International experts from the banking industry came together to discuss key topics affecting the trade finance industry this week at the Annual Technical Meeting of ICC’s Banking Commission.
Here are five highlights from the day:
- Digitalisation of trade finance
With COVID-19 further exposing the fragility of global trade’s reliance on paper documentation, ICC has been reinforcing its efforts to drive harmonisation of digital processes for trade flows – including directly addressing disruptions experienced during the pandemic.
ICC’s Digitalisation Working Group provided updates on progress related to the digitalisation of trade finance undertaken by the ICC Banking Commission, including drafting rules for data use and electronic documentation, as well as concrete policy recommendations outlined in the Working Group’s digital trade roadmap.
David Bischof – Deputy Director, Finance for Development at ICC – interviewed Oswald Kuyler – newly appointed Managing Director of ICC Digital Trade Standards Initiative, a collaborative cross-industry effort to enable the standardisation of digital trade – on the adoption of technology within the trade ecosystem and how new standards can facilitate greater inclusiveness for small businesses.
- Sustainable trade finance
Another current – and increasingly pressing – topic of discussion within the industry is sustainability. Global trade needs to come to grips with the consequences of climate change. As the COVID-19 pandemic has exposed, the industry needs to be better prepared for the next crisis by integrating sustainability into trade finance activities and business practices. The question is how can the industry achieve this at scale over the next few decade?
In line with ICC’s commitment to make climate action everyone’s business, the co-chairs of the sustainable trade finance working group (Roberto Leva, Trade and Supply Chain Finance Specialist at the Asian Development Bank, and Harriette Resnick, independent advisor) discussed the working group’s objectives and achievements to date, including the creation of tools and guidelines that enable trade bankers to identify sustainability risks emerging from trade finance transactions.
- Global Supply Chain Finance Forum (GSCFF)
Among the other presenting working groups and task forces, the GSCFF – initially set up as a forum to establish a set of commonly agreed standard definitions for supply chain finance (SCF) and for SCF-related techniques – provided attendees with an overview of recent progress.
Most recently, the GSCFF released a paper in response to growing concerns related to the use of SCF and payables finance programmes. The report addresses criticisms across three key areas: the potential adverse impact on suppliers, issues relating to financial reporting and transparency, and overall programme risk.
In turn, Christian Hausherr, Chair of the GSCFF and European Product Head of Payables Finance, Trade Finance and Supply Chain Finance at Deutsche Bank, elaborated on the steps taken by the Forum to tackle these concerns head-on and promote a wider understanding of the technique and its use.
- Regulatory advocacy
Since the 2007-2009 financial crisis, trade finance has experienced an ever-changing regulatory environment. With the delay of Basel III due the COVID-19 pandemic, it is more important than ever for the industry to work together with governments and regulators to ensure the fair treatment of trade finance within banking regulation.
In this context, Henri d’Ambrieres, Chair of the Working Group on Regulatory Advocacy, discussed how ICC – as the largest and most authoritative voice in trade finance – is at the forefront of these efforts.
- Update on ICC Rules
Updates on ICC rules and standards are a key feature of the Technical Meeting. Notably, co-chairs of the Digitalisation in Trade Finance Working Group, Alexander Goulandris and Michael Vrontamitis, provided updates on the new Uniform Rules for Digital Trade Transactions (URDTT) – aimed at developing a high-level framework outlining obligations, rules and standards for the digitalisation of trade finance.
In the final session of the day, Andrea Hauptmann, Chair, Task Force on Guarantees, along with Georges Affaki and Glen Ransier, Co-Chairs, Working Group for Standard Banking Practices for Demand Guarantees, presented updates on the ISDGP for URDG 758 – highlighting the salient features of the ongoing draft and seeking guidance on potential policy orientations while answering questions from Commission members.
The annual Technical Meeting took place virtually from 19-29 October, comprising meetings of ICC Working Groups and Task Forces for closed meetings and a main plenary session open to ICC members.