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The ICC Uniform Rules for Digital Trade Transactions (URDTT) are intended: (a) for a fully digital environment; (b) to be neutral with regard to technology and messaging standards; and (c) to extend into the corporate space, including commercial transactions and the growing community of non-bank providers of financial services.
The URDTT are designed to be compatible with UNCITRAL Model Laws, including those on Electronic Commerce, Electronic Signatures and Electronic Transferable Records.
Out of necessity, the digital transformation of trade requires a new way of thinking, affecting both market conventions and classifications. Rapid evolutions in new technology are changing how we view trade and supply chain finance. Businesses are looking for solutions that will deliver greater control and visibility within their supply chain ecosystem. Financiers are looking for tools that will support regulatory compliance and optimise the use of capital. A variety of technologies are being proactively introduced from Optical Character Recognition (OCR) and Artificial Intelligence (AI) to Distributed Ledger (DLT) and smart contracts. Solutions can be configured to be fully automated end-to-end without requiring human interaction.
The approach taken to the drafting of the URDTT has been to produce rules that are agnostic as to the medium used to perform the underlying trade transaction as a Digital Trade Transaction save that it would be conducted using Electronic Records and not paper documents. The structure of the rules is one of an underlying physical transaction for a sale and purchase or for the provision of services that the Principal Parties have agreed to evidence electronically, including a payment method that is itself electronic.
The ICC Banking Commission has already approved and issued electronic rules to advance the digitalisation of trade finance practices, releasing electronic supplements to the existing Uniform Rules for Collections (URC 522) and Uniform Customs and Practice for Documentary Credits (UCP 600) rules. The eURC and eUCP establish rules for electronic records associated with existing, well established, trade finance products. These rules, however, are not fully digitalised owing to an ongoing reliance on manual reconciliation processes. The URDTT on the other hand envisage transactions that are evidenced in a manner that is totally digitised.
The URDTT should be regarded as an over-arching set of rules under which other rulebooks may co-exist and the trade transaction may be documented. This recognises the prior existence of industry terms and conditions, proprietary rulebooks pertaining to individual service providers, as well as the existence of rulebooks developed in conjunction with distributed ledger projects. However, the URDTT may in some cases eventually remove the need for duplicate/repetitive clauses in user agreements and/or proprietary rulebooks.
In order to appreciate the true value of the URDTT we need to think beyond traditional instruments; think beyond traditional rule-making; think beyond existing ways of doing business. The URDTT is not just a set of rules for banks; the rules extend into the corporate world and to the growing community of non-bank service providers as well. The URDTT are intended to govern across a digital landscape, taking into account recent developments, not only in distributed ledger technology but also the use of artificial intelligence, natural language processing, machine learning, data analytics, smart contracts, smart objects and the Internet of Things, all of which will have a material impact on the ways in which we do business in future.
The Drafting Group that brought this important text to fruition deserves special mention. Their names are listed below:
Jim Bidwell, Head of Trade Product, NatWest, UK
John Bugeja, Managing Director, Trade Advisory Network Ltd, UK
Usman Butt, Senior Product Manager, Global Trade and Receivables Finance, HSBC Group, UK
Anastasia McAlpine, Head of Product, Trade & Supply Chain Finance, Finastra, UK
Kellie-Ann Scott, Global Product Head for Sales Finance and Inventory Finance, JP Morgan, UK
Advisers to the Drafting Group
Gary Collyer, Managing Director, Collyer Consulting Global Ltd, UK
Dave Meynell, Owner, TradeLC Advisory, UK
David Hennah, Co-chair, URDTT Drafting Group, Global Head of Trade & Supply Chain Finance, Intellect, UK
Geoffrey Wynne, Co-chair, URDTT Drafting Group, Partner, Sullivan & Worcester UK LLP, UK