MT760
Swift is a provider which is used as a security platform that secures messages for financial institutions mainly for banks. Swift messages are being sent and received by banks in coded forms. Swift messages work as a valid and reliable way of communication between banks. For example, an issuing bank sends a swift message to an advising bank to inform issuance of a documentary credit. Similarly, the advising bank has a role of sending the acknowledgement via a swift message. Swift messages play an important role not only in letters of credit but also in various other payment methods in international trade business/market such as cash in advance payment, documentary collections, open accounts and bank payment obligations.
What do you mean by MT 760 Guarantee / Standby Letter of Credit?
MT 760 is known as a swift message type that is usually used by issuing banks when issuing a guarantee or a standby letter of credit. Issuing banks then play a role of sending terms and conditions of a guarantee or a standby letter of credit along with a MT 760 Guarantee / Standby Letter of Credit swift message type.
What happened before Swift?
Before SWIFT came for the purpose of guarantee Letters of Credit and send information, a system called Telex was in use in spite of SWIFT. This was unfortunately prevented by low speeds, multiple security concerns and without any coding system – Transactions had to be described by the senders at any cost which were then interpreted by the receiver.
What is the use of MT 760 in trade?
MT 760 can be used both by the party issuing a beneficiary on a guarantee or LOC, or by the party who is issuing a counter-undertaking to the beneficiary.
MT 760 is another type of SWIFT message that is sent from an issuing bank to an advising bank, along with the details of the SBLC or bank guarantee. Generally, the MT 799 is subject to the rules of the following:
- URDG (Uniform Rules for Demand Guarantees)
- ICC UCP 600 (International Chamber of Commerce Uniform Customs and Practice for Documentary Credit)
- ISP (International Standby Practices)
What Does Current Bank Guarantee Rules (URDG 758) or Standby Letter of Credit Rules (ISP 98) Says Regarding the Issuance of a Bank Guarantee or a Standby Letter of Credit?
According to URDG 758 a guarantee is important to be issued whenever it leaves the control of the guarantor.
URDG 758 states that a guarantee is unchangeable on issue even if it does not state this.
As per the rules and regulations of URDG 758 a guarantee may be advised to a beneficiary with the help of an advising bank. By advising a guarantee, the advising bank certified to the beneficiary, that it has satisfied itself as to the apparent authenticity of the guarantee. Advising bank also gives you a certification that the advice is accurately reflecting the terms and conditions of the guarantee as received from the issuing bank.
According to ISP 98 a standby letter of credit is unchangeable, independent of its own, documentary, and binding undertaking when issued and need not so state.
ISP 98 also states that unless an advice states otherwise, it signifies that:
- (i) The advisor has checked the following apparent authenticity of the advised message in accordance with standard letter of credit practice; and
- (ii) The advice accurately then reflects whatever information has been received.
Who Needs SWIFT?
Initially, the founders of SWIFT aimed the network at Treasury communications, however, its popularity started growing along with this growth, came SWIFT’s customer base. The message’s format has allowed for great expansion and allowed SWIFT to now provide to:
- Banks
- Exchanges
- Asset Management Companies
- Brokerages/ Trading companies
- Normal Businesses
- Treasury Market
MT 760 Criteria
Unlike the MT 799, the 760 requires much more information when it comes to the transaction part. Information such as:
- Parties involved (Issuer, Beneficiary, Applicant, Obligor, Advising Bank)
- Transaction Details
- Transport details; goods presentation
- Dates and timings
