by Robert Marchal

While documentary trade volumes - letters of credit (L/Cs), collections, guarantees and standby L/Cs - have remained flat over the past few years, their value continues to rise, and they are still an essential part of emerging market trade and trade in countries where exchange controls are in force. In developed markets, standby L/Cs and guarantees are increasing in importance, while documentary collections are still used by small- and medium-sized enterprises that want the security of bank involvement without the cost of an L/C.

Following the successful introduction of the Trade Services Utility and the Corporate Access model SCORE (Standardised CORporate Environment) in 2007, and in response to increasing market interest, SWIFT has published a set of guidelines on the use of the existing documentary credit and guarantee messages for corporate-tobank communication. This makes use of the MT 798 (proprietary message) to complement and allow the re-use (without change) of the traditional bankto- bank FIN message formats that cover the documentary collections (MT 4 series of messages), the letters of credit (MT 7 series of messages) and bank guarantees (MT 76 series of messages). This approach supports the inclusion of additional data that is specific to corporate-to-bank information exchange.

The following functionality is supported in the corporate-to-bank or bank-to-corporate environment:

- letter of credit application;

- letter of credit advice;

- letter of credit amendment;

- guarantee issuance, advice and amendment; and

- standby letter of credit issuance, advice and amendment.

Banks will benefit from this solution because they can:

- standardize their exchange of trade data with their corporates;

- respond to their corporates' requests for a multi-bank solution; and

- process input from corporate to bank onwards in the chain with minimal handling.

Corporates will benefit from this solution because they can:

- leverage their investment in SWIFT;

- use the same channel and communication standard with all their trade banks; and

- gain a centralized view of their trade transactions worldwide, increasingly important for compliance.


The specification of these message guidelines was achieved in close collaboration with the community, involving consultation with banks, corporates, vendors and the Trade Finance Maintenance Working Group, comprising country representatives appointed by their respective SWIFT User Group. Five vendors have indicated that they are enabling the MT 798 Trade Envelope in their trade systems for banks and/or corporates. Banks are enhancing their in-house systems or looking to vendors for help with implementation.

To cater for the corporate-to-bank exchanges, several implementation options were evaluated. The use of MT 798 with identified sub-message types, supported by detailed guidelines, was deemed to provide the most appropriate implementation solution. The guidelines indicate exactly how the messages should be used and serve as the base implementation reference document.

This approach provides a consistent way for handling the specific data that corporates need to send to their banks and vice versa. It permits logical processing, numbering and routing of messages to enable banks to process the data with minimal conversion. The approach provides flexibility to easily extend the message components, should a need arise.

Importantly, the solution was achieved without the need to create new FINsyntax message types, but rather by reusing existing fields and message types, namely the MT 798, and using it to envelop existing MTs, the MT 700 and an MT 701, for example.

Each MT 798 will use an agreed submessage type and an envelope which carries the data required to undertake the transaction. For import letters of credit, the sub-message types cater for an application, notification, amendment request and amendment notification.

Import documentary credit transactions

In Example 1, the corporate can apply for an "Import Documentary Credit" by using two or more MT 798s. The first uses sub-message number 770. This envelope holds corporate-to-bank information not catered for in existing MTs. The second uses the 700 sub-message, the envelope containing the same fields as a bank-to-bank MT 700 message. Additional MT 798s may be used to carry extension messages with sub-message 701 and the 701 fields.

A similar series of messages is used for the issuance notification of a letter of credit, one change being that the first MT 798 will use the sub-message type 771.


To request the amendment of a letter of credit, the first MT 798 holds, as before, the specific corporate-to-bank information not otherwise carried in the 707, and it will use the sub-message type 772. The second MT 798 is an envelope for a 707 message.

The different messages sent as part of one logical group are linked using field 27A (Message Index/Total) and field 21A (Customer Reference Number) or 21P (Advising Bank Reference Number), depending on the message set function, and are supplemented, where appropriate, with the document reference number, e.g., documentary credit number or guarantee number.

Export documentary credit transactions

Export letter of credits and guarantees/ standbys follow the same methodology, as shown in Example 2.

Guarantee/standby letter of credit transactions

The Standards MT Message Implementation Guidelines that fully describe the above (see Example 3), including examples, are freely available from www., under Trade Services, along with other related information.

SWIFT expects to see live usage during the first half of 2009.

Robert Marchal is Business Analyst/Standards Specialist at SWIFT in Belgium. His e-mail is Robert.