World’s first digital trade financing pilot
25 November 2021
Singapore’s Infocomm Media Development Authority (“IMDA”), the Monetary Authority of Singapore (“MAS”) and the Financial Services Regulatory Authority (“FSRA”) of Abu Dhabi Global Market (“ADGM”), in collaboration with commercial partners DBS Bank, Emirates NBD and Standard Chartered, have successfully concluded the world’s first cross-border digital trade financing pilot of its kind.
The pilot used IMDA’s TradeTrust framework to facilitate the transfer of electronic records between jurisdictions that have adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Transferable Records (“MLETR”). This harmonises the legal recognition of digital documents such as electronic bills of lading (“eBLs”) across both jurisdictions, and complements the larger global trade movement by the G7 economies on adopting electronic transferable records in international trade.
Cross-border trade finance is largely paper-based and vulnerable to fraud, due to the complex flow of transactions and the multiple number of parties involved. IMDA developed TradeTrust as an interoperable framework that provides proof of authenticity, origin and ownership of digital documents used in trade finance. This enables trading counterparties and transacting banks to validate documents digitally and securely even when they are on different trade finance platforms, and allows such documents to be exchanged with another party in real-time. This helps mitigate the risk of fraud, reduce costs, and improve trust and efficiency.
The adoption of MLETR into statute law also provides increased legal confidence and commercial predictability to parties in both Singapore and ADGM in the recognition of electronic documents and digitalised transactions. This will pave the way for a more seamless, easier, and faster way to transact digitally. DBS Bank, Emirates NBD and Standard Chartered collaborated closely with IMDA, MAS and FSRA in this pilot, and used IMDA’s TradeTrust to validate, review and transfer ownership of simulated eBLs. In doing so, these partner banks gained insights into potential benefits such as reducing the operational costs of fraud detection and document verification.