Market adoption of MT798

SWIFT's Trade and Supply Chain team

supplychain@swift.com

La Hulpe, June 21th 2012

Facilitating multi-banking in trade finance using SWIFT's industry standards for letters of credit and demand guarantees

Agenda

•  Corporates, Banks and Solution Partners adopting the MT798 standards

•  Definition of Industry Standards •  Industry standards enable competitive vendor solutions to interoperate •  Best practices for multi-banking in trade and supply chain finance

•  Issues with proprietary formats and rulebooks •  Issues for banks of non-standardised multi-bank options •  Issues for corporates of non-standardised multi-bank options

•  Conclusion •  Contact details

Market adoption of the MT798 standards 2

Corporates adopting the MT798 standards Most are already using SWIFT for payments but this is not a pre-requisite

Corporates Use of MT798 for …

Use of MT798 as …

Live Usage

Multi-bank Solution

Alcatel-Lucent Guarantees Exporter Live Surecomp

Saudi Aramco Export LCs Exporter Live In-house

ArcelorMittal International

Export LCs Exporter Live Misys

Metro Group Buying

Import LCs Importer Live In-house

Metsä Finance Export LCs Exporter Q4 2012 GlobalTrade Corporation

Safran Guarantees, LCs

Exporter and importer

Q4 2012 GlobalTrade Corporation

Voith Guarantees, LCs

Exporter and importer

Q4 2012 Surecomp

3 Market adoption of the MT798 standards

More corporates will confirm their adoption of MT798 in H2 2012

24 banks adopting the MT798 standards 12 from the top20 Trade banks

4 Market adoption of the MT798 standards

All leading Trade Finance vendors are accredited by SWIFT

SWIFTReady Trade Finance

•  Bank-to-bank standards •  Corporate-to-bank

standards

SWIFTReady for Corporates – Trade

Finance

•  Corporate-to-bank standards

Vendor Trade Finance Solution

China Systems Eximbills

CSI BankTrade

Misys Trade Innovation Plus

MIT CREDOC

Sopra Evolan IB

Surecomp DOKA 5, IMEX

Bank Corporates

Vendor Trade Finance Solution

GTC GlobalTrade Corporate

Misys Misys Trade Portal

Pinnacle Solutions Incorporated (PSI)

Synergy Trade Services (TS) Multi-bank Corporate Site

5 Market adoption of the MT798 standards

Note: Surecomp is ready but not certified in 2011

Industry standards Developed by international standardisation bodies

Industry standards are industry-owned and technology-neutral. They offer a coherent legal and operational framework.

•  Trade Finance instruments (UCP600, URDG758, ISP98, URC 522, URBPO, …)

•  MT standards (for L/Cs, Demand Guarantees, Collections)

•  ISO 20022 standards (for BPO) •  ISO 9362 Business Identifier Code (BIC) •  ISO Country codes, Currency codes, …

6 Market adoption of the MT798 standards

Industry standards support end-to-end flows

Streamline the L/C, Guarantees and open account trade transactions Automate workflow of the trade life cycle to reduce cost

Accelerate handling of discrepancies and settlement Move to paperless transaction processing

Enhance visibility on credit lines

Application, amendment, …

Advising / confirming banks Sellers

MT798 ISO 20022

Advice, confirmation, amendment, …

MT798 ISO 20022

MT7XX ISO 20022

7

Internet

Issuing banks Buyers

Internet

Inter-bank flows

Market adoption of the MT798 standards

Industry standards enable competitive vendor solutions to interoperate

Message-level interoperability between various software solutions No vendor lock-in and vendor-specific process fees for banks

Increased choice of vendor solutions (competitive space) Reduced technical, operational and legal costs

Application, amendment, …

Advising / confirming banks Sellers

MT798 ISO 20022

Advice, confirmation, amendment, …

MT798 ISO 20022

MT7XX ISO 20022

8

Internet

Issuing banks Buyers

Internet

Inter-bank flows

Market adoption of the MT798 standards

Best practices for multi-banking in trade finance

Market adoption of the MT798 standards 9

Industry standards enable banks and corporates to increase efficiency and minimise costs when respecting all of the above best practices

•  ICC Banking Commission's rules Rules • MT Cat4/7 standards •  ISO 20022 TSMT standards Messages • Business Identifier Code (BIC or ISO

9362) for banks and corporates Identity • SWIFT for bank-to-bank (FIN and TSU) • SWIFT or Internet for corporate-to-bank Channel • SWIFTReady vendors •  In-house development Solutions

Issues with proprietary formats and rulebooks

Avoid proprietary solutions and vendor lock-in

•  Some Trade Finance vendors have been trying to impose their technology-specific formats and proprietary rulebooks in the C2B trade finance space –  Their goal is to intermediate the corporate-to-bank contractual relationship,

which is actually not necessary as their role is at technology level –  They also wish to force banks into their systems using corporate pressure –  Corporates and banks adopting such platforms are locked into the vendor-

specific rules, formats and technologies –  Software solutions should be independent of each other and interoperate

using Industry Standards (as it is the case for payments) •  Global Trade banks have resisted adopting those proprietary solutions as each

implementation generates huge implementation and running costs (software, legal, operational, technical); usually most fees are charged to the banks whereas those solutions target the corporates

•  Using Industry Standards, any change of software solution performed by one party is not impacting the other party (technology independence).

Market adoption of the MT798 standards 10

Issues for banks with non standardised multi-bank options

Market adoption of the MT798 standards 11

Scenarios:

Major issues for banks:

Corporate using a vendor platform forcing banks to adopt proprietary formats, security

and rules

Corporate re-using its FI BIC and the MT7xx

messages on the bank-to-bank FIN

service

Corporate using a vendor BIC and the MT798 standards on the bank-to-

bank FIN service

Corporate using MT798 standards with its own

BIC in SCORE

Increased vendor and

technical costs

Additional fees for banks to pay to the

vendor; additional IT integration

No fee for banks to re-use SWIFT and SCORE for

trade finance

Increased operational

costs

Additional vendor-specific operational

processes for limited number of

clients

Additional customer-specific

operational practices for banks

to develop

Single trade-specific process for all multi-bank

corporates

Increased legal

complexity and costs

Parties need to develop vendor-

specific contractual arrangements

Parties need to develop corporate-specific contractual

arrangements

Parties need to develop vendor-

specific contractual arrangements

Standardised SCORE agreement for cash and

trade

Increased KYC risks

Depends on vendor-owned legal frameworks

Lack of visibility on corporate identity, resulting with likely

KYC issues

Lack of full visibility to end-corporate identity, resulting with likely KYC

issues

Standardised SWIFT registration for corporates

and re-use of BIC by corporate

Issues for corporates with non standardised multi-bank options

12

Scenarios:

Major issues for

corporates:

Corporate using a vendor platform forcing banks to adopt proprietary formats, security

and rules

Corporate re-using its FI BIC and the MT7xx messages on the bank-to-

bank FIN service

Corporate using a vendor BIC and

the MT798 standards on the bank-to-bank FIN

service

Corporate using MT798 standards with its own

BIC in SCORE

Increased vendor and

technical costs

Need for multiple solutions when any

of the banks required do not

support the vendor platform

Proprietary development: so

packaged solutions and costs cannot be

shared

Re-use SWIFT connectivity in use for

treasury and cash management

Not following industry

standards and best practices

Dependency on single vendor solution: less

competition and technical lock-in

Not able to benefit from full MT798

functionality

Corporate does not benefit from SWIFT's FIN

Responsibility and Liability (R&L)

Single process with all banking partners

Increased legal

complexity and costs

Parties need to develop vendor-

specific contractual arrangements

Parties need to develop corporate-specific contractual

arrangements

Corporate cannot benefit from

standardised legal documentation

Standardised SCORE agreement for cash and

trade

Increased KYC risks

Depends on vendor-owned legal frameworks

Lack of visibility on corporate identity, resulting with likely

KYC issues

Lack of full visibility to corporate

identity, resulting with likely KYC

issues

Standardised SWIFT registration for corporates

and re-use of BIC by corporate

Conclusion Multi-banking in trade finance is now a reality

•  All trade banks in the world use SWIFT's MT7xx standards with their correspondent banks

•  The leading trade finance banks are now extending the use of those standards to the corporate world through the MT798; all leading vendors have adopted the MT798

•  The MT798 can be used on any channel (Internet, SWIFT) and with any software solution; the SWIFTReady certification ensures inter-operability between competitive vendor solutions

•  The growing adoption by all leading players confirms the immediate relevance of the MT798 industry standards to the trade finance market

Market adoption of the MT798 standards 13

Avoid vendor lock-in by pushing back on proprietary portals/formats

Contact our SWIFTReady Trade Finance 2011 partners

14

Partner Solution Contact

!

Joel Schrevens, Digby Bennett joel@chinasystems.com digby@chinasystems-me.com +32 475 904413

Selene Chan, James Tindall schan@banktrade.com jtindall@banktrade.com + 44 7941 325716

Olivier Berthier, Stephan Nouy Olivier.berthier@misys.com Stephane.Nouy@misys.com +33 (0)1 53 00 70 13

Jean-Luc Spinardi sales@mitsa.ch + 41 213 188 181

Marina Singlard msinglard@sopragroup.com +33 5 6573 4651

Murray Freeman Murray.freeman@surecomp.com +1 201 716 1236

Misys TI Plus

Evolan IB

DOKA 5, IMEX

Contact our SWIFTReady for Corporates - Trade Finance 2011 partners

Partner Solution Contact

!

Jacob Katsman, Nick Pachnev katsman@globaltradecorp.com pachnev@globaltradecorp.com +1 416 627 8520 / +1 416 661 8520

Olivier Berthier, Stéphane Nouy Olivier.Berthier@misys.com Stephane.Nouy@misys.com +33 (0)1 53 00 70 13

John Nash Pinnacle Solutions Incorporated +44 7587 088 049 john.nash@psi-nj.com

Misys Trade Portal

GlobalTrade Corporate

Pinnacle Solutions

Incorporated (PSI)

Synergy Trade Services (TS) Multi-bank

Corporate Site

Note: Surecomp is ready but not certified in 2011

Market adoption of the MT798 standards 15

Contact our MT798 bankers

Market adoption of the MT798 standards 16

Bank% CC! MT798%contact%person% Email%

Bank!of!America! US! Paul!Johnson! paul.a.johnson@baml.com Banque!Saudi!Fransi! SA! Shafeek!H.!Al<Manameen! ShafeekM@AlFransi.com.sa Bayerische!Landesbank! DE! Florian!Seitz! florian.seitz@bayernlb.de BNP!Paribas! FR! Eric!Henry! eric.henry@bnpparibas.com CiGbank! US! Fran!Martell! fran.martell@citi.com CM!CIC! FR! Tony!Croizer! tony.croizer@e-i.com Commerzbank! DE! Sven!Mueller! sven.mueller@commerzbank.com Crédit!Agricole!CIB! FR! Patrick!Boiteau! patrick.boiteau@ca-cib.com Danske!Bank! DK! John!Enemark! john.enemark@danskebank.dk Deutsche!Bank! DE! Frank!Bothe! frank.bothe@db.com Gulf!InternaGonal!Bank! SA! Mathew!Silva! mathew.silva@gibuk.com HSBC! HK! Kate!Han! katenqhan@hsbc.com.hk J.P.!Morgan! US! Merlin!Dowse! merlin.dowse@jpmchase.com; KBC! BE! Karen!Sterckx! karen.sterckx@kbc.be LBBW!Landesbank!Baden!WürSemberg! DE! Rolf!Seidel! rolf.seidel@LBBW.de Nordea! FI! Soren!Andresen! soren.andresen@nordea.com RBS! US! Deborah!Seliski! deborah.seliski@rbs.com Riyad!Bank! SA! Medhat!Sanuri! medhat.sanuri@riyadbank.com Samba! SA! Abdulkader!A.!Bazara! abdulkader.bazara@samba.com Société!Générale! FR! Corinne!Bakok! corinne.babok@socgen.com Standard!Chartered! SG! Ashutosh!Kumar! ashutosh.kumar@sc.com The!NaGonal!Commercial!Bank! SA! Omar!Yassine! os.yassine@alahli.com UBS!AG! CH! Erwin!Freiburghaus! erwin.freiburghaus@ubs.com Unicredit! AT! Markus!Wohlgeschaffen! markus.wohlgeschaffen@unicreditgroup.de

Contact us now!

André%Casterman% Head!of!Trade!and!Supply!Chain!Patrick%Krekels% Legal!Counsel!Nadine%Louis% Supply!Chain!Finance!and!Business!Intelligence!Marie?ChrisAne%Diaz%Supply!Chain!Finance!David%Hennah% Supply!Chain!Finance!Aline%Henrard% Supply!Chain!Finance!Raimo%Naatsaari% Documentary!Trade!Finance!and!e<invoicing!Robert%Marchal% Standards!David%Dobbing% Standards!Angéline%Tan% Standards!Kineth%Yuen% Standards!–!Asia!Pacific!Anyal%Hozee% Partner!Management!Chris%Conn% Business!Development!–!Americas!James%Wills% Business!Development!–!Americas!Connie%Leung% Business!Development!–!Asia!Pacific!Robert%Schneider% Business!Development!–!EMEA!Urs%Kern% Business!Development!–!EMEA!MaO%Monaco% Corporate!Sales!–!Americas!Paula%Goldsmith% Corporate!Sales!–!Americas!Zelda%Anthony% Corporate!Sales!–!Asia/Pacific!Thomas%Peeters% Corporate!Sales!–!Benelux!SebasAan%Niemeyer% Corporate!Sales!–!AT/DE/CH!Arnaud%Dupuy% Corporate!Sales!–!France!

Neil%Gray% Corporate!Sales!–!UK/Ireland/Nordics!Jan%Heinsbroek% Corporate!Sales!–!Nordics!Roger%Inderbitzin% Corporate!Sales!–!Switzerland!Ashley%Schmidt% Media!RelaGons!–!Americas!Sandra%Gavard% Media!RelaGons!–!Asia!Pacific!Thea%George% Media!RelaGons!–!EMEA!

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Market adoption of the MT798 standards