MT 700 Issue of a Documentary Credit

What are the Differences Between MT 700 and MT 760?

Ozgur Eker (CDCS) Bank Guarantees, Commercial Letter of Credit, Letter of Credit Types, MT 700 Issue of a Documentary Credit, MT 760 Guarantee/Standby Letter of Credit, Standby Letter of Credit, Swift Messages , , ,
What are the Differences Between MT 700 and MT 760?

MT700 and MT760 swift message types that banks use when issuing documentary credits and guarantees, respectively.

  • Banks use MT700 when issuing a commercial letter of credit or a standby letter of credit.
  • Banks use MT760 when issuing a demand guarantee or a standby letter of credit.

MT700 is used to indicate the terms and conditions of a commercial documentary credit or a standby letter of credit which has been originated by the Sender (issuing bank). This message is sent by the issuing bank to the advising bank.

MT760 is is sent between banks involved in the issuance of a demand guarantee or a standby letter of credit. It is used to issue a guarantee or to request the Receiver to issue a guarantee.

Comparison Between MT700 and MT760

comparison between mt700 and mt760

MT 700 Swift Message Field Specifications

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , ,
MT 700 Swift Message Field Specifications

Swift is a provider of secure message platform for financial institutions mainly for banks.

Swift messages are being sent and received by banks in encrypted forms. As a result swift messages are accepted as a valid and reliable way of communication between banks.

For example, an issuing bank sends a swift message to an advising bank in order to inform issuance of a documentary credit. Similarly the advising bank sends its acknowledgement via a swift message.

Swift messages play a key role not only in letters of credit but also other payment methods in international trade such as cash in advance payment, documentary collections, open accounts and bank payment obligations.

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Field 72: Sender to Receiver Information

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 72: Sender to Receiver Information

What is Field 72: Sender to Receiver Information?

Field 72: Sender to Receiver Information is a field in MT 700 swift message type that specifies additional information for the Receiver.

This is an optional field.

MT 700
Field 72: Sender to Receiver Information:
DEFINITION
This field specifies additional information for the Receiver

CODES
One or more of the following codes may be used:

  • PHONBEN Please advise/contact beneficiary by phone.
  • TELEBEN Please advise the beneficiary by the most efficient means of telecommunication.

USAGE RULES

  • Any code must be between slashes and must appear at the beginning of a line.
  • Narrative text must not begin with a slash and, if used, must begin on a new line and be the last information in the field.

Field 57a: Advise Through Bank

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 57a: Advise Through Bank

What is Field 57a: Advise Through Bank?

Field 57a: ‘Advise Through’ Bank is a field in MT 700 swift message type that identifies the bank, if different from the Receiver, through which the documentary credit is to be advised/confirmed to the beneficiary.

This is an optional field.

According to current letter of credit rules;

  • advising bank means the bank that advises the credit at the request of the issuing bank.
  • a credit and any amendment may be advised to a beneficiary through an advising bank. An advising bank that is not a confirming bank advises the credit and any amendment without any undertaking to honour or negotiate.
  • an advising bank may utilize the services of another bank (“second advising bank”) to advise the credit and any amendment to the beneficiary. A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same bank to advise any amendment thereto.
  • if a bank is requested to advise a credit or amendment but elects not to do so, it must so inform, without delay, the bank from which the credit, amendment or advice has been received.

MT 700
Field 57a: ‘Advise Through’ Bank:
DEFINITION
This field identifies the bank, if different from the Receiver, through which the documentary credit is to be advised/confirmed to the beneficiary.

Field 78: Instructions to the Paying/Accepting/Negotiating Bank

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 78: Instructions to the Paying/Accepting/Negotiating Bank

What is Field 78: Instructions to the Paying/Accepting/Negotiating Bank ?

Field 78: Instructions to the Paying/Accepting/Negotiating Bank is a field in MT 700 swift message type that specify instructions to the paying, accepting or negotiating bank. It may also indicate if pre-notification of a reimbursement claim or pre-debit notification to the issuing bank is required.

This is an optional field.

According to current letter of credit rules;

  • a bank utilizing the services of another bank for the purpose of giving effect to the instructions of the applicant does so for the account and at the risk of the applicant.
  • an issuing bank or advising bank assumes no liability or responsibility should the instructions it transmits to another bank not be carried out, even if it has taken the initiative in the choice of that other bank.
  • a bank instructing another bank to perform services is liable for any commissions, fees, costs or expenses (“charges”) incurred by that bank in connection with its instructions. If a credit states that charges are for the account of the beneficiary and charges cannot be collected or deducted from proceeds, the issuing bank remains liable for payment of charges.

MT 700
Field 78: Instructions to the Paying/Accepting/Negotiating Bank:
DEFINITION
This field specifies instructions to the paying, accepting or negotiating bank. It may also indicate if pre-notification of a reimbursement claim or pre-debit notification to the issuing bank is required.

USAGE RULES
When used to indicate pre-notification of a reimbursement claim or pre-debit notification to the issuing bank is required, the number and type, ie, banking or calendar, of days within which the issuing bank has to be notified should also be indicated.

Field 53a: Reimbursing Bank

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 53a: Reimbursing Bank

What is 53a: Reimbursing Bank?

Field 53a: Reimbursing Bank is a field in MT 700 swift message type that specify the name of the bank which has been authorized by the Sender to reimburse drawings under the documentary credit. This may be a branch of the Sender or the Receiver, or an entirely different bank.

This is an optional field.

According to current letter of credit rules;

  • if a credit states that reimbursement is to be obtained by a nominated bank (“claiming bank”) claiming on another party (“reimbursing bank”), the credit must state whether the reimbursement is subject to the ICC rules for bank-to- bank reimbursements in effect on the date of issuance of the credit or not.
  • a reimbursing bank’s charges are for the account of the issuing bank. However, if the charges are for the account of the beneficiary, it is the responsibility of an issuing bank to so indicate in the credit and in the reimbursement authorization.
  • If a reimbursing bank’s charges are for the account of the beneficiary, they shall be deducted from the amount due to a claiming bank when reimbursement is made.
  • If no reimbursement is made, the reimbursing bank’s charges remain the obligation of the issuing bank.

MT 700
Field 53a: Reimbursing Bank:
DEFINITION

This field specifies the name of the bank which has been authorised by the Sender to reimburse drawings under the documentary credit. This may be a branch of the Sender or the Receiver, or an entirely different bank.
USAGE RULES

With the exception of a credit valid for negotiation, if there is a single direct account relationship, in the currency of the credit, between the Sender and the Receiver, the absence of field 53a means that this account relationship will be used for reimbursement.

Field 49: Confirmation Instructions

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 49: Confirmation Instructions

What is Field 49: Confirmation Instructions?

Field 49: Confirmation Instructions is a field in MT 700 swift message type that contains confirmation instructions for the Receiver.

This is a mandatory field.

According to current letter of credit rules;

  • confirmation means a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation.
  • confirming bank means the bank that adds its confirmation to a credit upon the issuing bank’s authorization or request. As a result banks can not add their confirmations to the letter of credit without having a confirmation request by the issuing banks.
  • a confirming bank is irrevocably bound to honour or negotiate as of the time it adds its confirmation to the credit.

MT 700
Field 49: Confirmation Instructions:
DEFINITION
This field contains confirmation instructions for the Receiver.

CODES

  • One of the following codes must be used.
  • CONFIRM The Receiver is requested to confirm the credit.
  • MAY ADD The Receiver may add its confirmation to the credit.
  • WITHOUT The Receiver is not requested to confirm the credit.

Field 48: Period for Presentation

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 48: Period for Presentation

What is Field 48: Period for Presentation?

Field 48: Period for Presentation is a field in MT 700 swift message type that is used to specify the period of time after the date of shipment within which the documents must be presented for payment, acceptance or negotiation.

This is an optional field.

According to current letter of credit rules except as provided in sub-article 29 (a), a presentation by or on behalf of the beneficiary must be made on or before the expiry date.

According to current letter of credit rules a presentation including one or more original transport documents subject to articles 19, 20, 21, 22, 23, 24 or 25 must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry date of the credit.

MT 700
Field 48: Period for Presentation:
DEFINITION
This field specifies the period of time after the date of shipment within which the documents must be presented for payment, acceptance or negotiation.

USAGE RULES
The period of time is expressed in number of days.
The absence of this field means that the presentation period is 21 days, where applicable.

Field 71B: Charges

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 71B: Charges

What is Field 71B: Charges?

Field 71B: Charges is a field in MT 700 swift message type that is used to specify charges to be borne by the beneficiary.

This is an optional field.

A bank instructing another bank to perform services is liable for any commissions, fees, costs or expenses (“charges”) incurred by that bank in connection with its instructions.

If a credit states that charges are for the account of the beneficiary and charges cannot be collected or deducted from proceeds, the issuing bank remains liable for payment of charges.

A credit or amendment should not stipulate that the advising to a beneficiary is conditional upon the receipt by the advising bank or second advising bank of its charges.

FORMAT

Option B (Narrative)

In addition to narrative text, the following line formats may be used:
(Code)(Currency)(Amount)(Narrative)

CODES One or more of the following codes may be used, followed by the currency code and amount:

  • AGENT Agent’s commission
  • COMM Our commission
  • CORCOM Our correspondent’s commission
  • DISC Commercial discount
  • INSUR Insurance premium
  • POST Our postage
  • STAMP Stamp duty
  • TELECHAR Teletransmission charges
  • WAREHOUS Wharfing and warehouse

MT 700
Field 71B: Charges:
DEFINITION
This field may be used only to specify charges to be borne by the beneficiary.

USAGE RULES

  • In the absence of this field, all charges, except negotiation and transfer charges, are to be borne by the applicant.
  • Any code used in this field must be between slashes and must appear at the beginning of a line.
  • Narrative text must not begin with a slash and, if used, must begin on a new line and be the last information in the field.

Field 47A: Additional Conditions

Ozgur Eker (CDCS) MT 700 Issue of a Documentary Credit, Swift Messages , , ,
Field 47A: Additional Conditions

What is Field 47A: Additional Conditions?

Field 47A: Additional Conditions is a field in MT 700 swift message type that contains a description of further conditions of the documentary credit.

This is an optional field.

According to current letter of credit rules complying presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice.

Beneficiaries should carefully examine the additional conditions section.

The issuing banks state special requirements regarding the requested documents under this field such as signature requirements, attestation requirements, date requirements etc…

If there is any unclear article exists under the additional conditions field, please do not hesitate to contact the issuing bank for further clarification.

Examples:

  • All documents must be dated and signed.
  • All documents must indicate the beneficiary’s name.
  • Bill of lading bearing charges additional to freight mentioned on articles 26(c) of UCP 2007 Revision Publication 600 prohibited.
  • L/C reference no TF1808669450 must be indicated on all documents except proforma invoice.

MT 700
Field 47A: Additional Conditions:
DEFINITION
This field contains a description of further conditions of the documentary credit.

USAGE RULES

  • In case the documentary credit is subject to any rules for which no code words are provided in field 40E, further details should be specified in this field.
  • To cater for lengthy documentary credits, up to three MT 701s may be sent in addition to an MT 700. However, field 47a may appear in only one message, ie, either in the MT 700 or in one MT 701. This means that in any documentary credit, there is a limit of 100 lines of 65 characters to specify the additional conditions.
  • Where applicable, for credits subject to eUCP:
    • If presentation of both electronic records and paper documents is allowed, the place for presentation of the electronic records (ie, the electronic address to which presentation must be made) as well as the place for presentation of the paper documents must be specified in this field.
    • If presentation of only electronic records is allowed, the place for presentation of the electronic records (ie, the electronic address to which presentation must be made) must be specified in this field.
    • If not already part of the original documentary credit, the advising bank, ie, the receiver of the message, must provide the beneficiary or another advising bank with the electronic address of the issuing bank. Furthermore, the advising bank must provide the beneficiary or another advising bank with the electronic address where they wish the electronic records to be presented.
    • In case the electronic address contains the “@” sign, the latter should be replaced by “(AT)”. In case the electronic address contains the “_”, the latter should be replaced by “(UNDERSCORE)”.