Lloyds Bank has completed what it believes to be the first transaction under the UK’s new Electronic Trade Documents Act (ETDA) which came into force today [20 September 2023].

The ETDA gives electronic Bills of Exchange, Bills of Lading and other commercial documents the same legal footing as paper documents. The legislation is designed to give UK businesses and participants in the 60-80% of trade transactions worldwide that are subject to English law, more flexibility in how they trade. The Act will also significantly reduce the environmental impact that paper documentation has, while reducing the cost and time taken to conclude international trade transactions.

The Electronic Trade Documents Act (ETDA) has come into force today.

The new law represents a huge step forward into digitalisation of trade flows by eliminating paper flow documents and increase efficiency and transparency. This new act is not imposing the use of electronic documents and is allowing paper ones to circulate as well. In case of the use of electronic documents, they should be stored on a ‘reliable system’ that will permit verification of the authenticity, integrity and singularity of the documents.

State Bank of Pakistan (SBP) governor, Jameel Ahmad, has told a senate committee that letters of credit (L/Cs) ensured that loans made under the concessionary Temporary Economic Refinance Facility (TERF) to some businesses during the Covid pandemic were not used for any purpose other than for purchasing plant and machinery.

The senate's standing committee on finance and revenue had raised questions over the transparency of over US$3 billion of loans approved under the TERF. Members suspected that some funds had been misdirected and expressed concerns over the central bank's weak oversight of the funds.

A judge in a Canadian court case has ruled that a thumbs-up emoji constituted a legally binding acceptance of a contract, ordering the defendant, who failed to fulfil their end of the deal, to pay more than $82,000 in damages.

In November 2021, buyer South West Terminal Ltd (SWT) sought to purchase 87 metric tonnes of flax from seller Achter Land & Cattle Ltd at a price of $669.17 per tonne.

The Competition Commission of Pakistan (CCP) has concluded an extensive study titled “Enhancing Economic Efficiency of SMEs in Pakistan”, identifying barriers to competition, and providing recommendations for improving the economic efficiency of small and medium enterprises (SMEs).

The study is based on data from 50 Financial Institutions (FIs), 18 focused group discussions, and 362 SMEs across 11 cities and a seminar conducted by CCP on women entrepreneurs.

A court in the US state of New Jersey has sentenced two men to prison for their parts in a US$1 million up-front fee fraud that centred on a purported standby letter of credit (L/C) that the fraudsters said would help their victims import gold.

Roy Gillar was sentenced to six years in prison while Harold Mignott faces three years in jail. A co-defendant, Jerrid Douglas is scheduled to be sentenced later this month.

A businessman has been accused by India's enforcement directorate (ED) of using fraudulent letters of credit (L/Cs) and a network of shell companies to cheat banks out of the equivalent of around US$6.8 billion.

The accusations follow the arrest last week of promoter and former managing director of Bhushan Steel, Neeraj Singhal. He has been remanded in custody until 20 June.

Thailand's Bangkok Bank and Indonesia's Permata Bank have collaborated to complete a blockchain letter of credit (L/C) transaction in the Thai-Indonesian chemical market.

The digitalisedL/C transaction also aligns with the concept of green business for sustainable growth according to Bangkok Bank.

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India's ICICI Bank is adding a rupee vostro account (RVA) to its digital online trade platform that includes letter of credit (L/C) functionality according to an official statement.

The proposition will enable Indian exporters and importers to pay and settle export-import transactions in Indian rupees (INR) with RVAs that can be opened with correspondent banks in the Americas, Europe, Asia and the Gulf.

The African Development Bank (AfDB) is continuing its efforts to facilitate letter of credit (L/C) flows in Africa by approving a trade finance transaction guarantee facility for Banque Commerciale du Burundi (Bancobu).

The facility is one of the AfDB's responses to concerns about shrinking L/C availability in Africa since the terrorist attacks of 9/11 led to stricter compliance requirements that prompted some international banks to exit African markets. This process was accelerated by the 2008 financial crisis and, most recently, by the Covid pandemic.

A court in London gave judgment last week in favour of Celestial Aviation Services in its case against UniCredit after determining that the aircraft lessor made valid demands under letters of credit (L/Cs) last year while UniCredit's view that the demands were invalid was wrong.

The commercial court found that a German unit of Italy's UniCredit was wrong to withhold US$68 million in payment guarantees owed to Celestial claiming that it was prohibited from making payments because of sanctions imposed on Russia by the EU, the UK and US following Russia's invasion of Ukraine.

The Asian Development Bank has published a white paper on deep-tier supply chain finance (DTSCF), which potentially extends financing access and transparency down the chain to even the smallest suppliers.

The paper includes analysis of the role and different approaches of fintechs Skuchain, Banco and KashBank may take in the global realisation of this digital financial solution that can involve letters of credit (L/Cs).

The International Chamber of Commerce (ICC) has published a compendium of four guidance papers on documentary credit usage for trade finance practitioners.

The papers contemplate requirements for on board notation; the principle of strict compliance; use of drafts under documentary credits, and simple documentary credit format.

Insufficient industry support for their digital venture has caused international shipping giant A P Moller - Maersk (Maersk) and IBM to abandon their joint Tradelens blockchain-based supply chain platform initiative for international shipping.

Until recently the initiative has been working with banks and other partners on solutions combining digital letters of credit (L/Cs) with other trade finance instrument issuance, including the Tradelens electronic bill of lading (eBL) that aimed to simplify the issuance, transfer and surrender of original shipping documents by digitising the transfer of title process.

Green trade under the European Bank of Reconstruction and Development's (EBRD's) Trade Facilitation Programme (TFP) is growing, according to the bank's Task Force on Climate-related Financial Disclosures (TCFD) Report 2021.

Published to coincide with the COP 27 climate change conference in Egypt this month, the bank's third annual TCFD report discloses EBRD's climate risk assessment methodologies and initial portfolio risk assessments.

While earlier efforts to link sustainable trade finance principles with letters of credit (L/Cs) failed to gain traction, L/Cs in financings with clear climate targets are gradually emerging.

But unlike the capital markets that have the Green Bond Principles and the debt markets have the Green Loan Principles to guide best practice, sustainable trade finance lacks common standards and market definition.

The Roadmap and Vision for Industry, Policymakers, and Traders Worldwide - is the first output of a newly-launched ICC project aiming to align on a consistent definition of sustainable trade and trade finance, set out what specifically constitutes a sustainable trade transaction, and propose a framework and assessment methodology to qualify trade transactions for this purpose.

The first stone of the project is the positioning paper which is laying ground on the definitions of sustainable trade and trade finance, a comparison with other sustainability measures and why those can or cannot be applied for trade finance.

Default rates for both export and import letters of credit (L/Cs) decreased in 2021 compared with 2020 according to a new report produced by the International Chamber of Commerce (ICC) in partnership with Global Credit Data (GCD) and Boston Consulting Group (BCG).

Widely seen as the global authoritative source of trade default rates across all asset classes, the ICC 2022 Trade Register Report also confirmed that credit risk in all types of trade, supply chain and export finance has fallen back to pre-pandemic levels.

Post-pandemic economic headwinds, supply chain disruption and increased requirements to align with environmental, social and governance (ESG) considerations have prompted a recalibration in the perceived risks faced by trading counterparties according to Standard Bank.

It says this has led to an increase in demand for letters of credit (L/Cs) and L/C confirmations to mitigate buyer payment risk, financial institution payment risk and country risk.

Republican lawmaker Andy Harris has sent a letter to US commerce secretary Gina Raimondo regarding the National Telecommunications and Information Administration's (NTIA's) requirements for its Infrastructure Investment and Jobs Act (IIJA) broadband programmes.

The letter expresses the US congressman's concerns about the letter of credit (L/C) requirement included in the NTIA's two new grant funding programmes to stimulate the rollout across the US of broadband infrastructure.

India's central bank has approved a second cohort of neo-banking companies in its regulatory sandbox programme that have proposed blockchain-based cross-border payment systems that could be used as an alternative to letters of credit (L/Cs) by some Indian exporters.

The Reserve Bank of India's (RBI's) approvals come amidst a dollar crisis in global financial markets, which has prompted some exporters to switch from open account to L/C terms to minimise payment risks.

Pakistan's finance minister, Miftah Ismail, has said he is not in favour of further relaxing restrictions on import letters of credit (L/Cs) imposed with the aim of protecting the country's depleted foreign reserves.

Initially, the State Bank of Pakistan incrementally restricted the flow of imports and limited the number of L/C approvals for imports of all products. The government subsequently decided to lift the blanket import ban, and permit the use of L/Cs by Pakistan's exporters that require foreign goods to continue production.

Best known for its activities in the energy, petrochemicals and textiles sectors, a subsidiary of Indian conglomerate Reliance Industries - the country's largest publicly traded company - has become India's second largest wheat exporter, despite a ban on wheat exports.

On 13 May, India announced a sudden ban on overseas sales of wheat except for exporters who already had letters of credit (L/Cs) for exports of the grain in place.

Standby letters of credit (L/Cs) are still the most popular collateral choice for captive insurance companies according to the senior vice president and manager of Comerica Bank's global and captive insurance group, Martin Ellis.

He says that usage of standby L/Cs is also continuing to grow amongst the insurance companies set up and wholly owned by non-insurance companies to act as a direct insurer or reinsurer for a parent company and its subsidiaries.