MT700 Field 42A: Drawee and Its Relationship with UCP 600

Introduction

Field 42A of the MT700 identifies the drawee of the drafts drawn under a documentary credit. The field is conditional and carries network-validated constraints on the party identifier. Its interaction with UCP 600 centers on availability under Article 6 and the issuing bank's undertaking under Article 7. A drawee that is misidentified or non-conforming produces a credit that cannot be honoured as drafted.

Failure Mode Analysis

Failure Mode 1: Non-financial-institution BIC in Option A

A corporate BIC is placed in 42A Option A. Network validation returns C05 because the code is not a financial institution BIC, and the draft is drawn on a party the network rules do not permit.

Failure Mode 2: Unregistered or malformed BIC

The BIC fails registration checks (T27, T28, T29, T45). The message is rejected before advice, so the credit never reaches the beneficiary with a usable drawee.

Failure Mode 3: Drawee absent where drafts are required

Because 42A is conditional, it may be omitted when the credit is available by negotiation or deferred payment without drafts. If drafts are nonetheless called for in the credit terms while 42A is absent, the presentation cannot identify the drawee.

Failure Mode 4: Option D identity conflicts with a BIC-based reference elsewhere

A party is named in Option D, but the credit elsewhere references a BIC-controlled drawee, producing two inconsistent drawee identities.

Deterministic Resolution Architecture

1. Confirm whether the credit requires drafts; if not, 42A may be omitted under C2/C3.
2. Where drafts are required, select Option A with a registered financial institution BIC or Option D with full name and address.
3. Validate the BIC against the financial-institution test (C05) before submission.
4. Check BIC registration and format to clear T27, T28, T29, T45.
5. Ensure the drawee named in 42A matches the draft clause and any nomination in the credit.
6. Cross-check Article 6 availability: the place and method of availability must align with the drawee.
7. Confirm the issuing bank's Article 7 undertaking covers the drafting structure.
8. Where the drawee is a nominated bank, record the nomination to avoid honour disputes.
9. Retain the validated field copy for amendment and examination evidence.

Conclusion

Field 42A fixes the drawee of the credit's drafts and is bound by SWIFT validation and UCP 600 availability and undertaking rules. A conforming drawee is a registered financial institution BIC or a fully named party, consistent with Article 6 and Article 7. The field must be present exactly where drafts are contemplated and absent where they are not.

FAQ

Is 42A mandatory in every MT700?
No. It is conditional under rules C2 and C3 and applies where drafts are drawn.

Can a corporate BIC be used in 42A Option A?
No. The identifier code must be a financial institution BIC (error C05).

What if the drawee has no BIC?
Use Option D with the party identifier and the full name and address.

Does naming a drawee shift the issuing bank's undertaking?
No. Article 7 remains with the issuing bank regardless of the named drawee.

What happens if the BIC is unregistered?
The message fails network validation (T27–T29, T45) and is not advised.

Can 42A and 42D be used together?
No. They are alternative options for the same field, not cumulative.

Source Notes

• Context only: SWIFT SR2018 Category 7, MT700 field 42A specification (Option A / Option D, conditional C2/C3, network rules T27/T28/T29/T45, C05).
• Context only: UCP 600 Articles 6 (Availability) and 7 (Issuing Bank Undertaking).