SWIFT is a provider of a secure messaging platform for financial institutions, primarily banks.
SWIFT messages are sent and received by banks in encrypted form. As a result, SWIFT messages are recognized as a reliable and trustworthy means of communication between banks.
For example, an issuing bank sends a SWIFT message to the advising bank to inform about the issuance of a documentary credit. Similarly, the advising bank sends its confirmation via a SWIFT message.
SWIFT messages play a key role not only in letters of credit but also in other payment methods in international trade, such as advance cash payments, documentary collections, open accounts, and bank payment obligations.
What is MT700 Issue of a Documentary Credit in Trade Finance?
MT700 is a specific type of SWIFT message used by issuing banks when issuing a letter of credit.
The issuing bank sends the terms of the documentary credit using the MT700 message type “Issue of a Documentary Credit.”
The MT700 message is sent by the issuing bank to the advising bank. It is used to specify the terms of the documentary credit that has been issued by the sender (the issuing bank).
Further in this article, we will provide a detailed explanation of the fields used in MT700 SWIFT messages.
MT700 Issue of a Documentary Credit
Below, all the fields presented in this SWIFT message will be described.
:27: Sequence of Total
:40A: Form of Documentary Credit
Field 40A: Form of Documentary Credit – This field in the MT700 SWIFT message is used to indicate the form of the letter of credit.
This is a mandatory field, meaning it must be specified in all letters of credit issued using the MT700 SWIFT format.
This field specifies the type of letter of credit. One of the following codes must be used:
IRREVOCABLE – The documentary credit is irrevocable.
REVOCABLE – The documentary credit is revocable.
IRREVOCABLE TRANSFERABLE – The documentary credit is irrevocable and transferable.
REVOCABLE TRANSFERABLE – The documentary credit is revocable and transferable.
IRREVOCABLE STANDBY – The standby letter of credit is irrevocable.
REVOCABLE STANDBY – The standby letter of credit is revocable.
IRREVOC TRANS STANDBY – The standby letter of credit is irrevocable and transferable.
USAGE RULES
Detailed information about any special conditions applied to the transferability of the credit and/or the bank authorized to transfer the credit in a freely negotiable credit must be included in field 47A Additional Conditions.
:20: Documentary Credit Number
Field 20: Documentary Credit Number – This field in the MT700 SWIFT message is used to indicate the number of the letter of credit.
This is a mandatory field, meaning it must be specified in all letters of credit issued using the MT700 SWIFT format.
This field indicates the documentary credit number assigned by the sender.
According to the ICC’s opinion, the absence of the letter of credit number on documents is not a valid reason for refusal.
It should be noted that the request to include the letter of credit number is usually made at the initiative of the issuing bank to facilitate the reconciliation of documents when one or more documents are lost.
In the past, the ICC has repeatedly commented that refusal based on the absence of the letter of credit number on a document, if provided for in the letter of credit, is not a ground for refusal.
USAGE RULES
This field must not start or end with a slash ‘/’ and must not contain two consecutive slashes ‘//’.
:23: Reference to Pre-Advice
Field 23: Reference to Pre-Advice of the Letter of Credit – This field in the MT700 SWIFT message type is used only if the documentary credit has been pre-advised.
This is an optional field.
This field provides a reference to the pre-advised credit only if the pre-advised credit was previously sent to the beneficiary. In most cases, this field is not used.
A pre-advice of a letter of credit or amendment (“pre-advice”) is sent only if the issuing bank is prepared to issue the operative credit or amendment.
The issuing bank that has sent a pre-advice irrevocably undertakes to issue the operative credit or amendment without delay, in terms not inconsistent with the pre-advice.
USAGE RULES
This field must contain the code PREADV, followed by a slash ‘/’, and the reference to the pre-advice, for example, by date.
:31C: Date of Issue
Field 31C: Date of Issue – This field in the MT700 SWIFT message is used to indicate the date of issuance of the letter of credit.
This is an additional field, optional to fill. However, almost all letters of credit issued in SWIFT format include this field.
This field indicates the date on which the issuing bank (Sender) considers the documentary credit to be issued.
The date must contain a valid date expressed as YYMMDD (YEAR, MONTH, DAY).
The issuing bank irrevocably undertakes to fulfill its obligations at the time of issuance of the letter of credit.
The issuing bank’s obligation to honor begins from the time the letter of credit is issued.
USAGE RULES
The absence of this field implies that the date of issue is the date this message is sent.
:40E: Applicable Rules
Field 40E: Applicable Rules – This field in the MT700 SWIFT message is used to indicate the rules governing the letter of credit.
This is a mandatory field, meaning it must be specified in all letters of credit issued using the MT700 SWIFT format.
One of the following codes must be used:
EUCP LATEST VERSION: The credit is subject to the Supplement of the ICC Uniform Customs and Practice for Documentary Credits for Electronic Presentations, issued by the International Chamber of Commerce (ICC), Paris, France, in effect on the date the credit is issued.
EUCPURR LATEST VERSION: The credit is subject to the version of the Supplement of the ICC Uniform Customs and Practice for Documentary Credits for Electronic Presentations, ICC, Paris, France, in effect on the date of issuance. Reimbursement is subject to the version of the Uniform Rules for Bank-to-Bank Reimbursements, ICC, Paris, France, in effect on the date of issuance.
ISP LATEST VERSION: The standby letter of credit is subject to the version of the International Standby Practices, ICC, Paris, France, which is in effect on the date of issuance.
OTHR: The credit is subject to any other rules.
UCP LATEST VERSION: The credit is subject to the version of the ICC Uniform Customs and Practice for Documentary Credits (UCP), ICC, Paris, France, in effect on the date of issuance.
UCPURR LATEST VERSION: The credit is subject to the version of the ICC Uniform Customs and Practice for Documentary Credits, ICC, Paris, France, in effect on the date of issuance. Reimbursement is subject to the version of the Uniform Rules for Bank-to-Bank Reimbursements, ICC, Paris, France, in effect on the date of issuance.
:31D: Date and Place of Expiry
Field 31D: Date and Place of Expiry – This field in the MT700 SWIFT message is used to indicate the expiry date and place of the letter of credit.
This is a mandatory field, meaning it must be specified in all letters of credit issued using the MT700 SWIFT format.
This field indicates the latest date for the presentation of documents under the documentary credit and the place where the documents may be presented.
The letter of credit must specify an expiry date for the presentation of documents.
The place of presentation is the location of the bank where the credit is available. The place for presentation of the credit may be any bank that is part of the issuing bank.
A place for presentation different from the location of the issuing bank is any other branch of the issuing bank.
Except as provided in sub-article 29(a), presentation by or on behalf of the beneficiary must be made on or before the expiry date.
USAGE RULES
The date must contain a valid date expressed as YYMMDD.