ICC Banking Commission Introduction to ICC David Bischof Eleonore Treu Vincent O’Brien Minsk, 17March 2016

Areas of Work Rules & Guidelines Market Intelligence Policy & Regulatory UCP 600 are the most successful privately drafted rules for trade ever developed: they serve as the basis for US$2 trillion trade transactions a year ICC Trade Register 23 contributing banks > 13 million transactions from 2007 to 2014 ICC Global Survey on Trade Finance 482 respondent banks across 112 countries 16 institutional contributing partners Involvement in the B20 process – a business-driven process that runs in parallel to the G20

AREAS OF WORK (II) Dispute Resolution + Training & Certification Specialized Trainings and Events Documentary disputes settled in only 2 months Our record event so far: Banking Commission meeting in Singapore 617 participants 20 sponsors 8 media partners 8 institutional partners Over 10,000 people in over 100 countries previously trained using the suite of ICC online training services and approved certification facilities ICC Academy provides rigorous, relevant and applicable business education, specifically in trade finance

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

LEADING MARKET INTELLIGENCE ICC Trade Register ICC Global Survey ICC/IMF Market Snapshot on Trade & Finance 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 Risks Trends Snapshot

ICC Global Survey on Trade & Finance 2015

7 th edition Well-established market intelligence tool for the whole trade & finance industry, expanding year by year in scope, worldwide representation and relevance 482 Survey respondent banks across 112 countries +60% in participation compared to 2014 broad geographical reach enhances the richness of the data collected 16 institutional and contributing partners Industry actors from around the world pool their knowledge to develop a valuable global view on the pressing issues of today in trade finance and beyond Report released 29 September Global Survey at a glance

ICC TRADE REGISTER - OVERVIEW countries as of November  Request by policy makers/regulators to provide an objective, industry- wide source of Trade Finance (TF) and Export Finance (EF) related risk and loss data  8.6 mn short-term TF transactions  26’000 medium/long- term transactions

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 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

THE ICC TRADE REGISTER Low default rate across all products at Transaction level Low default rate across all products at Obligor level How safe is trade finance compared to other industry products? Clear and evolving illustration of the low-risk nature of Trade Finance

THE ICC TRADE REGISTER Customer default rates across regions and products, Relatively low customer default rates across all products and regions 0.72% = Ba Moody’s rating with same default rate

MLT TRADE FINANCE REGISTER : CUSTOMER DEFAULT RATE BY ASSET CLASS (2014 REPORT) The exposure-weighted customer default rate is 0.35%; FI’s have a higher default FI Default rate excl. Iran: 1,13% resp. 0,15% Specialized Finance include: Aircraft, Shipping and Project Finance

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 Trade Finance Register - Default Rate by Region (2014 Report) Default rate excl. Iran: 0,5% resp. 0,02%

Based on evidence from the ICC Trade Register, ICC & WTO called to soften Basel III rules on trade finance with some success in a few areas: Achievements from the ICC Trade Register 1.Trade finance definedUnder Capital Requirements Regulation (CRR) Trade Finance (TF) is defined for the first time. This provides clarity in terms of what products fall within the ambit of TF. Basel does not. 2. Exemption of trade instruments from the one-year maturity floor The Basel committee waived the one year maturity floor for trade-related letters of credit in October, Off balance sheet items, such as standby letters of credit and trade letters of credit, are subject to a 100% credit conversion factor (CCF) when calculating the leverage ratio, reflecting the likelihood that these positions become on balance sheet items. Maintain the CCF at 20% for trade-related contingencies (50% for transaction-related contingencies) RequestedObtained

BUT WITH MORE TRADE COMES DISPUTES… (AND WHAT IF YOU END UP IN COURTS?) Documentary disputes settled in only 2 months * Documentary Instruments Dispute Resolution Expertise ICC DOCDEX*  The ICC Banking Commission facilitates the rapid settlement of disputes arising in banking. ICC Opinions ICC Arbitration Questions raised by practitioners concerning how the latest ICC rules are applied in daily practice.

BANKING COMMISSION EVENTS 9-10 March 2016 Singapore, Singapore Supply Chain Finance Summit 4-7 April 2016 Johannesburg, South Africa ICC Banking Commission Annual Meeting 7-9 November 2016 Rome, Italy ICC Banking Commission Technical Meeting

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