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  1. A member of MUFG, a global financial group BPO Sub-group Presentation MUFG Bank, Ltd. MUFG Bank Transaction Banking Division 3 April 2018
  2. Chair Michael Quinn, J.P. Morgan Participants 20 experienced trade finance professionals nominated by the national committees • Representing banks, Fintechs, Consulting firms, Service Providers • Veterans of the development of the TMA(Transaction Matching Application) and BPO(Bank Payment Obligation) • Represent the major participants in “real” BPO transactions BPO Drafting Group 2
  3. 3 Objectives  Make the BPO more relevant to the industry Background  With the outbreak of DLT(Distributed Ledger Technology) & Blockchain applications, there is a further need for a form of settlement and risk mitigation.  Our view is that BPO can serve as a framework for risk mitigation in those emerging technologies. Tasks a. Evaluate how BPO meets the current business drivers in trade finance b. Revise URBPO to make it more effective in the current environment and to provide a framework for its application in new technologies The Objective of the BPO sub-group
  4. 4 1. Marketing and Awareness of BPO in its current state Tasks a. Publish materials through to the National Committees which are helpful to membership to understand and implement BPO b. Leverage industry organizations to communicate to the banking community and the corporates who participate in global trade the merits of BPO and how it assists in digitization of Trade Finance. c. Making members of the working group available to national committee members to assist in their evaluation and consideration BPO The Scope of work of the BPO sub-group (1/3)
  5. New BPO White Paper coming soon… The Bank Payment Obligation (BPO) pushes the evolution of trade towards digital handling of data, providing potential for mitigating payment risk, allowing faster and more flexible processing and increasing capital availability by financing. The new BPO White Paper will provide details and insights about: What exactly is the BPO? How does the BPO work? An enabling framework for Supply Chain Finance Market Adoption: hurdles and targets Benefits of the BPO Future potential of the BPO 5 Coming soon… For further information please contact: Angela Koll, Commerzbank AG Frankfurt Specialist Product Management Trade & Supply Chain Finance & Innovation Phone: +49 69 136 43706/ M: +49 162 2554362 email:
  6. 6 2. Revision of URBPO Objective  To include the roles and responsibilities of buyers and suppliers addressing a current deficiency in URBPO today.  Revision of URBPO to address conditions within DLT technologies that create obligations Tasks a. Review the existing URBPO to recommend revisions which will include the buyer and seller b. Work with industry initiatives that are exploring DLT/Blockchain to define “conditions” in the DLT enabled supply chains which would create an obligation to pay c. Publish a framework of a revised URBPO which can guide the future developments of digitized trade without delaying the move from DLT programs in market d. Complete a revised URBPO sufficiently vetted and approved by nation committees The Scope of work of the BPO sub-group (2/3)
  7. 7 3. Address data standards Objective  To improve the TMA’s effectiveness and meet the short term needs of URBPO and identify possible implications of emerging technologies on the rules Tasks a. Recommend and incorporate changes to TMA (Currently SWIFT Trade Services Utility) which address current limitations which have inhibited market acceptance b. Based upon the learnings from DLT/Blockchain of “conditions” which create obligations among the parties incorporate data standards that reflect these The Scope of work of the BPO sub-group (3/3)
  8. Latest BPO Trends (Data from SWIFT)
  9. Adoption of ISO 20022 for BPO in Trade Finance 27Banking groups live on BPO / TSU 22Banking groups testing BPO on TSU 194 Banks (BIC8) reachable on TSU 85 + Corporate relationships live on BPO 80Banking groups reachable on TSU 18 / 2018 of the top20 trade banks (*) are reachable on TSU to process BPOs 68%68% of the top50 trade banks (*) are reachable on TSU to process BPOs 51Countries reachable on TSU (*) ranking based on Cat 7 traffic
  10. 10 ISO 20022 Messages (live) BPO/TSU Traffic Evolution SWIFT Trade Messaging Trend Source: SWIFT Watch FY 2016 FY 2017 Growth 11,539 13,882 +20.30% 0 200 400 600 800 1 000 1 200 1 400 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ISO 20022 messages (live) for the BPO/ TSU 2016 2017
  11. Chemicals General Retailers Personal Goods Mining Technology Hardware & Equipment Automobiles & Parts Food Producers ISO 20022 for BPO brings value in various industries
  12. 27 banking groups live on ISO 20022 for the BPO Including 7 of the top15 trade banks (*) (*) ranking based on Cat 7 traffic
  13. Partner/client name/logo here (edit on Master) Disclaimer The information herein is provided for information purposes only, and is not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for any services, transactions, securities or other financial instruments. Neither this nor any other communication prepared by The Bank of Tokyo- Mitsubishi UFJ, Ltd. (collectively with its various offices and affiliates, "BTMU") is or should be construed as investment advice, a recommendation to enter into a particular transaction or pursue a particular strategy, or any a warranty, guarantee or statement as to the likelihood that a particular transaction or strategy will be effective in light of your business objectives or operations. Before entering into any particular transaction, you are advised to obtain such independent financial, legal, accounting and other advice as may be appropriate under the circumstances. In any event, any decision to enter into a transaction will be yours alone, not based on information prepared or provided by BTMU. BTMU hereby disclaims any responsibility to you concerning the characterization or identification of terms, conditions, and legal or accounting or other issues or risks that may arise in connection with any particular transaction or business strategy. Note that BTMU will require to apply to our credit division to establish credit facilities for the pooling arrangement in accordance with BTMU’s credit procedures. Note that BTMU may have issued, and may in the future issue, other reports that are inconsistent with or that reach conclusions different from the information set forth herein. Such other reports, if any, reflect the different assumptions, views and / or analytical methods of the analysts who prepared them, and BTMU is under no obligation to ensure that such other reports are brought to your attention. Copyright (c) 2018 MUFG Bank, Ltd. All rights reserved. 2-7-1 Marunouchi, Chiyoda-ku, Tokyo 100-8388 Japan. MUFG Bank, Ltd.