UK and US Finance Industries Join Forces to Propose a Vision for Closer Regulatory Cooperation

September 24, 2020 by Jessica Moore

Leading representatives from the UK and US financial and related professional services industries have joined together to propose a united business vision for future UK-US regulatory cooperation and dialogue. The group’s proposals aim to help forge even closer links between the hosts of the world’s two foremost financial centers.

The paper is released on the same day that the group relaunches as the British American Finance Alliance (BAFA). BAFA’s recommendations seek to build on the success of the UK/U.S. Financial Regulatory Working Group (FRWG), announced by HM Treasury (HMT) and the U.S. Department of the Treasury (UST) in April 2018 [2].

BAFA argues that establishing the right parameters and repurposing the FRWG behind a long-term vision will enhance regulatory dialogue. In turn, this will reduce cross-border frictions between the UK and US; bolster cross-border investment; and support stronger economic growth and job creation for both countries.

“This is an important strategic opportunity for the US financial services industry to strengthen cross-border regulatory and supervisory cooperation between the United Kingdom and the United States,” said Kenneth E. Bentsen, Jr., president and CEO of the Securities Industry and Financial Markets Association (SIFMA). “We look forward to working with policymakers and regulators on both sides of the Atlantic on this moving forward.”

“In today’s economy, many barriers preventing cross-border trade and investment in financial and professional services are regulatory in nature. For our industry, achieving compatibility of regulatory standards is therefore essential to support growth on both sides of the Atlantic. A robust regulatory dialogue will help achieve this. It also presents an opportunity for the UK and the U.S. to work even more closely together in international regulatory forums to achieve shared priorities,” said Catherine McGuinness, Deputy Chair of TheCityUK, and Chair of Policy and Resources Committee for the City of London Corporation.

The paper examines regulatory cooperation in a trade agreement and the architecture for regulatory dialogue between officials and also between officials and BAFA. It also highlights significant areas where the FRWG can help deliver a forward-looking vision: market integrity, data transfer, FinTech, cybersecurity and operational resilience, prudential measures, market access barriers, global financial stability, market fragmentation, and audit and accounting.

About The British American Finance Alliance (BAFA)
The British American Finance Alliance (BAFA) is a coalition of 20 British and American trade associations and industry bodies representing both financial and professional services. It was formed in September 2018 as the UK-U.S. Financial and Related Professional Services Industry Coalition to ‘actively contribute to the overall trade and investment discussions between the UK and U.S. and offer specific industry input on issues such as the process underpinning the regulatory dialogue and its substantive priorities.’ BAFA day to day operations are co-supported by the Securities Industry & Financial Markets Association (SIFMA) and TheCityUK (TCUK).

Members of BAFA
Alternative Investment Management Association (AIMA), American Council of Life Insurers (ACLI), American Property and Casualty Insurance Association (APCIA), Association of British Insurers (ABI), Association of Chartered Certified Accountants (ACCA), Association for Financial Markets in Europe (AFME), Bankers Association for Finance and Trade (BAFT), Bank Policy Institute (BPI), British American Business (BAB), City of London Corporation, Coalition of Service Industries (CSI), Institute of Chartered Accountants in England and Wales (ICAEW), Investment Association (IA), Investment Company Institute (ICI), London Market Group (LMG), Re-Insurance Association of America (RAA), Securities Industry & Financial Markets Association (SIFMA), TheCityUK (TCUK), The Law Society of England and Wales, US Chamber of Commerce (USCC), UK Finance.

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

September 18, 2020 by Jessica Moore

On September 18, BAFT’s Board Chair, Mark Garfield, published his monthly communication to the wider BAFT membership.

Growing up reading science fiction and watching futuristic shows like Star Trek, people were transported in their personal flying machines and called each other using devices where they could literally see the other person…crazy stuff. I dreamed that one day I could fly around my neighborhood but instead waited in competition with my eight other family members to use one rotary dial telephone line. Today I met virtually with five speakers in preparation for BAFT’s upcoming Crystal Ball Series – Banking Outlook. The speakers resided in New York, Belgium, South Africa, India, and Washington, DC. Talk about space travel.

BAFT just wrapped up its first virtual conference for the 2020 MENA Bank to Bank Forum to a big success. More than 500 people and 200 institutions joined from 43 different countries to hear representatives from many industry sectors such as big-tech, fintech, pharma, travel, and hospitality. There were more participants than ever before at a BAFT MENA event. From wherever we sat, we heard valuable insights and opinions about the future of various industries, their challenges, and opportunities. It was a global classroom.

The irony in this time of isolation, distancing and stay-at-home routines, is that we are meeting and connecting more easily than ever before with people around the world. With my meetings today, I seemed to have traveled around the globe meeting industry leaders discussing both relevant and current topics. For someone that has spent his entire career in in-person meetings, this has been quite a transformation. As was stated in the 2020 Virtual MENA Bank to Bank Forum by various speakers, the speed and pace of change have increased at warp speed these past few months affecting all industries. The question becomes, how does our business adapt and grow in this time of rapid change?

I look forward to in-person meetings again. I miss cheering in a crowd of a football or rugby match, listening with others at the symphony and outdoor concerts, eating in a popular restaurant, and meeting with you at BAFT events. I will likely never pilot a personal flying machine, that’s probably a good thing, but I will still need to strap on and hold tight to stay current in this accelerated time of change.

Our next series of events, Around the Globe: The BAFT Crystal Ball Series begins September 29th. This program is organized to provide industry-specific information and insight to navigate our ever-changing and fast-paced world. You don’t want to miss it or you may find yourself left behind with a rotary phone and traveler’s checks in hand!

See you soon.

Mark Garfield
BAFT Chair
Head of Global Financial Institutions
Zions Bancorporation

September 8, 2020 by Jessica Moore

On September 8, BAFT released new criteria for payables finance principles developed by BAFT’s Global Trade Industry Council (GTIC).

WASHINGTON — BAFT, an international financial services association, today announced the publication of BAFT’s Global Trade Industry Council Payables Finance Principles to inform the industry on the payables finance supply chain finance product.

Members of BAFT’s Global Trade Industry Council (GTIC), which consists of heads of trade from 19 of the largest trade banks in the world, worked to codify a framework for articulating the essential criteria for use and structuring of payables finance, a financial product providing support for the global economy.

“The BAFT GTIC spent considerable time developing these principles to help those in the industry build strong, sustainable payables finance supply chain programs,” said Geoffrey Brady, MD, chair of the BAFT GTIC and head of global trade and supply chain for Bank of America.

Because payables finance is often misunderstood, the GTIC requested BAFT develop a working group of member experts to draft guiding principles designed not only to assist the international trade industry with a framework for delivering and building payables finance supply chain finance programs, but also to provide specificity to the rating agencies and other stakeholders to avoid confusing it with different supply chain finance programs.

“In the absence of written rules, these new payables finance principles provide a common framework for banks to structure their individual programs, while contributing to a broader industry understanding of payables finance and its benefits,” said Tod Burwell, president and CEO, BAFT.

To read the full guidance document, visit our Library of Documents under the Industry Definitions and Guidelines section or click here.

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 the Global Trade Industry Council (GTIC)
The GTIC consists of global heads of trade from member banks including Bank of America, Bank of China, Barclays, BNP Paribas, BNY Mellon, Citigroup, Commerzbank, Deutsche Bank, First Abu Dhabi Bank, HSBC, J.P. Morgan, Lloyd’s Banking Group, MUFG, Santander Bank, Societe Generale, Standard Bank of South Africa, Standard Chartered Bank, UniCredit Group, and Well Fargo Bank.

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

August 29, 2020 by Jessica Moore

On August 27, BAFT responded to the European Commission’s Action Plan for a comprehensive Union policy on preventing money laundering and terrorism financing.

BAFT supports greater coordination and a more effective framework to prevent money laundering and terrorist financing across Europe. In drafting the response to the consultation, BAFT surveyed members in Europe to assess their views on the European Commission’s AML Action Plan which includes six pillars:

Effective implementation of existing rules
A single EU rulebook
EU-level supervision
A support and cooperation mechanism for financial intelligence units
Better use of information to enforce criminal law
A stronger EU in the world

To view the comment letter, visit our Library of Documents under the Comment Letters section or download the pdf here.

August 25, 2020 by Jessica Moore

New report from the industry coalition GSCFF addresses head-on the criticisms relating to impact on suppliers, financial reporting and potential credit and liquidity risks.

The Global Supply Chain Finance Forum (GSCFF) – comprising BAFT (The Bankers Association for Finance and Trade), FCI, the International Chamber of Commerce (ICC), the International Trade & Forfaiting Association (ITFA) and the Euro Banking Association (EBA) – today released a paper in response to growing concerns regarding the use of supply chain finance (SCF) and, in particular, payables finance programs. The report, Ensuring Payables Finance Remains a Force for Good, aims to address criticisms across three key areas: the potential adverse impact on suppliers, issues relating to financial reporting and transparency, and overall program risk.

Christian Hausherr, Chair of the GSCFF, as well as European Product Head of Payables Finance, Trade Finance & Supply Chain Finance at Deutsche Bank, says: “When used in an appropriate manner, payables finance programs enable buyers and suppliers to optimize their working capital and strengthen their relationships with each other. However, reports relating to the misuse of payables finance programs, notably around suppliers being forced into accepting unfavorable terms, are extremely worrying. As such the GSCFF has taken the initiative to address these concerns head-on, to promote understanding of the technique and its use.”

The report addresses topics ranging from the alleged “bullying” of small and medium-sized enterprises (SMEs) to join payables finance programs, to issues around financial disclosure, to impact of COVID-19 on the use of the technique. Key conclusions include:

SMEs should never be “bullied” to join such programs. Reports of such practices are highly concerning and taken for the GSCFF. They also ignore the balance that can be achieved through well-structured payables finance programs, which not only help buyers and therefore assure the health of the overall supply chain, but also provide prompt access to funds for suppliers on an affordable basis, addressing the systemic SME cashflow challenge.
Suppliers should feel that there is absolutely no obligation to participate. If they are not in urgent need of cash, they can opt to receive payment in full on the original due date. The report strongly encourages finance providers to follow accepted industry practice in considering extensions of terms.
Liabilities rising from SCF programs do not create additional financial risk above and beyond those that arise from trade between a buyer and a seller. Negative outcomes can be avoided by implementing strong credit analysis of a corporate’s balance sheet before engaging in a SCF program.
Transparency of financial reporting relating to the usage of SCF programs is desirable but requires developing parameters for disclosure in corporates’ financial statements in coordination with accounting standards bodies.
COVID-19 may have resulted in increased use of SCF, yet this does not create increased risk within the system as it would be counter-productive and inappropriate for banks to swiftly withdraw credit lines.

The report follows extensive work from the GSCFF on promoting strong industry standards and agreed definitions, including the release of the Standard Definitions for Techniques of Supply Chain Finance and Payables Finance – How It Helps Global Supply Chains.

About the Global Supply Chain Finance Forum:
The Global Supply Chain Finance Forum (GSCFF) was established in 2014 to develop, publish and champion a set of commonly agreed standard market definitions for Supply Chain Finance (SCF). Comprised of trade bodies BAFT (The Bankers Association for Finance and Trade), FCI, the International Chamber of Commerce (ICC), the International Trade & Forfaiting Association (ITFA) and the Euro Banking Association (EBA) the industry consortium leverages its collective footprint to aid the target audience of SCF in gaining clarity and consistency on the various terms and techniques used. The main objective of GSCFF is to support the sustainable growth of supply chain finance by establishing consistency and a standardized understanding of SCF across the industry. Subsequently, the GSCFF strives towards acknowledgement of its definitions and their benefits by its target audience, in specific on the regulatory side. The Forum monitors and reacts to major market developments in all relevant matters for Supply Chain Finance. It is open to financial institutions, non-FI Finance providers, accounting firms, investors, rating agencies, regulators and corporates who have a stake in supply chain finance.

August 20, 2020 by Jessica Moore

On August 20, BAFT’s Board Chair, Mark Garfield, published his monthly communication to the wider BAFT membership.

I fondly remember my first trip to Europe as a teenager in the 1970’s. My wallet was full of bulky traveler’s checks, and my siblings and I would stand in long bank lines to exchange the traveler’s checks for local currency. We paid for everything in banknotes, as cards were not accepted. Upon arriving in a different country, we joined yet another line at another unfamiliar bank to exchange our currency again. It was fun to handle foreign notes with their colors and history. We tried to impress each other on being the quickest and most accurate in calculating each exchange.

Those days are long gone. My children never use checks, have likely never heard of traveler’s checks, and certainly have never heard of Pesetas! They give no advance thought to payments and conversion when traveling. Their daily financial transactions are mostly digital. When they see me writing a check, they think I live in the “old world” of financial transactions. I remind them that one thing from this “old world” remains the same: the role of the bank is most important in payments processing and continues to be the key mechanism in making secure and efficient payments and currency exchanges globally.

BAFT, as the leading international transaction banking association, has recognized the need to place greater emphasis on payments. In 2020, the BAFT Board of Directors approved the payments strategy developed by BAFT’s Senior Vice President of Payments and Innovation, Samantha Pelosi, and established the Global Payments Industry Council (GPIC) as the cornerstone of that strategy. The GPIC was stood up in July 2020 with around 20 members comprised of senior management in global payments from BAFT member organizations. GPIC geographic representation includes Africa, Asia-Pacific, Europe, MENA, and North America. Congratulations and appreciation to David Kretz, Head of GTS Global Strategy and Payments at Bank of America, who was elected GPIC Chair and Jean-François Mazure, Head of Cash Clearing Services at Societe Generale, who was elected GPIC Vice-Chair.

GPIC’s primary purpose is to set BAFT’s strategic agenda regarding global payments, to raise and vet issues, initiatives, and challenges, and to ensure proper alignment of BAFT’s payments committees and working groups. GPIC’s formation is a wonderful addition to the BAFT organization. I look forward to what it will accomplish.

What will payments look like tomorrow? Certainly not “old world,” not likely “current world,” maybe a “whole new world,” or even “out-of-this-world” … and getting there will be fun.

Mark Garfield
BAFT Chair
Head of Global Financial Institutions
Zions Bancorporation

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