Amendments and SWIFT messages
A credit changes only by an amendment the bank confirms (MT707). PALBONTradeFinance keeps every amendment as a row on the credit, moves the facility exposure by the change only, and reads and writes the SWIFT messages that carry credits, amendments and guarantees.
1. SWIFT messages
Trade Finance › Credits › SWIFT Message. Each message is one record:
| Field | Use |
|---|---|
| Message | MT700, MT701, MT707, MT710, MT720, MT730, MT734, MT740, MT750, MT752, MT754, MT756, MT760, MT767, MT768, MT769, MT103, MT202 |
| Direction | Incoming (from a bank) or Outgoing (to a bank) |
| Reference (20), Related Reference (21) | Read from the text |
| Sender BIC, Receiver BIC, Date | |
| Letter of Credit | The credit it belongs to |
| Message Text | The SWIFT text, field by field (:20:…, :32B:…) |
| Fields Read | What the app read from the text |
| Problems Found | Mandatory fields missing or unreadable |
On save the app reads the text: the message type is taken from the text when it says so, and for MT700, MT701, MT710 and MT720 it reads the credit's values, the 46A documents and the 47A conditions; for MT707 it reads the amendment. Other types are kept for the record; nothing is applied from them.
1.1 Incoming messages
| Step | Action | Who |
|---|---|---|
| Draft | Mark Parsed | Trade Finance Executive (an incoming message is parsed on save) |
| Parsed | Apply to the letter of credit (Actions), then Mark Applied | Trade Finance Executive |
| Parsed | Mark Failed (for example the text is incomplete) | Trade Finance Executive |
| Failed | Retry (back to Draft, after correcting the text) | Trade Finance Executive |
Actions › Apply to the letter of credit:
- MT700 / MT701: creates the credit (or updates the credit with the same LC number) with every field read, its 46A documents and 47A conditions. See Letters of credit.
- MT707: adds an amendment row with status Bank Confirmed to the credit and clears Amendment Pending (below).
1.2 Outgoing messages
| Step | Action | Who |
|---|---|---|
| Draft | Submit for Release | Trade Finance Executive |
| Pending Release | Release (not the requester) | Trade Finance Manager |
| Pending Release | Return for Changes | Trade Finance Manager |
| Sent | – |
Outgoing messages are written for you:
- Letter of Credit › Actions › Write the MT700: the whole credit as an MT700 (form of credit, rules, dates, parties, amount and tolerance, availability, tenor, partial shipments and transhipment, ports, latest shipment, goods, the 46A list and the 47A clauses).
- Bank Guarantee › MT760 / MT767: see Guarantees and standby credits.
Review the text, then release and send it through your bank's channel. Sending to the SWIFT network directly is not part of this release.
2. Amend a credit
2.1 When a contract addendum changes the terms
- The contract's addendum is agreed or signed (see Trade contracts). The leg's credit shows Amendment Pending.
- Open the credit and click Actions › Propose amendment from the contract. An Amendments row is added: number, today's date, 45A price / 32B amount, old and new amount, the change, status Requested.
- Click Request Amendment (state Amendment Requested).
- Import credit: send the amendment request to your bank. Export credit: ask the buyer to have it amended.
2.2 When the bank confirms (MT707)
- Paste the bank's MT707 into a new incoming SWIFT Message and Apply to the letter of credit; or set the amendment row's Status to Bank Confirmed by hand, with Date (MT707 field 30), What Changed, Old Value, New Value, Amount Change (32B/33B) and New LC Amount.
- On save the credit's Amount becomes the latest confirmed amendment's new amount, the maximum amount is worked out again, and the status shows Amended.
- The facility exposure moves by the change only: an Exposure Movement of type Increase or Decrease for the difference.
- Click Record Bank Amendment (import) or Record Advised Amendment (export).
Example: the purchase contract's price moves from 49.26 to 51.72 by ADD I. The credit's amendment 1 raises the amount by USD 184,500 to USD 3,879,000; the maximum amount with 10% tolerance becomes USD 4,266,900, and the facility exposure increases by the difference.
2.3 Other amendments
Extensions of expiry or latest shipment, changes of documents or conditions: add the amendment row with what changed and the new value, request it, and record the bank's confirmation in the same way.
3. History
The Amendments (MT707) table is the credit's full amendment history. Every save of the credit is also kept in its version history and in the tamper-evident audit trail.