The International Trade and Forfaiting Association (ITFA) has launched its new Unfunded Master Risk Participation Agreement (MRPA) and associated user guidelines, including for letters of credit (L/Cs) for use by its members.

The ITFA Unfunded MRPA is for use for unfunded participations in a variety of trade finance transactions and will help banks and insurance companies to collaborate, better understand and participate in risk mitigation of trade finance assets, whether they are a seller or a participant in the market.

Major additions

One of the major additions in the new agreement is the introduction of terms specific to 'instrument facilities', which allows the seller to mitigate individual instrument risks arising out of facilities for the issuance of payment instruments - including standby L/Cs, guarantees, bonds - and the purchasing of receivables.

ITFA has published details of its Unfunded MRPA on its website for members, along with a mark-up against the 2018 Bankers Association for Finance and Trade (BAFT) MRPA for comparison and ease of understanding.

New York and English updates

The launch of the ITFA Unfunded MRPA follows an update to the New York Master Participation Agreement (NY MPA) published by BAFT in tandem with ITFA in May 2019, which serves as the industry standard for secondary market transactions under New York law.

The NY MPA in turn closely followed the major update to the English Law Master Participation Agreement in September 2018, which was published with detailed guidance for users and updated the original BAFT MPA published in 2008.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.