Standard Chartered Bank today announced that it had facilitated the first end-to-end automated trade finance transaction with the Bank Payment Obligation (BPO) through its Straight2Bank platform. This transaction heralds a new era of greater efficiency and paperless trade settlement. Launched by SWIFT, the BPO is an effective payment undertaking between banks that payment will be made on a specified date after a successful electronic matching of data according to industry-defined ISO 20022 message flows.
The first BPO transaction was carried out by BP's petrochemicals business. David Vermylen, global credit manager, petrochemicals, BP said: "The BPO programme offers us a number of efficiency benefits through reduced document handling and lower confirming costs, and by conducting business with less paper compared to traditional Letters of Credit."
Using BPOs, Standard Chartered Bank clients can benefit from assurance of payment and risk mitigation through a much faster, paperless and fully-automated process – bridging Letters of Credit and open account transaction. The result is a less complex and more cost-effective settlement tool that accelerates the payment cycle. This is particularly useful in the commodities industry (such as oil, gas or petrochemicals) where the dependence on documents is not intrinsic to conducting trade (where, for example, the need for documents such as inspection certificates is minimal). This will also work in industries where the supply-chain linkages between buyer and seller are strong.
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