The leading international transaction banking association

Following sanctions imposed on entities in connection with the Russian invasion of Ukraine, BAFT has provided members with information and various resources to help navigate sanctions across numerous international jurisdictions including the EU, Japan, Singapore, South Korea, the UK, and the United States. We will continue to monitor sanctions developments, update members accordingly, and channel inquiries to the appropriate authorities.

BAFT participated on a panel at GTR MENA 2022 Dubai addressing the adoption of the Model Law for Electronic Transferable Records (MLETR) and trade digitization more broadly. BAFT also joined the ICC Legal Reform Advisory Board (ICC LRAB), which brings together industry leaders to advance legal frameworks supporting trade digitization. The ICC LRAB held its initial meeting laying out the goals and expectations over 2022, building on the G7 commitment in 2021 to advance the adoption of MLETR and similar legal frameworks.

The BAFT Sustainability Working Group recently submitted comments on the proposed ICC Standards for Sustainable Trade and Sustainable Trade Finance. The European Bank for Reconstruction and Development (EBRD), which issues a plethora of sustainable finance transactions, has joined the working group to lend its expertise to various workstreams.

BAFT submitted comments to the European Commission (EC) "Have Your Say" initiative. Our comments urged the EC and co-legislators to amend two provisions in the proposed CRR3 that would yield detrimental impacts on the provision of trade finance. Our recommendations focused on maintaining the CCF for trade finance-related guarantees at 20% and allowing for the use of the actual/effective maturity under F-IRB. The BAFT Basel Working Group has requested meetings with the Rapporteur and Shadow Rapporteur and will undertake a comparison of insurance company treatment under Solvency II.

BAFT continues to see industry convergence in the use of Term SOFR. A recent BAFT LIBOR Working Group poll showed that less than 10% of members were using a combination of SOFR and BSBY, and no members were quoting BSBY exclusively. BAFT continues to monitor consideration of the use of a credit adjustment spread in conjunction with Term SOFR. Alternatives proposed are not yet viable options. Given their late release, it is unlikely that there will be a considerable uptick as members of the working group are growing comfortable embedding the CAS into their spreads. BAFT is also monitoring other IBOR transitions, and on February 28, BAFT responded to Refinitiv’s consultation on the potential cessation of CDOR (Canadian Dollar Offered Rate).

BAFT participated in a meeting hosted by TheCityUK and the City of London, co-chairs of the British American Financial Alliance; the Deputy Ambassador of the UK to the United States was also in attendance. Matters discussed included post-Brexit trade, CBDCs and crypto regulation, sustainable finance, and sanctions developments in light of the Russian invasion of Ukraine.