Having read the latest draft of UCP600 it seems to me that the proposed new UCP will offer few, if any, significant advantages over the current UCP(500) (taking into account subsequent ICC ‘Banking’ Commission documents) from the perspective of a bank (and a beneficiary for that matter). However, I imagine 'implementing' UCP600 is likely to incur significant costs -systems changes, 'training' etc- for banks (and beneficiaries?). If we banks are going to be obliged to incur significant costs with little gain would it not be in our interests that our National Committees voted against UCP600 in October? What do others think?
N.B. If replying to my message, please note that the ‘contents’ of the latest draft must ‘remain confidential’.
UCP600
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PradeepT_old
- Posts: 39
- Joined: Fri Apr 05, 2019 5:25 pm
UCP600
Dear Jeremy,
As always, I agree with you that implementing UCP 600 shall be a reasonably if not significantly, costly affair not only in regard to training, system changes but also perhaps legislative changes in some countries, where banking laws have adopted UCP 500 to govern LCs or where reasonable time has been defined as something not exceeding seven banking days. However, I couldn’t but more disagree with you when you say that the new draft will offer “few” advantages over the current one.
I have been watching evolvement of UCP 600 to its current draft which has indeed come a long way from what began as mere fine tuning or what you call some structural changes. But new concepts based on Banking Commission opinions, definitions, interpretations, removal or amendments to key terms to facilitate reduction, if not complete elimination of discrepancies and disputes are something to hail and appreciate. Taking cognisance of your hint to maintain the confidentiality of UCP 600 draft, I would particularly refer to removal of certain reasonably, on its face, vague expressions that are going to make life of us bankers lot easier.
Don’t you think so ? And sorry, NCs are not going to vote against UCP 600 !
Regards,
Pradeep Taneja
As always, I agree with you that implementing UCP 600 shall be a reasonably if not significantly, costly affair not only in regard to training, system changes but also perhaps legislative changes in some countries, where banking laws have adopted UCP 500 to govern LCs or where reasonable time has been defined as something not exceeding seven banking days. However, I couldn’t but more disagree with you when you say that the new draft will offer “few” advantages over the current one.
I have been watching evolvement of UCP 600 to its current draft which has indeed come a long way from what began as mere fine tuning or what you call some structural changes. But new concepts based on Banking Commission opinions, definitions, interpretations, removal or amendments to key terms to facilitate reduction, if not complete elimination of discrepancies and disputes are something to hail and appreciate. Taking cognisance of your hint to maintain the confidentiality of UCP 600 draft, I would particularly refer to removal of certain reasonably, on its face, vague expressions that are going to make life of us bankers lot easier.
Don’t you think so ? And sorry, NCs are not going to vote against UCP 600 !
Regards,
Pradeep Taneja
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
UCP600
Dear Jeremy,
I think it is all a matter of focus. Mine is that this gives the opportunity to educate customers and colleagues – and perhaps even (very controversial I admit) make marketing for your bank and for the LC instrument
of course for the benefit of yourself, the industry, the customers and of the LC instrument.
I sure would be disappointed if it turns out to be a “no”
Best regards
Kim
I think it is all a matter of focus. Mine is that this gives the opportunity to educate customers and colleagues – and perhaps even (very controversial I admit) make marketing for your bank and for the LC instrument
of course for the benefit of yourself, the industry, the customers and of the LC instrument.I sure would be disappointed if it turns out to be a “no”
Best regards
Kim
UCP600
Pradeep,
All I can is that I cannot see any justification for your apparent view that UCP600 will offer significant advantages over UCP500 when one takes into account the ICC documents that have been published to cure the major drafting problems UCP500 contained. I am struggling to see how the ‘discrepancy count’ is going to be reduced, as I think you are suggesting.
However, I have just rec’d the April-June 2006 ICC UK ‘Business Bulletin’ which -as far as I can see- is not stated to be confidential or the subject of any copyright. It says:
‘UCP 600 … may feature the following…:
- a leaner set of rules, with 39 articles … [I am sceptical that the amount of words used in UCP600 will be significantly less than UCP500.]
- a new section of “definitions” … [Big deal.]
- a replacement of the term “reasonable time” with a definite number of days [I cannot understand how the concept of ‘reasonable time’ could cause any competent banker difficulty. Whatever, I certainly cannot see that the major banks will change the amount of time in which they examine documents if reasonable time” is removed from the new UCP.]
- a new provision concerning addresses of the beneficiary and the applicant [Unless this new provision -if present in UCP600- states that any addresses that might be quoted do not have to be those stated in the credit (the current UCP500 position) such a provision will be a retrograde step as it will result in an increase in potential discrepancies.]
- an expanded discussion of “original documents” [The ICC ‘decision’ has seemingly addressed the problem, so I cannot see that this would be a substantive gain.]
- re-drafted transport articles aimed at resolving confusion over the identification of carriers and agents [We shall see.]’
You say ‘NCs are not going to vote against UCP 600’, and you may be right, but surely if it were in the interests of their banking members to vote against NCs would be duty bound to do so. After all, NCs exist for the benefit of their members, not the other way round.
Kim,
My focus is the overall interests of my bank, taking everything into consideration.
I am not sure about what you intend to ‘educate customers and colleagues’ but I agree that a new UCP600 gives a pretext for customer contact etc. I accept that this a positive, but one bought at a very high price in my opinion.
Lastly, included in the costs of implementation must -of course- be included the time etc. taken up in dealing with all the disputes that there will be between the different parties to credit transactions as to the meaning of the revised/new articles of the UCP. What fun!
Jeremy
All I can is that I cannot see any justification for your apparent view that UCP600 will offer significant advantages over UCP500 when one takes into account the ICC documents that have been published to cure the major drafting problems UCP500 contained. I am struggling to see how the ‘discrepancy count’ is going to be reduced, as I think you are suggesting.
However, I have just rec’d the April-June 2006 ICC UK ‘Business Bulletin’ which -as far as I can see- is not stated to be confidential or the subject of any copyright. It says:
‘UCP 600 … may feature the following…:
- a leaner set of rules, with 39 articles … [I am sceptical that the amount of words used in UCP600 will be significantly less than UCP500.]
- a new section of “definitions” … [Big deal.]
- a replacement of the term “reasonable time” with a definite number of days [I cannot understand how the concept of ‘reasonable time’ could cause any competent banker difficulty. Whatever, I certainly cannot see that the major banks will change the amount of time in which they examine documents if reasonable time” is removed from the new UCP.]
- a new provision concerning addresses of the beneficiary and the applicant [Unless this new provision -if present in UCP600- states that any addresses that might be quoted do not have to be those stated in the credit (the current UCP500 position) such a provision will be a retrograde step as it will result in an increase in potential discrepancies.]
- an expanded discussion of “original documents” [The ICC ‘decision’ has seemingly addressed the problem, so I cannot see that this would be a substantive gain.]
- re-drafted transport articles aimed at resolving confusion over the identification of carriers and agents [We shall see.]’
You say ‘NCs are not going to vote against UCP 600’, and you may be right, but surely if it were in the interests of their banking members to vote against NCs would be duty bound to do so. After all, NCs exist for the benefit of their members, not the other way round.
Kim,
My focus is the overall interests of my bank, taking everything into consideration.
I am not sure about what you intend to ‘educate customers and colleagues’ but I agree that a new UCP600 gives a pretext for customer contact etc. I accept that this a positive, but one bought at a very high price in my opinion.
Lastly, included in the costs of implementation must -of course- be included the time etc. taken up in dealing with all the disputes that there will be between the different parties to credit transactions as to the meaning of the revised/new articles of the UCP. What fun!
Jeremy
UCP600
Dear Jeremy,
I admit here that we all bankers agree with your point when it comes to cost, on the other hand the changes and improvements tackeled by UCP 600 are important to our job on long run, plus the cost can be depreciated over years to come.
we are voting in favour of the new UCP.
Basel
I admit here that we all bankers agree with your point when it comes to cost, on the other hand the changes and improvements tackeled by UCP 600 are important to our job on long run, plus the cost can be depreciated over years to come.
we are voting in favour of the new UCP.
Basel
UCP600
Basel,
Other bankers are of course entitled to views that differ from mine (at least I think so).
However, I defy anybody to identify more than two REAL improvements of significance in the current draft of UCP600 from a banking perspective (not that of course you are permitted to say here what they are if you can!) when compared to UCP500 combined with subsequent ICC publications.
Personally, I would have thought it better to avoid incurring unnecessary and unproductive costs in the first place, rather than taking comfort from the fact that they may be amortised over a period of years.
Jeremy
Other bankers are of course entitled to views that differ from mine (at least I think so).
However, I defy anybody to identify more than two REAL improvements of significance in the current draft of UCP600 from a banking perspective (not that of course you are permitted to say here what they are if you can!) when compared to UCP500 combined with subsequent ICC publications.
Personally, I would have thought it better to avoid incurring unnecessary and unproductive costs in the first place, rather than taking comfort from the fact that they may be amortised over a period of years.
Jeremy
UCP600
Jeremy,
UCP600's enlargement of the inconsistency defense will likely result in more citings of discrepancy. This and the other concerns you mention may induce some banks, individually or on a country or regional basis, to issue LCs under UCP500 in preference to 600.
The enlarged inconsistency defense should also make UCP even more inapt for standbys and induce banks (and thoughtful beneficiaries) to much prefer ISP.
That said, I think most banks will prefer 600 over 500 for commercial LCs and can address their concerns with a few more overriding LC and reimbursement agreement provisions.
Regards, Jim Barnes
UCP600's enlargement of the inconsistency defense will likely result in more citings of discrepancy. This and the other concerns you mention may induce some banks, individually or on a country or regional basis, to issue LCs under UCP500 in preference to 600.
The enlarged inconsistency defense should also make UCP even more inapt for standbys and induce banks (and thoughtful beneficiaries) to much prefer ISP.
That said, I think most banks will prefer 600 over 500 for commercial LCs and can address their concerns with a few more overriding LC and reimbursement agreement provisions.
Regards, Jim Barnes
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RolandLeupi
- Posts: 115
- Joined: Fri Apr 05, 2019 5:26 pm
UCP600
I understand Jeremy's point of view seing from the practice that e-UCP, ISP98 are not part of our daily business and not used at all. Bank to bank reimbursements bruchure has not altered or improved what was made in the past.
Now for the UCP 600 there will be changes regarding negotiation which will be divided into two categories. As far as I remember, the UCP 500 were so confusing about the word that ICC has to mad a position paper, which however has not eliminate at all the wrong understanding in some doc. credit community.
My personal opinion is that the best and most helpful job made by the ICC lately was the ISBP. Now if we restart to clarify without doing important changes what is an origianl, how the address should appear on the invoice and such other insignificant issued it would have maybe been more reasonable to keep the existing version which has significally improve our business. Looking at the latest revision it comes me in mind a sentence written once on the DC-Insight (I don't remember by who) saying . " Going on explaining we shall cease to understand each other".
Roland
Now for the UCP 600 there will be changes regarding negotiation which will be divided into two categories. As far as I remember, the UCP 500 were so confusing about the word that ICC has to mad a position paper, which however has not eliminate at all the wrong understanding in some doc. credit community.
My personal opinion is that the best and most helpful job made by the ICC lately was the ISBP. Now if we restart to clarify without doing important changes what is an origianl, how the address should appear on the invoice and such other insignificant issued it would have maybe been more reasonable to keep the existing version which has significally improve our business. Looking at the latest revision it comes me in mind a sentence written once on the DC-Insight (I don't remember by who) saying . " Going on explaining we shall cease to understand each other".
Roland
UCP600
If -for the sake of argument- UCP600 is voted through and IF -say- it were:
A. to contain provisions that more or less replicate sub-Article 13c of UCP500;
B. not to contain anything on the subject of 'linkage',
then logically Position Paper 3 and Opinion R251 would continue to represent international standard banking practice for the examination of documents and therefore be taken into account when determining if documents comply. Or am I mistaken?
[edited 7/12/2006 11:53:46 AM]
A. to contain provisions that more or less replicate sub-Article 13c of UCP500;
B. not to contain anything on the subject of 'linkage',
then logically Position Paper 3 and Opinion R251 would continue to represent international standard banking practice for the examination of documents and therefore be taken into account when determining if documents comply. Or am I mistaken?
[edited 7/12/2006 11:53:46 AM]
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
UCP600
Dear Jeremy,
My guess would be that if we “assume” that a provision replicating UCP 500 article 13(c) would be part of UCP 600 that one should be taken very literal. So my guess and hope is that you are mistaken – but once again you hit where it hurts the most. I think that the position papers will not apply under UCP 600 – and at the same time the ISBP will be changed (must be) – and no doubt that will strike on controversial issues as well.
We will have to wait and see.
In any case – coming back to your opening post and the one from 6 July – I think it is a clear advantage if the UCP 600 can make the views, opinions and positions regarding LCs less fragmented – not necessary for guys like you (having deep knowledge and full overview), but for exporters, importers and the average LC officer. I am not saying this is worth the cost of implementing these rules (as I have no idea how to estimate that) but it is surely on the “plus side”.
Best regards
Kim
My guess would be that if we “assume” that a provision replicating UCP 500 article 13(c) would be part of UCP 600 that one should be taken very literal. So my guess and hope is that you are mistaken – but once again you hit where it hurts the most. I think that the position papers will not apply under UCP 600 – and at the same time the ISBP will be changed (must be) – and no doubt that will strike on controversial issues as well.
We will have to wait and see.
In any case – coming back to your opening post and the one from 6 July – I think it is a clear advantage if the UCP 600 can make the views, opinions and positions regarding LCs less fragmented – not necessary for guys like you (having deep knowledge and full overview), but for exporters, importers and the average LC officer. I am not saying this is worth the cost of implementing these rules (as I have no idea how to estimate that) but it is surely on the “plus side”.
Best regards
Kim