The URBPO (ICC Publication 750) were unanimously adopted during the April 2013 meeting of the Banking Commission.
The basic premise of the rules is to provide a framework for a BPO that must relate to an underlying trade transaction between a buyer and seller.
The reference to the relationship of the data to an underlying trade transaction was seen to be necessary in the current banking and regulatory environment and, in particular, KYC principles.
The inclusion of ‘underlying trade transaction' is not inferring any relationship with the underlying contract nor should it be seen as creating a conflict with article 6 (Bank Payment Obligations v. Contracts) and article 7 (Data v. Documents, Goods, Services or Performance).
In addition, there must be an agreement from the applicable banks (known as Involved Banks) to participate in such a transaction (referred to as an Established Baseline), with confirmation that each bank will use the same technology platform - defined as a Transaction Matching Application (TMA).
It is important to note that the rules are not the determinant for recognising fulfilment of Data Matches or Mismatches - such actions are carried out by the TMA in accordance with the terms and conditions applying to that TMA.
The scope of the rules lies solely in the bank-to-bank space. The rules are designed to operate in what is known as the ‘collaborative' space as will any Transaction Matching Application chosen by the Involved Banks. Although it may be obvious, each Involved Bank must participate by the use of the same Transaction Matching Application. It is for each bank, in what can be described as the ‘competitive' space to offer its clients financing, or other services and products, based on the strength of agreeing to incur a bank payment obligation or through the receiving of one. A bank's services should also include the manner of receipt and delivery of data, and the output of that data in the form of reports and spreadsheets including those relating to the status of individual transactions.
Unless stated otherwise, a BPO will be subject to the latest version of the rules in existence. The rules can only be supported by by the use of the trade standard messages registered with the International Standards Organisation (ISO). Today, this refers to the ISO 20022 Trade Services Management (TSMT) messages. Use of any other message type will invalidate the transaction for use under the rules. Although there are a wide range of TSMT messages, it is only those TSMT messages that relate to a BPO that are covered by the rules.
More detailed information on this subject can be found in the BPO training module at www.tradefinance.training