2. WHO ARE ITFA?
Founded in Switzerland in 1999 with 11 members principally from Europe
Current membership around185 from over 38 countries:
New members in 2017/2018 have come from, amongst others: Belgium, Israel, Italy, Liberia, Sierra Leone and Singapore. CEE members in Albania, Belarus, Czech Republic, Hungary and Poland

3. What do we do? Mission to set standards, to engage in advocacy
to spread knowledge, education and market intelligence
serve as a networking community
Membership Benefits
Website, news and bulletins
Knowledge, Education and Market Intelligence
Education Courses
Seminars and Workshops on Regulatory / Business Topics
Rules, Dispute Resolution Services and Advocacy
URF
Conciliation and Arbitration
Business and Networking
The ITFA Annual Conference
Regional Members Events
Member Communications

4. Recent initiatives
Collaboration with other industry associations (ICC, BAFT…)
Uniform Rules for Forfaiting (ICC Publication no. 800) – UNCITRAL approved
Co-author of Global Supply Chain Trade Finance Forum (Standard definitions for Supply Chain Finance) with ICC, BAFT, EBA & FCI
Master Risk Participation Agreement Revision with BAFT
Dodd Frank Title 7 Lobbying in the US with BAFT
CRR Article 194 opinion re. BAFT MPA, including updates
Insurance Committee
Insurance Guidance on Basel and Insurance Act compliant non-payment insurance policies
BCBS Opinion
Accounting Principles
Re-classification of trade debt as bank debt in payables finance structures
IFRS9 implications for insurance and receivables finance
Fintech Committee
ITFA partners with R3, TradeIX and consortium banks on blockchain trade finance platform
PRA Consultation Paper CP6/18
ITFA Young Professionals – Martin Ashurst Mentorship Forum
ITFA release: Payables Finance – a Threat Averted. Moody’s Opinion on SCF Abengoa was influenced by representatives of ITFA who held a meeting with Moody’s to express this industry concern and to argue that the use of payables finance was a legitimate and acceptable form of finance which should not automatically result in trade debt being re-categorised as bank or financial debt. Moody’s have accepted ITFA’s concerns and have reviewed their methodology.

5. ITFA Committees Education Fintech* Insurance Market Practice Regions
Africa*, Australia and New Zealand (in progress)*, Brazil, Central and Eastern Europe, Germany, Middle East, North East Asia, Northern Europe, South East Asia, Southern Europe, VEFI (Switzerland)
Young Professionals Advisory Panel*
Membership and Communication
Institutional Relations
* Recently established committees

6. ITFA REGIONAL COMMITTEES
Switzerland
Collaboration with VEFI
NERC
CEERC
North America
Collaboration with ATFA
GRC
SERC
NEARC
MENARC
SEARC
ARC
SOUTH AMERICA
Collaboration with ATFA
SEARC
ATFA
ARC
VEFI
CEERC
GRC
Americas Trade Finance Association
African Regional Committee
Association of Forfaiters in Switzerland
Central & Eastern European Regional Committee
German Regional Committee
MENARC
NEARC
NERC
SEARC
SERC
Middle East & Northern Africa Regional Committee
North East Asia Regional Committee
Northern European Regional Committee
South East Asia Regional Committee
Southern European Regional Committee

7. financial supply chain opportunities

8. The ICC Supply Chain Finance Forum
Summary & Introduction
Context & Background
Standard Definitions
Master Definition of SCF
Receivables Purchase
Forfaiting
Factoring
Factoring variations
Payables Finance
Distributor Finance
Loans against receivables & inventory
Pre-Shipment Finance
Definition
Synonyms
Distinctive features
Parties
Contractual relationships and their documentation
Security
Risks and risk mitigation
Operational procedures
Benefits
Asset distribution
Variations
Bank Payment Obligation
Glossary & Appendices

9. The master risk participation agreement (mrpa)
MRPAs are a way of selling risk in an underlying transaction whilst staying “lender of record”
Can be funded or funded
In the trade finance market the BAFT model form, published in 2008, has been prevalent
Aim is to produce a “true sale” of the underlying risk in accounting terms i.e. de-recognition
Different accounting standards in US and rest of world d has resulted in different forms of MRPA
English law MRPA results in a debtor-creditor relationship as between Grantor (seller) and participant (buyer)
Can give an accounting true sale but not legal true sale with resultant risk on the Grantor
ITFA worked with BAFT to produce a new MRPA to avoid this problem
ITFA has also produced a CRR opinion on the MRPA to enable banks to obtain capital relief

10. Payables finance – diagram from scf definitions

11. Payables finance: the abengoa/carillion problem
Abengoa had implemented an extensive payables finance programme
Moody’s paper in December 2015 “Reverse Factoring has Debt-Like Features” spooks the market
Moody’s concerns centre around :
- size of programme
- uncommitted facilities
- lengthening of credit terms (DPO increased)
- existence of IPU
- granting of security and cash collateral
Danger that Abengoa might result in a generalised re-classification of trade debt as bank debt in standard financial statement adjustments
Following discussion with ITFA, it has been agreed that any adjustments will be non-standard and depend on a case-by-case analysis- ITFA paper to follow
Further Moody’s paper shows wide differences in treatment of payables finance programmes by large companies
Collapse of Carillion PLC in UK in early 2018 prompts Fitch paper to suggest there is a “debt classification loophole”

12. Abengoa/carillion: itfa guidance
Some very basic indicators may help to assess the change in the economic substance, possibly resulting in the re-classification of trade payables as bank debt such as:
Payments terms are extended beyond industry norms (indicating that the term extension exists solely because of third party financing)
The Buyer assumes the financial costs of the discounting of receivables
There is new security - Buyer’s parent guarantee or cash collateral - to the Finance Provider on top of what the Supplier would have had
Relative large size of the program compared to other liabilities to banks
A receivable has been discounted and the Buyer repays its debt beyond the maturity agreed with the Supplier
The payables finance facility is committed
No one factor prevails over the others – need to use judgement