Policy News

The Global Supply Chain Finance Forum announced today the release of its new guidance document, Market Practices in Supply Chain Finance: Receivables Discounting Technique.

The Global Supply Chain Finance Forum announced today the release of its new guidance document, Market Practices in Supply Chain Finance: Receivables Discounting Technique. The paper is the first in a series of industry guidance documents intended to provide clarity and consistency to the world of supply chain finance.

Supply chain finance is one of the fastest growing trade products, however, financial institutions often don’t use similar terminology or accounting techniques. The Forum, comprised of BAFT (Bankers Association for Finance & Trade), Euro Banking Association (EBA), Factors Chain International (FCI), International Chamber of Commerce (ICC), and International Trade and Forfaiting Association (ITFA), is issuing a series of guidance documents based on its 2016 Standard Definitions for Techniques of Supply Chain Finance to get all industry stakeholders on the same page.

The paper released today focuses on receivables discounting – a technique and form of receivables purchase, flexibly applied, in which sellers of goods and services sell individual or multiple receivables (represented by outstanding invoices) to a finance provider at a discount.

“Our hope is that this guidance will lead to an industry-wide, uniform adoption of the receivable discounting technique,” said Christian Hausherr, European product head of supply chain finance at Deutsche Bank and chair of the Global Supply Chain Finance Forum. “When all parties use similar techniques and terminology, it makes for a more streamlined and efficient process.”

The Forum will continue to issue guidance on individual techniques within supply chain finance including payables finance and plans to study the market evolution and develop relevant statistics.

To view Market Practices in Supply Chain Finance: Receivables Discounting Technique, please visit supplychainfinanceforum.org.

About the Global Supply Chain Finance Forum
The Global Supply Chain Finance Forum was established in January 2014, as an initiative of industry associations to address what has been recognized as a need to develop, publish and champion a set of commonly agreed standard market definitions for Supply Chain Finance and for SCF-related techniques.

BAFT joined with others in the Industry to file a letter supporting the Corporate Transparency Act.

You can read the letter here.

The BAFT Europe Council Intraday Liquidity Working Group today released an Industry Briefing on Intraday Liquidity Management in Europe.

The BAFT Europe Council Intraday Liquidity Working Group today released an Industry Briefing on Intraday Liquidity Management in Europe. The working group, led by Sandra Laielli van Scherpenzeel at UBS Switzerland AG, formed in September 2017 to examine the increasing importance of intraday liquidity in the daily routine of transaction bankers.

Working Group members, in conjunction with FImetrix, surveyed banks in Europe in order to assess how they had reacted to the market and regulatory pressure of monitoring and reporting on intraday liquidity positions. The survey focused on five key areas:

• Management of intraday liquidity lines and facilities
• Charging for intraday liquidity usage and related services
• Current and future usage of liquidity monitoring tools
• Investments in liquidity monitoring and forecasting
• Deposit management

Working Group members reviewed the survey findings in detail and added the expertise of their financial institutions to the analysis to provide a more granular interpretation of the survey findings in a meaningful market context. The survey results, subsequent dialogue among Working Group members and the broader BAFT Europe Council are captured in the Industry Briefing.

The Industry Briefing is available for all BAFT members and can be found in the Library of Documents under White Papers.

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.