Digital Negotiable Instruments

The ITFA Digital Negotiable Instruments Initiative

Bringing negotiable instruments into the digital world

Digitizing global trade has been a steadfast endeavour since before the outset of the COVID-19 pandemic, but pandemic-induced closures and remote work norms have vastly accelerated its need. Unlike in previous eras, it is no longer the state of technology that is holding back this cause, rather the limitations now stem from the legal and regulatory frameworks that global trade operates within.

The International Trade and Forfaiting Association (ITFA) has established the Digital Document (dDOC) specifications, laying out the mechanisms and requirements for digital original documents to achieve regulatory compliance. These specifications make use of E-signatures, cryptography, and distributed ledger technology (DLT) to create digital documents that effectively replicate many legally necessitated properties of paper. 

By applying these specifications to digital documents that replicate negotiable instruments, such as bills of exchange or promissory notes, the ITFA has created a type of digital negotiable instrument (DNI) that is referred to as an electronic payment undertaking (ePU). 

This hub examines the steps that are needed to establish the certainty of these ePUs under English law. English law has been selected as a primary focal point due to its widespread influence around the world, with nearly 40% of the world’s legal systems being based on or inspired by the English system.

As English law stands today, such an instrument does not comply. This is due to the heavily criticized legal precedent that one cannot possess an intangible. This makes it impossible to deliver, which is done through the transfer of possession to another party, an inherently intangible ePU, a legal requirement for such an instrument under the Bill of Exchange of 1882 (BoE 1882). 

To overcome this obstacle, lawmakers could adopt the UNCITRAL Model Law on Electronic Transferable Records (MLETR) or similar eCommerce legislation that would establish digital documents under English law. Another solution would be to formally change the definition of what it means to deliver something under the BoE 1882, establishing certainty for intangible ePUs.

Both of these, however, are expected to be longer-term solutions. In the interim, it should be possible to create an electronic instrument that has the features of a negotiable instrument and that is an enforceable debt obligation but that is not a negotiable instrument for the purposes of the BoE 1882.  Utilizing such an instrument would alleviate the need to consider the transfer of possession under the BoE 1882.

The specifications outlined in this paper offer policymakers the opportunity to refer to a vendor-agnostic industry-wide framework when considering the parameters of change and the necessary governance to guide change.

Digital Negotiable Instruments - Key Abbreviations

B/E Bill of Exchange
BoE 1882 Bill of Exchange Act of 1882
dDOC Digital Document
DeFi Decentralized Finance
DL Distributed Ledger
DLT Distributed Ledger Technology
DNI Digital Negotiable Instrument
eB/E Electronic Bill of Exchange
EBICS Electronic Banking Internet Communication Standard
eIDAS Electronic IDentification, Authentication and trust Services
eNI Electronic Negotiable Instrument
ePN Electronic Promissory Note
ePU Electronic Payment Undertaking
eUCP600 Uniform Customs and Practice for Documentary Credits Supplement for Electronic Presentation
FCAR Financial Collateral Arrangements (No 2) Regulations 2003
FTP File Transfer Protocol 
GDP Gross Domestic Product
HIDC Holder in Due Course
ICC International Chamber of Commerce
IoT Internet of Things
IT Information Technology
ITFA International Trade and Forfaiting Association
JSON JavaScript Object Notation
LPA 1925 Law of Property Act 1925
MLETR Model Law on Electronic Transferable Records
NI Negotiable Instrument
PN Promissory Note
SME Small and Medium Enterprises
SWIFT Society for Worldwide Interbank Financial Telecommunication
TERA Technology Experts for Regulatory Action
UCP600 Uniform Customs & Practice for Documentary Credits
UKJT UK Jurisdiction Taskforce
UNCITRAL United Nations Commission on International Trade Law
URL Universal Resource Locator 
WTO World Trade Organization 

Download our free 2021 publication

Access trade, receivables and supply chain finance

We assist companies to access trade and receivables finance through our relationships with 270+ banks, funds and alternative finance houses.
Get started

Download our free 2021 publication


Access trade, receivables and supply chain finance

We assist companies to access trade and receivables finance through our relationships with 270+ banks, funds and alternative finance houses.
Get started

Latest News


2021 – A Year in Review with Trade Finance Global


As the clocks strike midnight, we look back at over 700 articles, handpicking our favourite stories that made the headlines… Read More →


In conversation: New Enigio CEO Patrik Zekkar talks about the journey to a digital future for trade finance


This month, Trade Finance Global (TFG) Editor Deepesh Patel spoke with Zekkar to find out more about his journey to… Read More →


Short-term, low-risk, self-liquidating – Santander’s Alberto Amo on trade finance as an investable asset class


Having joined Spain’s Banco Santander in 1997, Alberto Amo spent eight years as a corporate banking director before gravitating towards… Read More →


UK to introduce new proof of origin requirements for trade between Britain and EU


The UK government is preparing to introduce new rules on suppliers’ declarations for trade between Britain and the EU, which… Read More →


TFG announces media partnership with World Trade Symposium 2022


Trade Finance Global is pleased to announce it will be a media partner for the World Trade Symposium 2022 taking place… Read More →


67 countries sign landmark WTO deal set to cut cost of global services trade by $150bn


Sixty-seven countries have delivered a landmark deal on services trade regulation that could save up to $150 billion in trade… Read More →


Less domestic red tape in services trade could save $150bn annually worldwide, says OECD-WTO study


A new study has found that lowering domestic red tape in services trade could save an annual $150 billion globally. … Read More →


A Britcoin a day keeps the banks away


This week, at a House of Lords Economic Affairs Committee hearing on CBDCs, Sir Jon Cunliffe, deputy governor for financial… Read More →


VIDEO: Dr. Joanna Burch-Brown discusses the EU taxonomy and the ethics of green finance


With this year’s biggest climate conference, COP26, now behind us, 2021 may turn out to be a landmark year for… Read More →


Interview: BAFT SVP Scott Stevenson on trade finance, COVID-19, regulations, ESG


BAFT is the leading financial services association for international transaction banking. In his new role, Stevenson will lead BAFT’s trade-focused… Read More →

About the Author

Gabrielle Ann Vilda is an author at Trade Finance Global

Back to Top