Exclusive: J.P. Morgan uses electronic Bill of Exchange in live transaction with South African telecoms network - Trade Treasury Payments

In a step toward trade finance digitisation, J.P. Morgan has completed its first transaction using an electronic Bill of Exchange (eBoE). The transaction, involving Mobile Technology Network South Africa (MTN SA), was executed using Enigio’s trace:original solution and governed under English law. 

Though modest in scale, it offers an early glimpse into how banks and corporates might leverage longstanding trade instruments in newly digital ways, unlocking liquidity, improving transparency, and, potentially, paving a path for broader acceptance of electronic negotiable instruments.

This eBoE pilot is less about replacing paper and more about reimagining what negotiable instruments can do in the digital age.

Why Bills of Exchange—and why now?

Bills of Exchange are hardly newcomers to the world of trade. Their lineage predates container shipping, central banking, and even modern accounting. Yet in recent years, they’ve largely been overshadowed by other forms of working capital financing, particularly supply chain finance, which hinges on invoice-based discounting.

So why breathe new life into this ancient instrument?

“The Bill of Exchange is a valuable financial instrument that has lost some of its lustre over the years,” Merlin Dowse, Executive Director for Global Trade Finance at J.P. Morgan told TTP. “However, businesses continue to seek innovative ways to manage their cash flow and access liquidity, and this is exactly where the Bill of Exchange can play a role, even in its physical form.”

That logic becomes even more compelling when translated into a fully digital format. Unlike invoices, which are often non-negotiable, Bills of Exchange are transferable, enforceable, and (when digitised properly) uniquely positioned to facilitate secondary liquidity. “With our new electronic Bill of Exchange, we have focused on an instrument that helps our clients identify and access working capital solutions, whether as a buyer or as a supplier,” Dowse added.

This renewed focus also fits neatly into broader legal reform. The UK’s Electronic Trade Documents Act (ETDA), which passed in 2023, provides the legal basis for electronic versions of negotiable instruments (including Bills of Exchange and Promissory Notes) to be treated the same, from a legal standpoint, as their paper counterparts.

A working capital tool with sector-wide relevance

Unlike pilot transactions of the past, this transaction with MTN SA was a live shipment of goods from Asia to the United Kingdom financed using a fully digital eBoE.

Dineo Molefe, Chief Finance Officer at MTN SA, said, “MTN South Africa has been a leader in developing our working capital strategy as it pertains to our procurement of devices. J.P. Morgan and MTN SA have collaborated closely to unlock additional liquidity through innovative solutions, making us the ideal collaborator to pioneer this digital tool.”

The infrastructure layer, powered by Swedish technology firm Enigio, was critical. Enigio’s solution is designed to generate digital original documents that meet the legal criteria for negotiable instruments under English law. The instrument used in the MTN transaction is fully compliant with the ETDA and, by extension, subject to the same protections and remedies as traditional paper instruments.

“We have seen interest from clients in various sectors such as Oil & Gas, Original Equipment Manufacturing (OEM), and Telecom,” said Dowse. “However, this solution is not intended to solely serve an individual set of clients or sector. The fundamentals are simple and its usage depends on a client’s risk appetite and willingness to innovate by leveraging emerging technology.”

That framing matters. Too often, pilot announcements are more about technical possibility than market appetite. But in this case, the appetite is very real, and growing. “Clients and investors have been supportive of the recent developments in this field,” Dowse added. “We continue to see an ever-growing interest in alternative working capital solutions, whether they be on an individual transaction or a more programmatic basis.”

The eBoE, then, aligns with investors’ continued interest in secondary market tradability, potentially expanding liquidity channels for corporates and financial institutions alike.

Legal readiness—and what’s missing

If the use case is clear and the technology available, what’s preventing broader adoption?

Dowse points to legal infrastructure as the main bottleneck: “Continued legal reform and further adoption of the Model Law on Electronic Transferable Records (MLETR) would aid broader industry adoption. The recent announcements out of the state of New York are encouraging given a large proportion of trade finance is either subject to English or New York law.”

Indeed, English and New York law underpin a significant share of global trade contracts, and progress in these two jurisdictions is often seen as catalytic. But challenges remain. Even if a negotiable instrument is valid under one country’s law, questions still arise when it is presented or enforced elsewhere.

“As banks offering trade finance cater to the demand from clients domiciled in other locations, additional legal due diligence with regard to enforceability will need to be addressed,” Dowse noted. “While legal reform occurs in specific countries, the ICC Digital Standards Initiative (DSI) could consider identifying those jurisdictions where an electronic negotiable instrument subject to English law (or any MLETR-compliant legal framework) is enforceable.”

This is a subtle but important point about understanding the interoperability of legal frameworks and the practical enforceability of digital instruments across borders.

Defining success and what comes next

As expected, J.P. Morgan’s ambitions for the electronic Bill of Exchange do not end with this one transaction.

“Success in the next 18 months will include the transition from paper-based to digital Bills of Exchange for more of our existing programs,” said Dowse. “We also see further opportunities to leverage the electronic Bill of Exchange, or the electronic Promissory Note, in other trade finance instruments, whether within the core trade or structured trade verticals.”

For all the attention given to digital trade technologies (from blockchain to smart contracts) the instruments that underpin liquidity and enforceability are still catching up. With this transaction, J.P. Morgan has taken a step to digitise one of these instruments, and demonstrate that they can operate in the modern world while retaining legal integrity and market appeal.

This is not a finished product nor a solved problem. But it is a live, enforceable, digital trade instrument backed by a major bank and used by a global corporate. That alone is significant.

As Dowse put it, “We challenged ourselves with the ‘what if’ question, and the result is an even more efficient secure process with only benefits to all those involved.”