Trade finance bankers are enjoying a win in their battle against incoming regulations as the Basel Committee agreed to change some of its proposals.

The committee has agreed to waive the one-year maturity floor for certain trade finance instruments under the advanced internal ratings-based approach for credit risk.

This was potentially an enormous problem for trade bankers, as the most commonly used trade instrument has a 180-day maturity.

Furthermore, the Basel Committee has agreed to waive the sovereign floor for certain trade finance-related claims on banks using the standardised approach for credit risk.

The changes come after consultation and lobbying from the World Bank, the WTO and the ICC.

“The agreed changes will improve the access to, and lower the cost of, trade finance instruments for low income countries,” the committee added.

Trade heavyweight Tan Kah Chye, who has been lobbying the committee from his role as chair of the ICC’s banking commission, says: “It is crucial that the cost of capital between a low-risk, low-margin activity like trade finance is differentiated from higher-risk, higher-margin activity.

But Tan feels there is still more work to be done: “We have narrowed the gap today and there is an opportunity for us to do more through continuing dialogue,” he says.

Tan’s comments come as the ICC released its second annual report detailing quantitative data from trade finance transactions from 14 banks.

Of 11 million transactions, equal to 65% of the world’s trade finance transactions, there were only 3,000 defaults.

The first such was report was completed with the Asian Development Bank (ADB), however, this second incarnation saw the ADB take a step back and leave it to the ICC.