A consortium of banking and trade-related companies is forming an electronic registry for the exchange of international trade documents.
The registry, to be known as the Bolero Association, would be based in London.
Officials hope it can reduce the paper costs associated with international trade. The association would be similar to the Depository Trust Co., which operates an electronic book entry system for the securities industry.
Although details about Bolero's structure were not released, association officials said it is being sponsored by the European Commission. They declined to estimate when the registry might begin operating.
Industry experts estimate that about 7% of the $3 trillion in annual international trade transactions goes toward processing paper documents.
Companies working closely on the registry's development include Marinade Ltd., a London-based consulting firm; GKN Freight Services Ltd., London; Standard Chartered Bank, London; Citicorp, New York; Banque National de Paris; Barclays Bank PLC, London; and Deutschebank, Frankfurt.
"Banks are seeking to improve their efficiencies, reduce costs, and provide higher-quality products," said James C. Wills, a senior vice president at Bank of California, San Francisco.
Mr. Wills was recently elected chairman of the U.S. Council of International Banking, a New York-based trade group also involved in the development of Bolero.
"As we move from a paper-based delivery system to an electronic-based system, we can resolve many questions in terms of cost efficiency and quality," he said.
As part of the effort to reduce paper, Bolero would develop electronic versions of bills of lading, which serve as titles to shipped goods. Within five years, the association is expected to be able to electronically track other trade documents, such letters of credit, commercial invoices, and inspection certificates.
Bolero would determine which organization possesses the "original" copy of a bill of lading - whether it be the company providing the insurance, the bank issuing the letter of credit that financed the shipment, or another related party.
"The way we do business in trade is really archaic," said John McKessy, North American representative for Bolero. "We are drowning in paper."
He said an average of 20 documents are required to ship goods internationally. The process gets even more bogged down in paper when shipments in transit, such as oil and lumber, are bought and sold by speculators during sudden price swings on the market.
Officials hope the Bolero registry can alleviate these and other problems.
Bolero began as a small group of European-based trade companies that won financing for a pilot in 1994 from the European Commission.
Officials said the pilot proved the system was feasible, so the participants pressed forward with plans to develop it.
Though the ownership structure of the registry has not been determined, officials involved in the effort said it likely would be privately held.
The network portion of the registry would use electronic data interchange, which is the electronic transfer of business documents in standard computer formats. It also is likely to use the United Nations- backed Edifact standards.
"I've had a keen interest in EDI for a long time," said Mr. McKessy, who is a former electronic data interchange program manager at Chase Manhattan Corp.
"I thought trade was certainly an area that was ripe for the picking."
In another effort related to international trade, the Society for Worldwide Interbank Financial Telecommunication, or Swift, has a plan on the drawing board to provide for electronic draft payments in trade finance.
Swift is a Brussels-based, bank-owned financial messaging service. Officials said Bolero and Swift are looking at ways to work together.
"Swift could be the electronic medium that carries the information," Mr. Wills said. Bolero "could be a part of Swift, any value-added network, or maybe even the Internet."