The Risk and Precaution of Main Parties in Transferable Letter of Credit
|School||Tianjin University of Finance and Economics|
|Keywords||Transferable letter of credit UCP600 Risk Precaution|
Transferable letter of credit is a special form of letters of credit. With the development of a variety of indirect international trade, transferable L/C credit came into being, providing the basic credit for intermediary trade. The use of transferable L/C has expanded gradually to the scope of the settlement, compliance, finance and other fields, and plays an increasingly important position in international business.Owing to the characteristics of their own, the parties of transferable L/C have to face risk in general as the parties in common L/C, but also to deal with special risks of transferable L/C, such as the credit risk of transferring bank, the risk of broker document changing faced by the second beneficiaries, the risk of the first beneficiaries’negotiation, etc. These risks have influenced seriously the use and development of transferable L/C, and hinder the development of intermediary trade.So the risk research of transferable L/C has important practical significance, especially for such a large trading nations, the financial crisis at today, the role of transferable letter of credit is particularly important which is urgent.New introduction of international practice UCP600 plays a positive role in risk control of the transferable L/C, but there are still lots of difficult problems, and the study of risk in the transferable L/C also put on the agenda. Primarily depth study of the legal relationship between the parties revealed the existence of the root causes of risk by the method of qualitative analysis and comparative analysis, and made a detailed analysis of the form of risk. The risk can have a variety of forms of existence, the first beneficiary and importers are faced with the risk of supplier default, the second beneficiary is facing a single risk for the brokers, transfer line to confirm the qualifications of the risks. The article discussed in detail separately from credit risk, operational risk and financial risk. And the risk prevention is the focus of writing, It expatiates the main parties’measures respectively from the beforehand Process control and subsequent remedial in detail, and wish it helpful prevent the transferable of L/C risk in practice, as well as its better to play its role.