Lloyds and Mercore have completed a series of transactions that have featured the secondary participation in an accepted digital bill of exchange.
The process enables businesses who are not utilising electronic trade documents to enter into secondary participations.
The trades involved shipments of sugar by Mercore’s client from Central America to a longstanding client of Lloyds in the UK. These were underpinned by a digital negotiable instrument (DBE) which was drawn by the exporter and accepted by the importer. On confirmation of acceptance by Lloyds, Mercore funded the transaction against the DBE.
Traditionally, secondary purchases of bills of exchange in trade finance have relied on physical paper instruments. Using digital trade documentation significantly speeds up the completion of secondary transactions, reducing transaction times from days to - in some cases - a matter of hours.
Surath Sengupta, head of trade and working capital for Lloyds, says: "We have previously showcased digital flows for primary transactions, and this latest trade is a great example of our technological solutions in action in the secondary market space. Combined with continued uptick in the use of digital negotiable instruments to deliver trade financing, a vibrant digital secondary market could help extend the funding of cross-border trade, helping more businesses around the world trade more efficiently."
The transaction entailed the use of Enigio’s trace:original software, which removes the need to physically transfer paper negotiable instruments, enabling the creation of digital documents that can be ‘possessed’ by an individual, transferred between parties and distinguished from copies, just like paper-based counterparts.
Lloyds invested €3 million in Enigio in September 2023.