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The Market Practice Committee of the International Forfaiting Association (IFA) has sent members the first of a series of updates intended to keep members aware of progress generally, and also to brief members on continuing work on market practice guidelines.

Following the resignations of Karin Meyer and Bruce Fields from the committee, Donald Asadorian, chairman of the Association of Forfaiters in America (AFIA) and Rene Mueller,

  • Zurich representative of the International Chamber of Commerce (UCP) have taken their places. This was, according to the Market Practice Committee, in the absence of volunteers. “In spite of advertising widely for volunteers (at the AGM, in the Newsletter, on the website and by word of mouth) no-one put their name forward,” says the update. “It is fair to say that we were disappointed that not even our severest critics were willing to work with us towards improving the guidelines. In the absence of any volunteers, we have tried to maintain the balance on the committee and we have therefore invited the [above] to join us… As always, if anyone else is willing to volunteer, we would still welcome an additional member.”

    Following the annual forfaiting meeting in Dublin last September the guidelines were reviewed and the committee came to the following conclusions:

    Workshop No.


    Summary and Action Required


    Standard Confirmation

    A number of issues were raised, particularly as to how and whether reference should be made to the guidelines in the confirmation. These points will be referred to a lawyer for an opinion and probable re-drafting.


    Formulae, calculations etc

    These require some improvement in both content and form. A working group has been established to achieve this.


    Clauses 8 & 9

    In respect of the rate to be used for re-purchasing a transaction when a reserve point has not been fulfilled, the workshop’s view differed from what the committee believe to be current market practice. We will have an open vote among members to determine this point.

    The workshop concluded that it was not appropriate for rate fixing reference pages to be included in the guidelines. These should be set out in the confirmation. This will be amended accordingly.

    7 (two groups)

    Clauses 14 & 15

    The wording of these clauses is poor. The role of a “primary forfaiter” and the meaning of “without recourse” are unclear. These clauses will be referred to a lawyer for an opinion and probable redrafting.


    Risk participations

    The workshop’s view was that to include guidelines and documentation for risk participations was not a high priority and should be deferred. The committee agrees.


    Assignments & waiver clauses

    The workshop felt that some reference should be made to assignments in the guidelines, and that a standard waiver clause would be desirable (and probably achievable). These points will be referred to a lawyer for appropriate wording.


    Satisfactory documentation

    Although discussion of this point was not on the agenda, it is still clearly an issue for a number of people (but by no means all). This subject will be referred to a lawyer to see if an objective definition is achievable. Depending on the response, an open vote may need to be held on this point.

    The next meeting of the committee is scheduled for March 20 in London. If any member has any specific point that they would like discussed, they are urged to contact either Tim Everitt or Ragnar Granelli of the committee.