BAFT Releases Updated New York Law Master Participation Agreement

BAFT today announced the release of an updated New York law Master Participation Agreement (MPA). The original was drafted more than 10 years ago, and serves as the industry standard for secondary market transactions to facilitate the buying and selling of trade finance-related assets globally.

BAFT, together with ITFA (International Trade and Forfaiting Association), put together a working group of experts to review the existing forms and identify necessary changes based on current market practice. International law firm, Sullivan & Worcester, drafted the modernized New York law MPA form and associated usage guidelines.

The agreement continues to help standardize documentation for trade finance transactions and facilitates the communication around trade finance assets between financial institutions, investors of all types and government bodies globally.

“The revisions to the BAFT MPA continue our efforts to standardize industry documentation, facilitate better transaction efficiency and provide greater consistency,” said Tod Burwell, president and CEO of BAFT.

The updated MPA covers secondary market activities  related to  various types of  trade assets. The document is free for BAFT members and available for purchase for nonmembers. Read More.

BAFT joined with others in the industry to file a letter supporting BSA reform. Read the letter here.

BAFT released technical as well as business best practices for a digital ledger payment commitment (DLPC). The documents identify industry-wide specifications for a DLPC, enabling digitization of trade finance instruments for processing on a DLT platform and interoperability among platforms.

BAFT Releases Best Practices for Digital Ledger Payment Commitments

WASHINGTON – BAFT, the leading global trade association for transaction banking, today released technical as well as business best practices for a digital ledger payment commitment (DLPC).  A DLPC is a core component of all trade finance instruments involving a promise to pay that is registered on distributed ledger technology (DLT) platform built to conduct international trade.  The documents identify industry-wide specifications for a DLPC, enabling digitization of trade finance instruments for processing on a DLT platform and interoperability among platforms.

The best practices were developed by BAFT’s Digital Ledger Payment Commitment Working Group, which formed in 2016 at the direction of BAFT’s Innovation Council. The working group consists of representatives from 15 large global banks, business consultant firms, law firms, trade finance solution providers, and fintech companies.

“The BAFT Distributed Ledger Payment Commitment specifications offer a standardized solution for companies to register digital representations of payment commitments on a distributed ledger,” said Samantha Pelosi, Senior Vice President, Payments and Innovation of BAFT.  “It is a building block for instruments like drafts, bills of exchange, letters of credit, bank payment obligations and banker’s acceptances. We encourage the industry to incorporate these specifications into DLT platforms for international trade to facilitate interoperability between the multiple trade solutions being developed to leverage the benefits inherent in DLT.”

Recognizing that the industry is early in its transition from a paper-based process to a DLT-based process for engaging in trade finance, BAFT is releasing these best practices for trial use and seeking feedback from early adopters. It hopes to incorporate that feedback in future versions of the DLPC specifications as they evolve into industry standards.

The Technical Best Practices and Business Best Practices are available for industry review at www.baft.org.  Specific feedback on the documents may be directed to industryfeedback@baft.org.

BAFT, The Wolfsberg Group, and the International Chamber of Commerce (ICC) jointly announced today the publication of appendices to its 2017 Trade Finance Principles guidance document.

International Trade Organizations Release Additional Compliance Guidance for Trade Transactions

BAFT, The Wolfsberg Group, and the International Chamber of Commerce (ICC) jointly announced today the publication of appendices to its 2017 Trade Finance Principles guidance document. The document addresses the due diligence required by global and regional financial institutions of all sizes in the financing of international trade and will now feature information on open account trade and financial institutions’ trade loans.

The appendices provide guidance on the specific application of controls by banks in the context of open account trade transactions and specifically elaborate on receivables purchase techniques as defined by the Global Supply Chain Finance Forum. They also provide guidance on the application of controls by banks in the context of Financial Institutions Trade Loans (FITL), also called Bank-to-Bank Trade Loans.

The publication of this additional guidance is the culmination of more than two years of work undertaken by the organizations and their members.

“The trade industry has been clamoring for more specific guidance on articulating controls for open account trade products,” said Tod Burwell, president and CEO, BAFT. “Finally, a resource has been developed by the leading industry associations working together to provide guidance on payables finance, receivables discounting and bank to bank trade loan products.”

“The trade finance market is rapidly evolving, which means that rules and guidance need to not only keep pace but also anticipate future changes,” Olivier Paul, director of ICC finance for development. “This new update of the Trade Finance Principles does exactly that — providing critical guidance on Open Account and Receivables techniques.”

“In the two years since BAFT, the ICC and the Wolfsberg Group published their last update to the Trade Finance Principles, the working group has not lessened its efforts or enthusiasm, producing very welcome additional guidance on open account trade and the financing of international trade more broadly,” said Tracy Paradise, executive secretary, the Wolfsberg Group. “We trust that those involved in these transactions will find this useful, particularly all aspects of the controls required in this area.”

The updated Trade Finance Principles may be found in the Library of Documents under “Best Practices and Industry Standards”.

About The Wolfsberg Group

The Wolfsberg Group is an association of thirteen global banks which aims to develop frameworks and guidance for the management of FCRs, particularly with respect to Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies. The Wolfsberg Group consists of the following financial institutions: Banco Santander, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, MUFG, Société Générale, Standard Chartered and UBS. https://www.wolfsberg-principles.com/

About The International Chamber of Commerce (ICC)
The International Chamber of Commerce (ICC) is the world’s largest business organization representing more than 45 million companies in over 100 countries. ICC’s core mission is to make business work for everyone, every day, everywhere. Through a unique mix of advocacy, solutions and standard setting, we promote international trade, responsible business conduct and a global approach to regulation, in addition to providing market-leading dispute resolution services. Our members include many of the world’s leading companies, SMEs, business associations and local chambers of commerce.www.iccwbo.org

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