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( Source of the document: ICC Digital Library )
2013 has proved to be one of the Banking Commission's busiest years, with a host of new rules rolled out, new partnerships being formed and major changes in the structure of the Commission's leadership.
Rules and other products
First, the rules: three new sets of rules were approved during the year, with another, the Uniform Rules for International Factoring and Account Receivables, having been discussed at the autumn Commission meeting in Vienna. By any measure, that's a remarkable accomplishment, since ICC rules require lengthy deliberations, and it's rare to see so many approved in such a short space. To review, the following were put on the books during the first six months of the year:
• ICC Uniform Rules for Bank Payment Obligations (URBPO). Relying on the electronic exchange and validation of data to effect payment, the BPO is an instrument designed to provide risk mitigation and the basis for financing transactions between buyers and seller who choose not to use documentary instruments. Along with the rules, ICC also published a Guide to the BPO and posted on its URBPO website a set of useful Frequently Asked Questions and a paper on the Capital & Accounting Treatment of the BPO.
• International Standard Banking Practice (ISBP), the 2013 revision. This checklist of best practices for examining documents under documentary credits has been a staple reference book for bankers, lawyers and academics since it was first introduced ten years ago. Now expanded to include new documents and to provide more detail on old ones, this revised ISBP (Publication 745) is more comprehensive than past editions. See Bob Ronai's article in this issue of DCInsight.
• ICC Uniform Rules for Forfaiting. Traditionally defined as the non-recourse discounting of trade-related payment instruments, principally promissory notes, bills of exchange and letters of credit, forfaiting now involves a market estimated at more than $300 billion a year. These rules, years in preparation, are the first attempt to apply uniform standards for forfaiting worldwide.
New roll-outs for 2013 didn't stop with the rules; other products were also completed during the year. One of these, launched in April, the ICC Trade Register 2013 contained data of over 15 million transactions provided by 21 banks and reflecting around 60-65% of global trade finance activity. The point of the exercise was to demonstrate to the Basel III drafters that trade finance is a relatively low-risk asset class that should not be over-regulated by governments. It seemed to work, because the Basel III committee modified its originally harsh requirements for trade finance transactions.
Complementing the Trade Register, ICC issued its Global Survey 2013. First started in 2009, the Survey gathers data on trade finance transactions worldwide. Now with new partners, the International Trade Centre (ITC) and Factors Chain International (FCI), this latest Survey's early information showed that most of the US$2.5 trillion worth of trade deals were short-term in nature, averaging 115 days. The banks participating in the project reported only 1,140 defaults in these transactions.
Finally, it's worth mentioning other developments.The CDCS certification, which dates from 1998 and involves a partnership with the Institute for Financial Services, has provided certificates of competence to trade finance professionals from more than 75 countries. The year 2013 saw renewal of the ICC/IFS partnership and the first discussions concerning future certifications for a Bank Guarantee Specialist and a Global Trade Finance Certification Program.
The Banking Commission suffered a considerable loss when Gary Collyer, the Commission's technical advisor for many years, retired from the Commission after the Lisbon meeting. Gary drafted the Commission's opinions and was recognized worldwide for his unparalleled knowledge of documentary credits. He will be replaced by a trio of competent advisors - Nicole Keller, Vice President of KfW IPEX Bankg Gmbh; David Meynell, Owner of TradeLC Advisory and Donald Smith, President of Global Trade Advisory Ltd. They have big shoes to fill.