Mandatory SWIFT MT Category 7 changes are fast approaching that will impact letters of credit. Changes to the 700 series for documentary credits will come in November of 2018, and November 2019 for the 760 series (demand guarantees & standby LCs). At last month’s IIBLP Guarantee & Standby Forum in Antwerp, the question was asked: Will vendors be ready?
The community of vendors is relatively small and certain vendors have liaised with SWIFT regarding their plans. The transition will not be easy, but the sense is that vendors are among the most prepared in the process. The greater concern is within banks. No doubt, it is reasonable to believe that large banks heavily invested in the trade business will be well-positioned to adapt. In Antwerp, one banker expressed the notion that many IT people underestimate the time needed to prepare. At IIBLP’s event in Dubai one specialist shared his personal opinion that a lot of small banks from emerging markets will not be ready.
One facet possibly overlooked is their role regarding non-bank use of messages. SWIFT expects corporates to fill out message fields correctly and banks to educate customers on the structured formats. Is this change on your radar?
Preparing for SWIFT MT Category 7 Changes
In an attempt to keep LC and guarantee practitioners apprised of the forthcoming SWIFT updates, IIBLP is working with SWIFT officials to present helpful updates at the Annual LC Survey and Guarantee & Standby Forum events around the world. At the April 2018 trade finance events in Antwerp and Stockholm, Robert Marchal (Standards/Business Analyst at SWIFT) made video presentations to demonstrate the forthcoming changes. Attendees of the upcoming events in Hong Kong and Singapore can expect to hear more from Mr. Marchal with updated presentations.