Current Issues


We serve as the industry’s voice before multilateral agencies, export credit agencies, finance ministries, central banks and legislative bodies. We collaborate around the world with other industry groups and trade associations. As a member of BAFT, we represent you in continually striving to:

  • develop international standards such as the “Master Participation Agreement” for trade risk
  • support the “national treatment” of financial firms in the markets where they do business
  • promote the harmonization of financial services regulation and supervision between countries
  • coordinate with private and public sector stakeholders to ensure that governments, multilateral agencies, and leading policymakers around the globe have substantive feedback and reliable data on market dislocations and industry trends
  • Advocate for the positive consideration of trade finance and transaction banking under the Basel capital and liquidity framework
  • Use common Trade Finance Definitions to standardize industry/regulatory terminology and facilitate prioritization of trade risk in sovereign events
  • Ensure the continuation of benefits afforded companies via ECA financing

Policy News

  • BAFT submits letter to Basel Committee on Banking Supervision outlining price and capital impacts of Basel III proposals

    by Patrick Devilbiss | Nov 21, 2016

    On November 17, 2016, BAFT submitted a letter to the Basel Committee on Banking Supervision reiterating its belief that, if left unchanged, the Basel III proposals outstanding would be highly detrimental to trade finance.  BAFT highlighted recent work from Oliver Wyman which shows that lending will decrease 2.6% with every 1% increase in capital ratios.  Further, modeling shows that, for trade finance, capital requirements will increase by around 36%, and pricing will need to increase an estimated 60%-100% depending on the product.  As the Basel Committee wraps up its work related to the Basel III package of reforms, BAFT urges the Committee to modify the proposals to avoid these potentially calamitous effects.

    Read the Letter
  • BAFT Submits Letter to European Banking Authority on Article 55 of the BRRD

    by Patrick Devilbiss | Oct 02, 2016

    On Tuesday, September 30th, BAFT submitted a letter to the European Banking Authority (EBA) in response to their interim report on minimum requirement for own funds and eligible liabilities (MREL).  In the report, the EBA recognized the serious problems implementation of Article 55 presents for trade finance and offers a number of policy approaches for the European Commission to consider.  BAFT thanked the EBA for its work and urged them to adopt a blended approach, limiting the scope of Article 55 while at the same time providing national authorities the power to offer waivers where necessary. 

    BAFT Letter to EBA re MREL Report Aug 30 2016

  • Oil and Gas Best Practices Guidance Document

    by Patrick Devilbiss | Sep 11, 2015

    BAFT has published The Oil and Gas Industry: A Practical Guide to Independent Undertakings (the “Guide”) developed by its Oil & Commodity LC Working Group. This educational document reviews common terms found in the LCs and Demand Guarantees (collectively “Undertakings”) supporting this industry’s sales.

    BAFT identified a need to harmonize and qualify specific terms and document types in these Undertakings to better serve the industry needs. The Guide addresses such topics as fluctuating pricing, reduction and due date clauses, etc. It assists in reviewing documents not specifically mentioned in the various rule sets (UCP, ISP and URDG) governing undertakings, such as pipeline certificates, book transfers, meter tickets, letters of indemnity (“LOIs), etc.

    Guidance Document available to BAFT members here

  • BAFT Submits Intraday Liquidity Comment Letter

    by Patrick Devilbiss | Jun 04, 2015
    BAFT, alongside the IIF and the Clearing House, submitted a letter to the Basel Committee Working Group on the topic of intraday liquidity. Members can read the full comment letter on the BAFT website.
    View the Comment Letter
  • BAFT and ITFA Produce Trade Risk Participation Legal Opinion for New Regulatory Requirements

    by Patrick Devilbiss | May 05, 2015
    WASHINGTON — The International Trade and Forfaiting Association (ITFA) and  BAFT, an international financial services association, announced today a joint industry standard legal opinion for banks to use in satisfying new regulatory requirements in the European Union.

    ITFA and BAFT, working through the law firm Sullivan & Worcester, jointly produced this legal opinion as a benefit for their member institutions to reduce the cost and complexity for banks subject to the EU rules and to increase the ease of doing business under the English law version of the BAFT Master Participation Agreement (MPA).  Input to the opinion came from working groups of both associations.

    Read the Legal Opinion and Guidance Note

    Under these new European regulatory requirements, credit risk mitigants, like the BAFT MPA, will need a legal opinion on whether their credit protection arrangements are legally effective and enforceable in all relevant jurisdictions. The legal opinion, issued by Sullivan & Worcester, is designed to facilitate this process for members of ITFA and BAFT.

     “Our members make wide use of the BAFT Master Participation Agreement as one of their tools for distributing trade risk in the broadly-based modern forfaiting industry,” said Paolo Provera, chairman of ITFA. “Reducing the expense of regulatory compliance is one of the tasks ITFA has set itself. This opinion reduces, at a stroke, the need to carry out much of the expensive and onerous groundwork in ensuring the agreement meets capital rules requirements.” 

    “The BAFT Master Participation Agreement facilitates distribution of trade risk using a common framework, thus enabling more liquidity to meet financing needs,” said Tod Burwell, BAFT president and CEO. “For both BAFT and ITFA, this legal opinion is critical to ensuring regulatory compliance while continuing to meet the needs of trade finance clients around the world.”

    The BAFT MPA is an industry standard for the transfer of trade finance related risk.  It’s English and New York law forms have been vital tools for the international banking industry for nearly 10 years. 

    About BAFT

    BAFT, the leading global financial services association for international transaction banking, helps bridge solutions across financial institutions, service providers and the regulatory community that promote sound financial practices enabling innovation, efficiency, and commercial growth. BAFT engages on a wide range of topics affecting transaction banking, including trade finance, payments, and compliance. The association website is www.baft.org.

     

    About IFTA
    Founded in 1999, ITFA - The International Trade & Forfaiting Association (previously known as International Forfaiting Association – IFA), is the worldwide trade association for companies, financial institutions and intermediaries engaged in trade and the origination, structuring and distribution of trade debt. ITFA also represents the wider trade finance syndications and secondary markets for trade assets.