The International Chamber of Commerce (ICC) today unveiled new uniform rules on forfaiting (URF) to govern the international forfaiting market estimated at more than US$300 billion annually. The URF will enter into effect on 1 January 2013, providing a set of rules for the sale of instruments used for financing trade – which include bills of exchange, promissory notes, documentary credits and invoice purchases as well as some newer instruments.
Forfaiting facilitates the provision of finance to the international trade community and gives liquidity to instruments that would otherwise be limited to evidencing payment claims. By making payment claims easier to transfer, forfaiting enables them to be used as more than just a means of obtaining payment for goods or services delivered: they can be used to provide finance.
“The newly-adopted forfaiting rules are the latest example of ICC’s leadership in writing rules that govern international trade and investment and highlight the crucial role forfaiting plays in securing financing for exporters and importers,” said ICC Secretary General Jean-Guy Carrier.
The URF are the result of an ambitious project by ICC and the International Forfaiting Association (IFA) to create new rules for a multilateral trading system fit for the 21st century.
Meticulously prepared over a period of three-and-a half-years and with input from experienced professionals from all over the globe, the URF are destined to become the standard text for both the primary and secondary forfaiting markets worldwide.
“It has long been an ambition of the IFA to produce a single set of standardized terms and conditions for the two components of the forfaiting market – the primary market in which transactions are originated from exporters and other sellers of goods and services, and the secondary market where those transactions are traded between banks and other financial institutions,” said IFA Chairman Paolo Provera.
The URF do not change the nature of the payment claim being originated or on-traded, and as such can be used alongside the full and ever-expanding range of instruments used to finance trade.
The rules were adopted today during a meeting of the ICC Banking Commission taking place in Mexico City from 12-15 November. Over 400 participants are attending the meeting, which is the first of the commission’s bi-annual meetings to be held in Latin America.
The ICC Banking Commission is the world’s essential rule-writing body for the banking industry. With 80 years of experience and more than 600 members in more than 100 countries, the Banking Commission – the largest commission of ICC – has gained a reputation as the most authoritative voice in the field of trade finance. The ICC Banking Commission produces a range of universally accepted rules and guidelines for international banking practice. ICC rules on documentary credits, UCP 600, are the most successful privately drafted rules for trade ever developed, serving as the basis of US$2 trillion trade transactions a year.
The fundamental mission of ICC is to promote trade and investment across frontiers and help business corporations meet the challenges and opportunities of globalization.
Uniform Rules for Forfaiting will be available in December for purchase from the ICC Bookstore.
up to the ICC Bookstore newsletter to receive notification of when pre-ordering