Letter of Credit Forum

"This message is sent by the paying, accepting or negotiating bank, or the bank incurring a deferred payment undertaking, to the issuing bank. It may also be sent by the bank to which documents have been presented to a bank that has been nominated to pay/accept.

It is used to advise the Receiver that documents were presented in accordance with the credit terms and are being forwarded as instructed."

The act of Negotiation involves the purchase of the beneficiary's documents, and it would be true to say that true negotiation would therefore involve discounting the proceeds (with or without recourse). Only then would a nominated bank be considered to have "acted" on its nomination.

In practice, very few banks (unless it is a confirming bank) truly acts on its nomination by paying out from its own funds prior to receiving settlement from the issuing bank. However, on examination of compliant documents a nominated bank is still entitled to issue an MT754, and the issuing bank is still obliged to honour, but (depending on LC terms) not necessarily until it has received and examined the documents itself.

Certainly the MT754 would provide no indication to the issuing bank as to whether the nominated bank has "acted" on its nomination. Its scope is limited to advising the issuing bank that documents are compliant and that they are being forwarded. However, whether or not the nominated bank has actually "negotiated" is immaterial to the issuing bank's obligation to pay the nominated bank, if documents are compliant.

Is there anybody who has an aswer to what I wrote ?

thanks