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All praise the ICC Trade Finance Register

Just came back from the International Chamber of Commerce (ICC) Banking Commission meetings in Beijing. It was a great conference with excellent content and debates, from the rules making activities to the launch of new instruments like the Bank Payment Obligation to address the open account and supply chain finance space, from regulation with Basel III to the activities of the market intelligence working group or the role of technlogy in supporting trade finance. Many thanks again to the ICC for the invitation to speak.

One of the highlights was the discussion around the analysis of the ICC Trade Finance Register released in the new ICC report Global Risks – Trade and Finance and showing yet again the short-term nature of trade transactions and their relatively low risk profile. The document is a gem. 

Just one example with the Import Letters of Credit reporting 0.077% default and 0.007% loss...

The Basel Committee on Banking Supervision's annoucement this week that it is waiving the one-year maturity floor for certain trade finance instruments under the advanced internal ratings-based approach (AIRB) for credit risk in Basel III is a great first step. But surely the committee can do more in differentiating trade finance from higher-risk activities. 


Comments: (1)

Enrico Camerinelli
Enrico Camerinelli - Aite Group - Boston 31 October, 2011, 07:30Be the first to give this comment the thumbs up 0 likes Thank you Olivier for sharing your opinion on this very important subject. My take is that the ICC has squarely reconfirmed itself as the main and privileged interlocutor for trade finance related matters. For this reason I would welcome a clear position from the ICC as to what are the components of a modern trade finance practice. I believe it's about time we pull down the barrier between documentary credit and open account, and speak instead of an overall trade finance (TF) discipline. Many of the banks and vendors I talk to have different opinions regarding what falls under the trade finance umbrella (e.g. Is factoring part of TF or not?). It's not just a semantical debate. Rather, a definite glossary of TF components will allow corporate practitioners to compare apples with apples.
Olivier Berthier
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Olivier Berthier



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Financial Supply Chain

In the world of international trade, the process of exchanging payments, information and documents between buyers, sellers, banks, and other involved parties is becoming increasingly important for financial institutions. This community aims at presenting views and innovative ideas related to this financial supply chain space.

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