The International Trade and Forfaiting Association (ITFA) has launched a survey to assist in the lobbying of US authorities regarding the proposed Dodd Frank treatment of sub-participation agreements.

ITFA has also published a briefing to its members, informing them of the issues surrounding Dodd Frank and how it may impact the trade finance industry – not only in the US, but globally too.

ITFA’s aim is to collate data from its members and other non-member banks that are active in the trade finance risk distribution market on the size and importance of risk distribution in the industry.

GTR spoke to ITFA board member Paul Coles about why it’s in banks’ best interest to provide this information (which will remain strictly confidential):

GTR: Why is this information being sought now? Why not sooner?

Coles: Dodd Frank wasn’t aimed at trade finance specifically, so originally, there was no reason for the market to delve into the details y. It’s one of these areas of legislation which, when you start reading into it in greater detail, you suddenly start to realise that it could be something that is part of our industry.

GTR: To what extent will the trade finance market be affected?

Coles: It’s a US-specific legislation, but the problem is that it can have a knock-on effect on the rest of the industry – especially the American banks– but also institutions that are dealing with American banks and those that may have a significant presence in the US. They all need to be aware of the potential ramifications and hopefully it’s something we can get resolved before it’s too much of an issue.

That’s why it’s vital for everyone to submit their information.

GTR: What do you hope to achieve with this information?

: The idea is to get some data on the size of the risk distribution business: the practitioners know that it plays a significant part in overall trade finance flows, but there are no statistics around it that demonstrate how big a market it is, how useful it is, how much capacity it helps the industry to generate over and above what the banks can book and hold themselves.

It’s really trying to give some empirical data to try and substantiate the argument that’s being made, and to demonstrate to the US regulators that this is a significant and well-established business. It has a big impact on trade finance and if we can get the data from the banks that are active in the market, it gives us a better argument for when Baft is going forward with Sullivan & Cromwell to the regulators on behalf of the industry.

View Coles’ full briefing to ITFA members.

Click here to provide information about your sub-participation agreements, which globally, under Dodd Frank, may be classified as swap agreements, resulting in extra administration and cost, with negative consequences for both origination and distribution.

For more information, email