BAFT Releases Best Practices for New Financial Asset on Distributed Ledger Technology

January 12, 2021 by Jessica Moore

BAFT announces the publication of both the Business Best Practices and Technical Best Practices, Version 1.1, for the Distributed Ledger Payment Commitment (DLPC).

WASHINGTON – BAFT, the leading global financial services association for international transaction banking, today announced the publication of both the Business Best Practices and Technical Best Practices, Version 1.1, for the Distributed Ledger Payment Commitment (DLPC). The DLPC is a digital asset and global standard for a payment commitment that can be used on any blockchain network and can operate across networks. First released in August 2020, this latest version of the DLPC Best Practices incorporates industry comments and experience from implementation in live transactions.

Investigating the use of distributed ledger technology to expedite the digitization of trade finance, the BAFT Innovation Council established the DLPC working group in 2016. It was tasked with producing standardized rules for the transformation of a payment commitment, the common core of all negotiable trade instruments, into a digital asset to be used in any trade finance solution sitting on any distributed ledger technology platform. The working group introduced the DLPC Best Practices for trial use in April 2019.

Since then, the DLPC has been implemented in live transactions as a digital asset backed by a traditional trade instrument, such as a guarantee, as a means for enterprises to finance international trade transactions and facilitate the ultimate resulting payments. With the recent guidance from the U.S. Office of the Comptroller of the Currency endorsing bank participation on blockchains and use of stablecoins for payments, the DLPC is in position to make a significant contribution to the new rails of transaction banking.

“In just a little over a year, the DLPC has grown from being a global standard for traditional payment commitments to a new financial asset and payment instrument in its own right,” said Rebecca Liao, co-founder and COO of Skuchain and co-chair of the DLPC working group. “The trade finance community was hungry for an innovation with a solid legal framework that would allow transactions to be digitized, de-risked, negotiable, and interoperable across platforms to promote greater liquidity and market efficiency.”

“The DLPC breaks new ground for financial services firms seeking to leverage the unique characteristics of distributed ledger technology,” said Samantha Pelosi, senior vice president for payments and innovation, BAFT. “Use of the DLPC facilitates the interoperability of disparate blockchain platforms and creates what is currently the only digital negotiable instrument with legal backing. These best practices provide for sound validity under Delaware law, and BAFT continues to advocate for the amendment of laws to grant similar legal status to digital negotiable instruments used in cross-border transactions.”

The DLPC working group consists of 12 representatives from BAFT and the following organizations: Arnold & Porter Kaye Scholer, CGI, Citi, GTBInsights LLC, Morgan, Lewis & Bockius, Queen Mary University of London, R3, Red Chalk Group, Skuchain, Standard Chartered, Surecomp, US Bank, Wells Fargo, and Young Conaway Stargatt & Taylor.

To read the DLPC Best Practices, visit our Library of Documents under the Industry Definitions and Guidelines section.

About BAFT
BAFT is the leading international financial services association whose membership includes large global and regional banks, service providers, and fintech companies headquartered around the world. BAFT provides advocacy, thought leadership, education, and a global forum for its members in transaction banking, including international trade finance and payments. For nearly a century, BAFT has expanded markets, shaped policy, developed business solutions, and preserved the safety and soundness of the global financial system. Learn more at www.baft.org.

BAFT Media Contact:
Blair Bernstein
[email protected]
+ 1 (202) 663-5468

December 17, 2020 by Jessica Moore

On December 17 BAFT’s Board Chair, Mark Garfield, published his monthly communication to the wider BAFT membership.

Each year at this time, my wife and I send out seasonal holiday cards to former work colleagues, old high school chums, family, and friends. For some, we’ve had no contact for 40 years other than the giving and receiving of our annual holiday greeting. It’s a joy to receive a card from a long-ago acquaintance with an updated family photo and a simple note. Over time some of my cherished connections were lost. Thus, the address list is of the utmost value. Well, last year, I lost the address list. My wife did not lose it; I did…oops. We tried our best to reconstruct the addresses. But, alas, we lost some connections that we may never recover.

This reminded me of another prized list: my bank’s RMA list. And like my seasonal greeting card, over the years we’ve lost a few RMAs, which also caused some difficulties. The RMA exchange is the lifeblood for a regional bank like mine to connect with the larger global banking community. It is how a Main Street bank assists a Main Street company in moving products or buying products overseas. The RMA challenge is not unique to my bank. Regional banks in MENA, Africa, Latin America, Asia, and the Caribbean have all informed me of this significant challenge.

At BAFT, the RMA issue is a key priority. The association created a working group to identify the challenges and determine possible solutions. Amy Sahm from Fulton Bank, a BAFT Board member and a key leader in this RMA working group, presented some findings from the group at the 2020 Virtual Regional Bank Conference in October. The working group identified current tools that may be useful in our efforts to maintain and grow RMA permissions. There is more to be done and your input or suggestions are welcome as we look at the broader global effect. This winter, BAFT plans to hold an all-member collaborative webinar in partnership with SWIFT to address and assist in this RMA effort.

I believe that with the help of BAFT, our industry can find ways to keep the RMA exchange as complete and vibrant as possible, allowing for all of us to maintain our valued connections. More to come. And if you didn’t get my holiday card this year, I need your address!

May your holiday season be full of joy.

Mark Garfield
BAFT Chair
Head of Global Financial Institutions
Zions Bancorporation

December 5, 2020 by Jessica Moore

MEMBERS ONLY

You have tried to access a page that is exclusive to BAFT members only.

BAFT Is an institutional membership. If your institution is a member, YOU are a member!

Member Organizations

If you already have a baft.org account, please login using your a username (company email address) and password.

If you do NOT have a baft.org account, you may create a username (company email address) and password.

If you’ve forgotten your account information, then you can reset your password now.

Non-Member Organizations

If you are a non-member, find out how to become a BAFT member today!

November 24, 2020 by Jessica Moore

On November 24 BAFT’s Board Chair, Mark Garfield, published his monthly communication to the wider BAFT membership.

Like many of you, I just attended the 2020 Virtual International Convention. Wow. What a powerful conference with excellent content, outstanding panelists and speakers and a format that provided access to experts and colleagues around the world. The event was the largest ever hosted by BAFT…750 attendees from 120 institutions across 30 countries engaged with 55 sessions and 120 panelists, speakers, and moderators. At one point, the programming went for 24 straight hours with a specific emphasis on geographic-oriented sessions that moved around the globe. More exciting than the 24 hours of the Le Mans race. Vroom!

(Don’t forget you can continue to access the plenary sessions and selected workshops on-demand until December 4)

This week in the U.S we will celebrate one of our most popular and historic holidays, Thanksgiving. It centers around a meal with family, friends, food, and faith with a focus on thankfulness and gratitude. A few years ago, I was fortunate to be in Istanbul during Ramadan. Each evening, family and friends gathered to share a wonderful meal with the express purpose of thankfulness. I reflected that it was like a Thanksgiving at home, but better as the evening meal occurred over multiple days!

In that spirit, I would like to express my deep gratitude to the BAFT staff for their tireless effort in managing the International Convention. I would also like to thank the planning committee, moderators, and subject matter experts who make it worthwhile and valuable.

I am grateful to be a part of the global banking community. Thankful, for the role that each of you play in our crucial responsibility in connecting societies, delivering goods and services, and facilitating trade. We may have to meet virtually rather than in person, but thanks to BAFT we can connect frequently, more easily, and in greater numbers.

I am most thankful for the friendship and associations I have with many of you around the globe. As I reflect upon the unique obstacles we face today, I continue to marvel at how my banking colleagues have the talent, optimism, and determination to navigate and overcome these challenges.

Mark Garfield
BAFT Chair
Head of Global Financial Institutions
Zions Bancorporation

November 24, 2020 by Jessica Moore

Officially announced at the 2020 Virtual International Convention and for the third year running, BAFT is honored to recognize individuals for their invaluable assistance provided to the association throughout the past year.

In an effort to publicly recognize individuals from member organizations who have volunteered their time and worked diligently with the association throughout the previous calendar year, BAFT annually awards select members with the BAFT Ambassador of the Year Award.

Ambassadors of the Year, are individuals nominated by BAFT staff. Potential recipients are chosen by the BAFT Ambassador of the Year Committee following nomination submissions from BAFT staff. Awardees are then selected from the list of potential nominees following a weighted voting process.

Officially announced at BAFT’s 2020 Virtual International Convention on November 16, BAFT is honored to recognize the following individuals for their invaluable assistance provided to the association throughout the past year and for helping to continually drive the mission of BAFT forward.

Daniel Pinho, senior vice president and assistant group manager, trade finance, PNC
Kristine Siebel, vice president & standby letter of credit officer, Societe Generale
John Taylor, international advisor, Centre for Commercial Law Studies, Queen Mary University of London

Once again, thank you for your hard work and going above and beyond in the past year to support BAFT and its overall objectives. Recipients’ awards will be mailed to them in lieu of an official awardee ceremony due to the pandemic.

November 18, 2020 by Jessica Moore

New report examines the implications of transitioning away from LIBOR to SOFR for the trade finance industry.

WASHINGTON — BAFT, the leading global financial services association for international transaction banking, today announced the publication of SOFR: Trade Finance Priorities to inform the policy community and the industry on the impact of a possible transition to the Secured Overnight Financing Rate (SOFR) from the London Inter-Bank Offered Rate (LIBOR).

Trade is essential to GDP growth and supports commercial flows and supply chain sustainability globally. In 2019, global trade flows totaled $18.1 trillion, with an estimated $9.77 trillion of that sum comprised of bank intermediated trade. USD LIBOR is the most widely used benchmark across the trade finance industry globally. As the market prepares to transition away from LIBOR to Risk Free Rates (RFRs) by the end of 2021, BAFT member institutions have been working steadily to prepare for the change.

“This report examines the impact of the transition from LIBOR on the trade finance business and concludes there is an imperative for a forward-looking term rate to ensure the uninterrupted provision of financing to support cross border trade,” said Diana Rodriguez, vice president, international policy at BAFT. “We were pleased to see the Alternative Reference Rate Committee’s (ARRC) September publication of a Request for Proposals for a Term Rate administrator, and we welcomed subsequent dialogue with the Federal Reserve Board on the findings of this paper. We look forward to continued progress toward the publication of a forward-looking term SOFR in the first half of 2021 for use by the Trade Finance market.”

The white paper is the culmination of several months of analysis by the BAFT IBOR Transition Working Group’s Suitability of Rates subgroup, as well as input from a global BAFT member survey. The working group also considered findings from the BAFT Future Leaders’ Group on IBOR Transition and incorporated elements of their work in this paper. Though members have made progress in identifying areas where overnight SOFR could be used, BAFT believes most transactions require a forward-looking rate to provide certainty to trade buyers and sellers.

“As experienced trade finance professionals, the working group members have provided market views stressing the critical importance of a forward-looking term rate from a trade finance practitioners perspective,” stated Priyamvada Singh, managing director & regional head, product, propositions & structuring, global trade and receivables finance, HSBC Bank USA. “Considering trade finance products are globally used to finance a significant volume of merchandise trade, and that users of trade finance products globally span a wide range of companies, especially a majority of Small and Medium companies (SMEs), the members recognize the need for industry consensus for a workable solution that can provide cost certainty and pricing transparency for robust adoption.”

“Establishment of a SOFR term rate and clarity on the timing of its launch are critical for the trade market to finalize conventions and support the transition away from LIBOR,” said Doug Laurie, director, global programme lead- LIBOR transition loans at Barclays. “Getting the SOFR transition right will have an impact on banks and their customers globally given the dominance of the U.S. dollar for trade transactions.”

Rodriguez of BAFT and Laurie of Barclays will host a workshop on the implications of the transition to SOFR for trade finance on Friday, Nov. 20, 2020 at 8:00 a.m. ET during BAFT’s International Convention.

To read the full white paper, visit our Library of Documents under the BAFT Guidance and Industry Practice section or click here.

BAFT Media Contact:
Blair Bernstein
[email protected]
+ 1 (202) 663-5468

Address

Phone

Sitemap

Social