Update on developing e-compliance in ICC rules: BPO


David Meynell and Daisuke Kamai provided an update to the ICC banking Commission in Miami on 6 April 2018


Key Takeaways from the presentation


The Bank Payment Obligation is not dead!

Utilisation of BPO continues to grow albeit at a slow rate

Banks in Europe and Asia have experienced most success


As corporate customers look to move to digital trade finance solutions, the means exists to satisfy their needs today.

Corporate customers continue to digitise their business processes including commercial trade transactions

Banks have the means to support digital trade settlement and financing

Greatest obstacle to adoption of BPO is the lack of banks to support counterparts of active customers


The URBPO is being revised to support digital trade finance today and for the future.

All Proofs of Concept (POCs) in Distributed Ledger Technology (Blockchain) are looking for means to establish underlying payment obligations

There is a need for the Banking Commission to provide the framework to ensure "banks" continue to be an integral part of trade settlement and financing



The Objective of the BPO sub-group


With the advent of Distributed Ledger Technology (Blockchain) applications there is a further need for a form of settlement and risk mitigation.

It is our view that the Bank Payment Obligation can serve as a framework for risk mitigation in the emerging technologies.

For this purpose and to make the BPO more relevant to the industry, the sub-group is tasked with:

  • Evaluating how BPO meets the current business drivers in trade finance
  • Revise the BPO to make it more effective in the current environment and to provide a framework for its application in emerging technologies



The Scope of work of the BPO sub-group

1)        Marketing and Awareness of BPO in its current state

a.         Publish materials through the National Committees that are helpful to its membership to understand and implement the Bank Payment Obligation - previously developed collateral material has been refreshed and available via the ICC website

b.         Leverage industry organisations to communicate to the banking community and the corporates who participate in global trade the merits of BPO and how it assists in digitisation of Trade Finance - SWIFT actively promotes BPO in any corporate form; members of the BPO sub-group are actively engaged in bank and corporate industry organisations

c.          Making members of the working group available to National Committee members to assist in their evaluation and consideration of the BPO


2)        Revision of the URBPO to include the roles and responsibilities of buyers and suppliers, addressing a current deficiency in the URBPO today

            Revision of the URBPO to address conditions within DLT technologies that create obligations 

a.              Assemble a team within the BPO sub-group to review the existing URBPO to recommend revisions which will include the buyer and seller within the rules (including but not limited to the four corner model for Supply Chain Finance)

Preliminary work among the drafting team to identify key areas of focus


b.              Working with industry initiatives that are exploring distributed ledger technologies (DLT/ Blockchain) to understand and define "conditions" in the envisioned DLT enabled supply chains which would create an obligation to pay, and facilitates financing

Participants in the revision process are also active in DLT proofs of concept (POC)


c.          Short-term (by Technical Meeting in October) publish a framework of a revised URBPO which can guide the future developments of digitised trade without delaying the move from experimentation with DLT to scalable programs in market


d.         Longer term complete a revised URBPO sufficiently vetted and approved by National Committees including the above criteria


3)        Address data standards that improve the Trade Service Utility's (TSU) effectiveness and meet the short term needs of the URBPO and identify possible implications of emerging technologies on the rules

a.         Recommend and incorporate changes to the Trade Service Utility which address current limitations which have inhibited market acceptance (i.e., Vessel names/ identifier; edits of ports) Recommended changes to ISO standards and the TSU operating system to SWIFT

b.         Based upon learnings from Distributed Ledger Technologies (Blockchain) of "conditions" which create obligations among the parties incorporate data standards that reflect these

Looking to organisations such as the Digital Standards for Trade (DST) for emerging standards


Composition of the BPO sub-group

20 experienced trade finance professionals nominated by the national committees

            Representing banks, Fintechs, Consulting firms, Service Providers

            Veterans of the development of the Trade Service Utility and the Bank Payment Obligation

            Represent the major participants in "real" BPO transactions


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