JP Morgan says South African telecommunications provider MTN SA has become the first customer to use the bank’s digital bill of exchange product.
The product, which uses Swedish digital trade fintech Enigio’s trace:original solution, aims to reduce risk and complexity on trade finance transactions.
A small number of trade financiers have begun offering digital versions of bills of exchange, partly driven by the enhanced legal security provided by the UK’s Electronic Trade Documents Act, which was passed in 2023.
Digitisation proponents say the greater speed and security offered by electronic versions has breathed new life into negotiable instruments such as bills of exchange and promissory notes, which are among the oldest trade finance tools.
JP Morgan’s first transaction was for the export of telecommunications equipment from an Asian country to the UK, according to a statement.
A spokesperson tells GTR the bank purchased and discounted the digital bill of exchange from the seller, but declined to identify the seller, exporting country or value of the transaction.
“Using Enigio’s blockchain infrastructure, an [electronic bill of exchange] is securely signed and updated throughout its lifecycle, improving transparency and streamlining workflows, while enabling automatic data transfer and reducing risks and errors associated with traditional manual processes,” JP Morgan says in a statement.
The product is currently only available to companies “transacting under English law”.
MTN SA chief finance offer Dino Molefe says the company “has been a leader in developing our working capital strategy as it pertains to our procurement of devices”.
“JP Morgan and MTN SA have collaborated closely to unlock additional liquidity through innovative solutions, making us the ideal collaborator to pioneer this digital tool.”
Natasha Condon, JP Morgan’s global head of trade sales and head of Emea trade, says being “one of the first banks to approve the financing of a select set of electronic negotiable instruments” is part of the lender’s goal “to be at the forefront of the future of trade”.
Citi launched a digital bill of exchange product last year, which it says it developed without a technology partner.
Lloyds and non-bank financier Mercore have also conducted transactions using digital negotiable instruments that include more than one financial institution.
The pair also used Enigio as a technology provider. Enigio’s chief executive Patrik Zekkar says the JP Morgan transaction “is a significant step forward in proving that electronic trade solutions can operate at scale – and that they are already doing so”.
