign’ electronic
records?
Who will provide them with
digital certificates?
3. How are electronic records and paper
documents
combined in one presentation?
4. If the electronic record presented can not
be
authenticated what are the bank’s
potential
liabilities? How can a practical
solution for this
be found that would not frustrate
clients and
would increase the volume of
business?
‘CCEWeb has obtained know-how dealing with issues surrounding electronic presentation while developing its @GlobalTrade Secure Payment and Trade Management System,’ said Jacob Katsman CCEWeb’s CEO. ‘We are one of the few companies in the world that has domain knowledge, IT expertise, and hands-on experience working with various providers of authentication software, digital certificates, and electronic document standards focused specifically on trade services.’
@GlobalTrade is now being tested by a number of international banks, corporate customers, and trade service providers. @GlobalTrade is 100 per cent eUCP compliant and offers an out-of-the-box solution that does not require integration until trade volumes justify such expenditures. @GlobalTrade uses Adobe PDF as a standard and can accommodate major digital certificate solutions such as Entrust, Verisign, and Identrus.
eUCP On-Line Training Course
Starting this month, DC-PRO, the International Chamber of Commerce (ICC) initiative, will offer an ‘eUCP on-line training’ course.
The course covers all of the provisions of eUCP, including the following range of topics:
The scope of eUCP
• Does eUCP replace UCP 500?
• Under what conditions should you issue a
credit
subject to eUCP?
• What should you do if eUCP produces a
different
result to the application of UCP
500?
• Is it possible to present paper documents
under
an eUCP credit?
Presentation of electronic records
• What happens if a bank’s system is down
and
unable to accept an electronic
record?
• How does the beneficiary present the
electronic
records?
• How must a beneficiary indicate that a
presentation is complete?
• Can the expiry date of an eUCP credit be
extended?
Electronic Records
• How does eUCP define an electronic record?
• How do you ascertain the date of
issuance/
shipment indicated in an
electronic record?
• In what circumstances would the date of
receipt
of an electronic record be deemed
to be the date
of shipment?
• An electronic record must be capable of
being
authenticated in three distinct
ways, what are
these ways?
Examination of Electronic Records
• How long does the document checker have
to
examine a presentation under an
eUCP credit?
• What happens if there is data corruption
in an
electronic record?
• Is it possible for a beneficiary to re-present
a
corrupted electronic record?
• What happens if the issuing bank is
unable to
open an electronic record in the
format required
by the credit?
The course offers an extra touch of reality through Q&A section that is positioned throughout various lessons taking abstracts from sample letters of credit to reinforce a specific issue. LCM has obtained permission to reprint one of the questions herein and will provide the answer in the next month’s issue.
eUCP Question 1.
On what date does the period of time for examination of documents commence?
A. Wednesday 04 May
B. Thursday 05 May
C. Friday 06 May
Correct Answer: [see the May Issue of LCM]
The eUCP on-line training course is priced @ USD$99.00 and can be purchased online via http://www.dcprofessional.com.
Through ‘eUCP Watch’ LCM will follow the developments of the eUCP and its effect on trade services.