New standardised international messages have been approved under the ISO standards for financial services messaging, providing SWIFT the green light to use 20 new message definitions to support demand guarantees and standby letters of credit (L/Cs).

The new definitions respond to industry calls to change SWIFT Category 7 messages for these instruments, which have remained largely unchanged for around thirty years.

Straight-through processing

The new set of ISO 20022 messages aim to ensure coverage of the full end-to-end flows (applicant-bank-bank-beneficiary) of demand guarantees and standby L/Cs.

According to an ISO statement, the messages are more structured and granular, aim to improve straight through processing and allow that process to be monitored and managed in a more effective and efficient manner.

Business functions

Messages include support for business functions such as application, issuance, confirmation, advising, amendment, counter-undertaking, demand processing and termination.

The demand guarantees and standby L/Cs message definitions standardise the message flows and message structures used for information communication among the parties dealing with these instruments.

Much-needed change

Category 7 messages demand guarantees and standby L/Cs were implemented in the 1980s and have remained largely unchanged, changes in response to regulation excepted.

SWIFT has acknowledged the active contribution made to the new messages by specialists from several of the world's leading banks and the Institute of International Banking Law and Practice amongst others.

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