Blog/News

REMINDER – ETC THANKSGIVING HOLIDAY HOURS

Kindly note that our office will close at 3 p.m. EST on Wednesday, November 24th and be CLOSED on Thursday, November 25th and Friday, November 26th, 2021, in observance of the Thanksgiving Holiday.

Please contact your account officer to plan accordingly during this time frame.

We greatly appreciate your understanding and apologize for any inconvenience.

Happy Thanksgiving to all!


REMINDER – ETC VETERANS DAY HOLIDAY HOURS

Kindly note that our office will be closed on Thursday, November 11th in observance of Veterans Day.

Please contact your account officer to plan accordingly during this time frame.

We greatly appreciate your understanding and apologize for any inconvenience.

Happy Veterans Day to all!


Express Trade Capital closes a hot deal with a Chili Spice Company

Express recently cooked up a $2mm A/R and a $500k P.O Funding Facility for a chili spice company. The company’s sales caught fire with significant increased orders from its large retailers and they couldn’t keep up with the demand. Express’s well-seasoned team spiced things up with working capital to pay their copacker and purchase raw materials, ingredients and packaging.

Like many food and beverage companies, the client was originally looking for VC or PE firms to provide capital for order fulfillment and basic working capital requirements. The client did a hot take when they realized that they could use factoring and PO funding facilities to finance their growth AND increase their enterprise value without giving up equity in the meantime. All in all, it was another tasty adventure.

What are everyone’s thoughts on when companies should seek equity investors?


Promotion Announcement

We are pleased to announce that effective immediately, David Estrakh has been promoted to EVP.  Over the last few years, David has already taken on and performed the duties of EVP and his new title is intended to convey a role commensurate with those responsibilities. 

As EVP, David heads ETC’s Sales and Marketing Department, overseeing a team of eight new business and marketing executives across the country.  David is a member of ETC’s Executive Committee and active in all areas of operations and management including client and partner relations.  As a corollary to his role as EVP, David sits on multiple company boards and is active in various charitable organizations.  

In addition to his 10+ years’ experience and success at Express Trade Capital, David was recently awarded 40 Under 40 honors by SFNet (2020) and Insight Success Magazine (2021).


REMINDER – ETC Upcoming Columbus Day Holiday Hours

Kindly note that our office will be closed on Monday, October 11th in observance of Columbus Day.

Please contact your account officer to plan accordingly during this time frame.

We greatly appreciate your understanding and apologize for any inconvenience.

Happy Columbus Day to all!


ETC – ANNOUNCEMENT

Important Upcoming Information:

On Thursday, September 16th, 2021there will be no funding available of any-kind (including the issuance of LC’s).

Please note, we will be OPEN to handle all other client relations.

You may contact your account officer to plan accordingly during this time frame.

We greatly appreciate your understanding and apologize for any inconvenience!


REMINDER – ETC Upcoming Labor Day Holiday Hours

Important Upcoming Information:


Due to the upcoming Labor Day Holiday, our office will be closing Friday, September 3rd at 3 p.m. EST and be closed on Monday, September 6th in the observation of the holiday.


Please contact your account officer to plan accordingly during this time frame.


We greatly appreciate your understanding and apologize for any inconvenience.


Happy Labor Day to all!


Global Governance of Letters of Credit and the UCP600

By: Slava Vernidub, Express Trade Capital

Every year, trade transactions exceeding US$2 trillion are conducted under UCP600, totaling some 11% of all import/export transactions.­­1 The primary goal of the UCP600 is to ease cross-border trade by providing global uniform rules regulating the issuance and usage of letters of credit (“LCs”).

To date, the UCP (“Uniform Customs and Practice for Documentary Credits”) rules are adopted in 175 countries. UCP rules are issued by the International Chamber of Commerce’s (ICC) commission on Banking Technique and Practice.  It is important to note that the ICC is a private international organization of industry experts, not a governmental body. The UCP600 is arguably the most widely accepted set of private rules for international trade ever developed.

How is UCP600 different from previous UCP publications?

Since the UCP was first established in 1933, it underwent several revisions, each reflecting the evolution of trade finance practices across banking, insurance, and transport industries. The objective was to create a set of internationally uniform rules to remove confusion caused by individual countries promoting disparate laws and practices governing the use of letters of credit. By guiding banks and other players engaged in global trade, the UCP enables greater trust between multinational actors and drastically increases the reliability, frequency and efficiency of international trade transactions. As of today, the UCP600 is the latest published revision issued on July 1, 2007 and includes 39 Articles.

In contrast to previous UCP publications, UCP600 not only lays out guidelines, but also includes definitions (Article 2) and interpretations (Article 3) on how to apply certain provisions of the code. By providing clear, defined terms and information specifying the role of banks in letters of credit, UCP600 removes ambiguity and provides a more concise and precise set of regulations to govern LCs. As a result, compared to transactions governed by previous versions of the UCP, transactions conducted under UCP600 are more streamlined, less risky and require fewer amendments.

Aiming to adapt the evolving practice of submitting electronic documents under letters of credit, UCP600 introduced the eUCP which has 12 articles. The goal of the eUCP is to ‘accommodate presentation of electronic records alone or in combination with paper documents’.2 However, for a letter of credit to be subject to eUCP, it must explicitly indicate so in the instrument. Letters of credit subject to eUCP are also subject to UCP600 even if this is not explicitly stated in the letter of credit. If there is a conflict, eUCP will prevail in situations where it will produce a different result from UCP.

How is UCP600 beneficial for trade transactions?

1. UCP600 levels the playing field by creating one set of operating rules for all international parties. This makes trade more inclusive because it allows SMEs to participate in international markets and integrate global supply chains.  SMEs can now rely on banks and counterparties to follow the UCP600 rather than relying on their network, market position, banking relationships and ability to exercise legal muscle, to hold sway over their trade partners when disputes arise.

2. UCP600 resolves disagreements without court intervention, providing more fair, cost-effective, and efficient global trade transactions. Banks and other LC issuing institutions can perform better as neutral third parties to decide issues that are resolved by the language of UCP600 rather than deferring and referring issues for resolution to courts for fear of incurring liability.

3. UCP600 clearly identifies the roles of parties involved and their responsibilities, reducing risk and increasing transparency and therefore speed for exporters and importers who otherwise would have no recourse beyond suing their trade partners and corresponding banks in courts of foreign jurisdiction.

4. A notable feature of UCP600 is the irrevocable nature of the letter of credit. An irrevocable letter of credit cannot be revoked by the issuing bank or at the request of the letter of credit applicant. It assures the parties involved that the guarantee offered by an LC cannot be rescinded once issued unless all parties mutually agree to cancel it. An LC is irrevocable by default, even if not explicitly stated.

For a letter of credit to adhere to UCP600, it must specify so (unless it states that it is subject to the eUCP in which case, both apply). This ensures that all parties involved understand how their performance under the instrument will be governed. If a transaction requires, certain parts of the UCP600 can be omitted but such exceptions must be specifically and unambiguously written into the LC.

If you would like to find out more about LCs, the UCP600 and how it could benefit your trade transactions, reach out to slava@expresstradecapital.com. A comprehensive understanding of UCP600 will help both small and large businesses mitigate risks and conquer new international markets.

To make sure your LCs are issued under UCP600, reach out to us. We issue LCs, SBLCs, BGs, RWAs, and Proof of Funds. Contact us to understand which instrument is best suited for your business needs.

Sources:

1. Collyer, Gary. Guide to Documentary Credits. The London Institute of Banking & Finance, 2017

2. International Chamber of Commerce. Supplement to the Uniform Customs and Practices for Documentary Credits for Electronic Presentations (eUCP), 2007

International Chamber of Commerce. Uniform Customs and Practices for Documentary Credits, Publication 600 (UCP600), 2007

“UCP600.” ShippingCollege,

shippingcollege.co.uk/j365/index.php?option=com_k2&view=item&layout=item&id=193

“Global Rules.” International Chamber of Commerce,

iccwbo.org/global-issues-trends/banking-finance/global-rules/

Thanuja, Rodrigo. “UCP 500 to 600: A forward movement.” Murdoch University Law Review, vol. 18, no. 2, 2011,

research-repository.griffith.edu.au/bitstream/handle/10072/48300/80083_1.pdf

Badlis, Baziz. “UCP600 & UCP500 Compared.”

academia.edu/11329530/DIFFERENCE_BETWEEN_UCP_500_V_UCP600

Castaneda, Cristina. “Comparative Study of UCP500 and UCP600 – Approach to Negotiation and Preclusion.” Jan. 2007,

picadoyleon.com/en/pdf/COMPARATIVE.pdf

Chan, Jeremy. “Banks see uneven digitisation in trade.” The Global Treasurer, 24 November 2020,

theglobaltreasurer.com/2020/11/24/banks-see-uneven-digitisation-in-trade/

Manzella, John. “The New UCP 600: Better Rules to Better Facilitate International Trade.” The Manzella Report, 1 Jan. 2007,

manzellareport.com/index.php/trade-finance/438-the-new-ucp-600-better-rules-to-better-facilitate-international-trade


Drayage drivers picket LA, Long Beach marine terminals

Source: www.joc.com

Jon Slangerup, executive director of the Port of Long Beach, said the drivers’ pickets are informational in nature and are not affecting cargo-handling.

“Let’s be clear, this is not a strike. We do not expect there will be any adverse impact to port terminals,” he said. Longshoremen are moving cargo, and trucks continue to move freely into and out of the terminals, Slangerup said

Read Full Article


The Future of Lending

In 2014, the former chairman of the Federal Reserve, Ben Bernake – the man who was once responsible for setting the United States’ interest rate policy – was summarily rejected by his bank when he tried to refinance his mortgage. The reason: he just changed jobs, which, according to an anachronistic credit metrics, indicated an intolerably heightened credit risk.

The credit analysis did not weigh his future earning potential – he was gainfully employed by a think tank and had just signed a one million dollar book deal. In fact, even the most cursory web search would have revealed that refinancing Ben Bernake’s Washington, DC house is one of the safest bets a local bank could make.

Download the full article by Drew F. Cohen