ICC Banking Commission ICC Rules and Tools for the Trade Finance Industry David Bischof Banking Commission International Chamber of Commerce Minsk, 19 March 2015

ICC – THE WORLD BUSINESS ORGANIZATION ICC has hundreds of thousands of members in 130 countries:  Companies of all sizes and from all sectors  Chambers of commerce, national and local  Business associations  Privileged partner of intergovernmental bodies UN, WTO, G20, MDBs ICC is the world business organization: It’s mission is to promote cross-border trade and investment

The ICC Banking Commission A leading and trusted rule-making body for banking and trade finance Rules & Guidelines Market Intelligence PolicyDispute Resolution + Training & Certification

Reach and Global Network A truly representative global forum More than 600 institutional members spread over countries

LEADING GLOBAL RULE-MAKING BODY The ICC Banking Commission is continuously enriching its portfolio of trade facilitation rules  Traditional rule-making activities: UCP, URDG, Collections, ISBP  New service line: Open Account & Supply Chain Financing Traditional TF Rules New Set of Rules

Our Market Intelligence Products ICC Trade Register ICC Global Survey ICC/IMF Market Snapshot Measuring Global Risks in Trade Finance Markets Measuring Performance and Shifts in Trade Finance Markets Snapshot of the Current Status of Trade Finance Markets ICC Market Intelligence Products help leaders make informed decisions on World Trade Finance

TRADE FINANCE GAPS Regulatory constraints ICC Surveys have previously shown KYC issues can complicate or prevent trade deals. This year’s survey reinforces that view, as 66% said KYC hampers the well-functioning of trade finance transactions To make matters worse, 35% of respondents considered closing correspondent relationships due to rising compliance costs 51% said complying with sanctions restricted trade finance operations to a greater extent than in previous years. 65% said implementation of Basel III is to some extent or to a large extent affecting the cost and liquidity for trade finance.

Background and purpose 1.Present the global trade finance industry’s perspectives on risks in trade finance  First ever quantitative analysis of Trade & Export Finance  Establishment of representative data set (+15M trans.) 2.Increase understanding of trade finance instruments amongst industry participants 3.Promote understanding of international regulations affecting bank capital, liquidity and leverage requirements THE ICC TRADE REGISTER

25 banks have provided data on more than 15 million short-term trade finance transactions globally. 9 banks have provided data on 15,000 transaction-years for medium and long-term export finance, covering THE ICC TRADE REGISTER

The data provide a strong evidence that short-term trade finance products have a low likelihood of default. THE ICC TRADE REGISTER: SHORT-TERM Transaction numbers and default levels by product,

SHORT-TERM TRADE FINANCE (TF) - CUSTOMER AND TRANSACTION DEFAULT RATE Low default rate across all products at Transaction level Transactions1,250,903828,537494,1171,980,642 Transaction Defaults

SHORT-TERM TRADE FINANCE (TF) - CUSTOMER AND TRANSACTION DEFAULT RATE Low default rate across all products at Customer level Customers36,79729,09840,16734,851 Customer Defaults

THE ICC TRADE REGISTER We observe an average maturity of less then 100 days across products Average reported maturity by Product

Medium Long Term Trade Finance Similarly relative low risk observed for MLT transactions Default rates by asset class,

MLT DEFAULT RATE BY REGION Customers1,0131, ,2191,7001, ,081 Customer Defaults The Iran sanctions is reflected in the fact that Middle East is the region with the highest customer default

MLT CUSTOMER DEFAULT RATE BY ASSET CLASS The exposure-weighted customer default rate is 0.35%; FI’s have a higher default

ICC Academy launch 18 March 2015

The curriculum

The membership

Specialized Trainings and Events APRIL ICC Banking Commission Annual Meeting NOVEMBER ICC Banking Commission Technical Meeting SEPTEMBER Supply Chain Finance Summit

Thank you! ICC Banking Commission The leading and trusted authority for trade finance David Bischof,