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 

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About the Author

Gabrielle Ann Vilda is an author at Trade Finance Global

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