Trade Services Uniform Rules for BPO Book Release

4531_image002New York, N.Y., June 13, 2013Uniform Rules for Bank Payment Obligations (BPOs), a 21st-century standard in supply-chain finance that will facilitate international trade, is now available at the USCIB International Bookstore.

These new rules are set to revolutionize trade finance transactions. BPO is an irrevocable commitment made by one bank to another that payment will occur on a specified date after a specified event has taken place. It is an alternative instrument for trade settlement, designed to complement existing solutions, not to replace them.

The BPO provides the benefits of a letter of credit in an automated and secured environment, and enables banks to offer flexible risk mitigation and enhanced financing services to their corporate customers.

The rules were developed by the International Chamber of Commerce (ICC) Banking Commission, in partnership with the financial messaging provider SWIFT and take into account the expectations of all relevant industries and users. Reflecting consensus of the industry, the rules were unanimously adopted by the ICC Banking Commission in April.

“The importance of collaboration among the banking community is paramount today.” According to Michael Quinn, Co-Chair of the ICC URBPO Education Group, Chair of USCIB’s Banking Committee, and Managing Director of Global Trade at JP Morgan. Quinn went on to say, “we have case studies where banks are successfully using BPO in situations where there is high volume import, short shipment time periods and a need to provide liquidity to suppliers who are providing relatively low-cost retail consumer type goods.” Mr. Quinn also added, “this provides us with excellent examples of how BPO is being leveraged to facilitate trade without getting bogged down in the processing of documents.”

The speed of trade, the complexity of supply chains and the reliance on information and data today is overwhelming. Over the last 10 years banks and corporates have become focused on financing liquidity down supply chains to ensure products can get to customers. The financial crisis forced many companies to rethink their supply chain strategies and consider ways to ensure integrity down the chain while ensuring it remains liquid and appropriately protected. This, Quinn suggests, has led to a convergence of corporate needs for supply chain financing with banks’ need to support them in this and an ambition to reduce paper handling so that greater focus can be put on risk mitigation and financing.

The rules are set to go into effect on July 1. Order your copy today at USCIB International Bookstore.

About USCIB:
USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network encompassing leading international business organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More at www.uscib.org.

USCIB’s Trade Services include: ATA Carnet, commonly known as the Merchandise Passport, which allows goods to enter over 85 customs territories tax- and duty-free for up to one year; eCertificates of Origin, fully electronic processing of Certificates of Origin, returned to you by e-mail, fast and complaint with ICC Guidelines for Certificates of Origin; and the USCIB International Bookstore, which enables customers to learn international business through unique titles covering a range of topics.

Contact:
Hsin-Ya Hou, USCIB International Bookstore
+1 212.703.5066, hyhou@uscib.org

USCIB International Bookstore

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New Report Proves Trade Finance Is Low-Risk, Asks Regulators and G20 to Unlock Trade

4182_image002Beijing and New York, N.Y., October 26, 2011 –The rules set by bank regulators impose unwarranted capital requirements that choke trade and have adverse impacts on growth. A new report issued today by the International Chamber of Commerce (ICC) shows that trade finance is a relatively low-risk asset class that should not be feared by banks, nor over regulated by governments, according to ICC’s American national committee, the United States Council for International Business (USCIB).

ICC also said it was pleased that the Basel Committee on Banking Supervision had announced measures yesterday that recognize trade finance as a low-risk activity for banks, and said that there is opportunity to further refine the rules to foster the development of trade and the support of SME clients. ICC asserted that treating trade finance as a unique asset class to accurately reflect its low risk will help foster more trade and create jobs.

“The ICC report provides a compelling case for the Basel Committee to reduce the proposed capital requirements, which by some estimates effectively increase the cost of trade finance by 30 to 40 percent ,for importers and exporters around the world,” said Michael Quinn, managing director with JP Morgan and chair of the USCIB’s Banking Committee.  “As the rules have yet to be finalized, this ICC effort will hopefully address major concerns in the Basel Committee’s original recommendations.”

The new ICC report calls on standard setters and policy makers to carefully study the potential unforeseen impact of proposed Basel III changes on trade finance from the Basel committee and to make trade finance more accessible and affordable.

Reliable and cost-effective finance and guarantees to companies looking to import or export commodities, consumer goods, and capital equipment are critical to keep trade flowing within and between counties. World trade is, in turn, key to global economic growth.

The outlook on the risks of defaults in trade and finance were revealed in the ICC report Global Risks – Trade and Finance, issued on the occasion of a major ICC Banking Commission meeting taking place in Beijing from October 24 to 28.

The report was based on analysis of the ICC Trade Finance Register, the most comprehensive dataset available on the market. It contains data from major international banks reflecting a minimum of 60-65% of traditional global trade finance activity, worth about USD2-2.5 trillion. Fewer than 3,000 defaults were observed in the full data set of 11.4 million transactions.

The report also showed the short-term nature of trade transactions and recommended using the actual maturity of trade transactions to calculate risk requirements as opposed to the one-year standard proposed by regulators.

In the midst of the current global economic crisis, the ICC Banking Commission meeting brings together some 350 eminent banking professionals, international organizations and supervisory bodies from over 50 countries to examine the key trade and finance challenges faced by the industry.

The trade and finance experts at the ICC meeting also worked to frame business input to the G20 on stimulating jobs and growth, ahead of the upcoming G20 Summit in Cannes. The discussions were part of a series of regional consultations led by the ICC G20 Advisory Group around the world. Since its creation in May 2011, the G20 Advisory Group has been leading ICC’s efforts to develop policy input to the G20 process in areas including: trade and investment, financial regulation, anti-corruption, the international monetary system, commodity price volatility and green growth.

“Trade will play a key role in tackling the jobs crisis,” said Jean-Guy Carrier, ICC’s secretary general. “Economic growth depends largely on the capacity of G20 governments to improve the conditions for international trade, including easing trade finance rules. However, what we’re seeing is that protectionist measures are growing within the G20. This trend must be reversed and more needs to be done to dispel the myths that trade results in job losses. Trade is a dynamic process that contributes to job creation.”

Global Risks – Trade Finance 2011 is a useful tool for both policy-makers and senior executives in financial institutions around the world. It will enable institutions to better understand the level of risks involved in different trade finance products and allow bankers to benchmark their activities in a more rigorous fashion.

“I hope that by focusing on the critical connections between default levels in trade finance and the shaping of new regulatory recommendations, decision-makers will be able to engage collectively in efforts to improve the global financial system’s overall resilience,” said Kah Chye Tan, global head of trade and working capital, Barclays Corporate, and chair of the ICC Banking Commission.

To read the ICC response to the Basel Committee on Banking Supervision announcement on trade finance, please visit www.iccwbo.org.

About the International Chamber of Commerce

ICC is the world business organization, representing enterprises from all sectors in every part of the world. It promotes cross-border trade and investment and the multilateral trading system, and helps business meet the challenges and opportunities of globalization. Business leaders and experts drawn from ICC’s global membership establish the business stance on broad issues of trade and investment policy as well as on vital technical subjects. ICC enjoys a close working relationship with the United Nations and other intergovernmental organizations, including the World Trade Organization and the G20. ICC was founded in 1919. Today it groups hundreds of thousands of member companies and associations from 120 countries. For more information please visit www.iccwbo.org.

About USCIB

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and prudent regulation.  Its members include top U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world.  With a unique global network encompassing leading international business organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment.  More information is available at www.uscib.org.

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SWIFT and ICC Collaborate on Enhanced Rules and Tools for Trade Finance

Declaration of Cooperation paves way for market acceptance of the Bank Payment Obligation instrument

New York, N.Y., September 21, 2011 – SWIFT, the financial messaging provider for more than 9,700 financial institutions and corporations in 209 countries, and the Banking Commission of the International Chamber of Commerce (ICC) have signed a Declaration of Cooperation that will enable industry-wide adoption of the Bank Payment Obligation (BPO), according to ICC’s American national committee, the United States Council for International Business (USCIB).

The ICC Banking Commission is a global rule-making body for the banking industry and a worldwide forum of trade finance experts whose common goal is to facilitate international trade finance.

The BPO will offer an alternative means of settlement in international trade and will provide the benefits of a letter of credit in an automated environment. It enables banks to offer flexible risk mitigation and financing services across the supply chain to their corporate customers.

Both ICC and SWIFT believe that by working together and leveraging their respective positions across the trade finance community, the BPO will have an important role to play in the development of international trade by addressing cost pressures in the face of increased automation and changes in the regulatory environment.

“Trade finance is a critical banking service supporting the world economy,” said Kah Chye Tan, chair of the ICC Banking Commission and global head of trade and working capital with Barclays.  “It is vital that the industry aligns on enhanced rules and tools in support of trading counterparties whether large or small. The ICC Banking Commission views the development of the BPO rules and the related ISO 20022 messaging standards as strong foundations for banks to provide modern risk and financing services aligned with today’s technology evolution.”

Michael Quinn, chair of USCIB’s Banking Committee and managing director at JP Morgan Global Trade Services, elaborated: “The Bank Payment Obligation will facilitate significant operating process improvement for corporations involved in Trade Finance while preserving the risk mitigation attributes of the traditional letter of credit.  The ICC-SWIFT work on BPO rules and standards leverages the  expertise of the respective organizations to help broaden the availability of trade finance for bank customers, an important driver of economic growth at a time when it’s vitally needed both here in the U.S. and abroad.”

Industry forecasts indicate that merchandise exports will reach $33 trillion (U.S.) by 2020, from $6 trillion in 2000, explained Gottfried Leibbrandt, head of marketing at SWIFT.  “ICC and SWIFT are best positioned to help the banking industry facilitate further growth of trade using innovative solutions,” he said.  “SWIFT is committed to helping its member banks deliver innovation in trade finance to the corporate world.”

The declaration, signed at Sibos in Toronto, confirms the framework for collaboration between SWIFT and ICC to publish and maintain a set of contractual rules that will establish uniformity of practice in the market adoption of the Bank Payment Obligation (BPO) and the related ISO 20022 messaging standards.

 

About the ICC Banking Commission

The ICC Banking Commission is a leading global rule-making body for the banking industry, producing universally accepted rules and guidelines for international banking practice, notably letters of credit, demand guarantees and bank-to-bank reimbursement. ICC rules on documentary credits, UCP 600, are the most successful privately drafted rules for trade ever developed and are estimated to be the basis of trade transactions involving more than one trillion dollars a year. The Banking Commission is equally a worldwide forum of trade finance experts whose common aim is to facilitate international trade finance across the world. With over 500 institutional members in 85 countries, many of them emerging, the Banking Commission is one of the largest ICC Commissions.

About SWIFT

SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 9,700 banking organizations, securities institutions and corporate customers in 209 countries. SWIFT enables its users to exchange automated, standardized financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.

About USCIB

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and prudent regulation.  Its members include top U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world.  With a unique global network encompassing leading international business organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment.  More information is available at www.uscib.org.

More on USCIB’s Banking Committee