BAFT released technical as well as business best practices for a digital ledger payment commitment (DLPC). The documents identify industry-wide specifications for a DLPC, enabling digitization of trade finance instruments for processing on a DLT platform and interoperability among platforms.
BAFT Releases Best Practices for Digital Ledger Payment Commitments
WASHINGTON – BAFT, the leading global trade association for transaction banking, today released technical as well as business best practices for a digital ledger payment commitment (DLPC). A DLPC is a core component of all trade finance instruments involving a promise to pay that is registered on distributed ledger technology (DLT) platform built to conduct international trade. The documents identify industry-wide specifications for a DLPC, enabling digitization of trade finance instruments for processing on a DLT platform and interoperability among platforms.
The best practices were developed by BAFT’s Digital Ledger Payment Commitment Working Group, which formed in 2016 at the direction of BAFT’s Innovation Council. The working group consists of representatives from 15 large global banks, business consultant firms, law firms, trade finance solution providers, and fintech companies.
“The BAFT Distributed Ledger Payment Commitment specifications offer a standardized solution for companies to register digital representations of payment commitments on a distributed ledger,” said Samantha Pelosi, Senior Vice President, Payments and Innovation of BAFT. “It is a building block for instruments like drafts, bills of exchange, letters of credit, bank payment obligations and banker’s acceptances. We encourage the industry to incorporate these specifications into DLT platforms for international trade to facilitate interoperability between the multiple trade solutions being developed to leverage the benefits inherent in DLT.”
Recognizing that the industry is early in its transition from a paper-based process to a DLT-based process for engaging in trade finance, BAFT is releasing these best practices for trial use and seeking feedback from early adopters. It hopes to incorporate that feedback in future versions of the DLPC specifications as they evolve into industry standards.
The Technical Best Practices and Business Best Practices are available for industry review at www.baft.org. Specific feedback on the documents may be directed to [email protected].