Trade Finance Products & Mechanisms
Trade Finance Products & Mechanisms
Starting dates and places
Description
A practical 4-day course covering the products and practices
employed in international trade finance. Featuring: Linking the
commercial contract to the banking transaction Use of documentary
collections and URC722 Components of a letter of credit Critical
aspects of letter of credit practice Letter of credit applications
Relevant UCP600 and URR725 provisions Non-performance in
international trade; use of bank guarantees and standby letters of
credit differences and key provisions of URDG 758, ISP98 A primer
on Islamic Trade Finance Who Should Attend: The course is suitable
for both recent entrants to the trade finance community as well as
for more experienced practitioners. Participants from…Frequently asked questions
There are no frequently asked questions yet. If you have any more questions or need help, contact our customer service.
A practical 4-day course covering the products and practices
employed in international trade finance. Featuring: Linking the
commercial contract to the banking transaction Use of documentary
collections and URC722 Components of a letter of credit Critical
aspects of letter of credit practice Letter of credit applications
Relevant UCP600 and URR725 provisions Non-performance in
international trade; use of bank guarantees and standby letters of
credit differences and key provisions of URDG 758, ISP98 A primer
on Islamic Trade Finance Who Should Attend: The course is suitable
for both recent entrants to the trade finance community as well as
for more experienced practitioners. Participants from various
levels within a bank, different functional responsibilities (front,
middle and back offices) will equally benefit from the product
knowledge that will be delivered. This programme is equally
relevant to persons engaged in trading, exports, imports, bank
regulation, financial management and legal affairs requiring a firm
grounding in current trade finance topics as listed. Course
Outline: This course provides a comprehensive coverage of
documentary products and practices employed in international trade
finance. It aims to set a firm conceptual foundation and follows
through to highlight critical aspects of banking practice. All
learning points will be illustrated through an abundant supply of
real life cases.
Day 1 The underlying commercial contract between buyer and seller Risks arising from contracts Know your counterparty; the scourge of fraud Variance between purchase/sale contracts for goods and related letter of credit transaction Payment mechanisms commonly used in international trade Force majeure, contract frustration, liquidated damages and dispute resolution Documentary Collections – concept and background When should such a mechanism be employed as a means of settling trade payments? Trigger for payment URC722 provisions governing Documentary Collections How do mechanisms defined in URC722 work? Drafts and Bills of Exchange – legal differences Documents against Payment (upon first presentation) Documents against Acceptance Role and Obligations of Remitting Bank, Collecting Bank Avalization/Co-Acceptance of Drafts The Hong Kong Clause; how it did come about? Some risky situations Group Work Documentary Letter of Credit Purpose & intent; Risk ownership by parties to a letter of credit Contracts within a letter of credit framework. How do such contractual relationships work? Impact on buyer and seller Critical aspects of a Letter of Credit – risk implications in accordance with UCP600 Significance of Irrevocability of a letter of credit, once issued How and when do amendments work? Group Work Day 2 Critical aspects of a Letter of Credit – risk implications in accordance with UCP600 Availability by Payment/Deferred Payment/Acceptance/Negotiation How does availability influence risks to participants in a letter of credit? Constructing a Letter of Credit that works for the buyer and issuing bank Who’s the seller (beneficiary)? Why is the letter of credit being issued? Protecting the security interests of issuing bank Choosing appropriate documents for presentation under the letter of credit; template for such clauses Why should banks not include clauses that may obstruct the beneficiary? Commercial and Financial documents; third party documents Description of goods, specifications Fixing Presentation period; relating it to transit time for goods to reach How do banks settle payments under a Letter of Credit? Provisions (under URR725) governing reimbursement arrangements in a letter of credit Group Work Once the letter of credit is issued ...... Role of Advising Bank Does the beneficiary desire that a bank of their choice add Confirmation? Open or Silent? How does Confirmation protect the beneficiary? Risks covered How might Confirmation affect the buyer (applicant)? Leveraging LC Confirmation Day 3 Beneficiary’s presentation of documents under a letter of credit Where to present? By when? What do banks search for when examining documents? Treatment of ‘discrepant’ documents Bill purchase and/or discounting of an exporter’s documents Goods have arrived at destination, but shipment documents are still between banks ...... How does a Shipping Guarantee work? Nature of such a guarantee; what is the importer signing up for? Why do banks occasionally refuse to countersign a Shipping Guarantee? Is the seller at risk if the buyer obtains delivery of goods before related documents reach? Special-purpose Letters of Credit Instalment and Revolving Letters of Credit – commercial considerations underlying use of such letters of credit Cumulative/Non-cumulative features Colourful letters of credit; pre-shipment finance to sellers through a Red, Green Clause Letters of Credit Commodity letters of credit – Energy, Hard and Soft commodity flows Examples of letters of credit used for non-trade transactions Letter of Credit Structures for Traders Transfer of letter of credit; why and how? When should a trader request for a transfer of a letter of credit? Behind-the-scenes view of a bank’s response to a transfer application Guidelines for the transfer process Group Work Day 4 Letter of Credit Structures for Traders The alternative to transferring a letter of credit; the strictly back-to-back letter of credit arrangement Perspectives of the trader’s bank Quasi back-to-back LC structure – when a trader’s contracts are complicated ... Demand Guarantees and Standby Letters of Credit Consequences of default under an international trade contract How can businesses mitigate such risks? Relative positions of Primary and Secondary Obligors What are banks attempting to achieve by offering to intercede as guarantor? What is the bank’s position when its client has committed a default in the underlying commercial contract? Rationale for the use of Bid Bonds, Performance Bonds and Advance Payment Guarantees How does a Bank Guarantee differ from a Standby letter of credit? Governing provisions; UCP600, ISP98, URDG758 Mishaps in the use of Guarantees/Standby Letter of Credit Does a Standby letter of credit expose the applicant to greater risk? Islamic Trade Finance Principles of Islamic Finance Role of Sharia Board Islamic Financing structures Murabaha Ijara Musharaka Salam Istisna
Day 1 The underlying commercial contract between buyer and seller Risks arising from contracts Know your counterparty; the scourge of fraud Variance between purchase/sale contracts for goods and related letter of credit transaction Payment mechanisms commonly used in international trade Force majeure, contract frustration, liquidated damages and dispute resolution Documentary Collections – concept and background When should such a mechanism be employed as a means of settling trade payments? Trigger for payment URC722 provisions governing Documentary Collections How do mechanisms defined in URC722 work? Drafts and Bills of Exchange – legal differences Documents against Payment (upon first presentation) Documents against Acceptance Role and Obligations of Remitting Bank, Collecting Bank Avalization/Co-Acceptance of Drafts The Hong Kong Clause; how it did come about? Some risky situations Group Work Documentary Letter of Credit Purpose & intent; Risk ownership by parties to a letter of credit Contracts within a letter of credit framework. How do such contractual relationships work? Impact on buyer and seller Critical aspects of a Letter of Credit – risk implications in accordance with UCP600 Significance of Irrevocability of a letter of credit, once issued How and when do amendments work? Group Work Day 2 Critical aspects of a Letter of Credit – risk implications in accordance with UCP600 Availability by Payment/Deferred Payment/Acceptance/Negotiation How does availability influence risks to participants in a letter of credit? Constructing a Letter of Credit that works for the buyer and issuing bank Who’s the seller (beneficiary)? Why is the letter of credit being issued? Protecting the security interests of issuing bank Choosing appropriate documents for presentation under the letter of credit; template for such clauses Why should banks not include clauses that may obstruct the beneficiary? Commercial and Financial documents; third party documents Description of goods, specifications Fixing Presentation period; relating it to transit time for goods to reach How do banks settle payments under a Letter of Credit? Provisions (under URR725) governing reimbursement arrangements in a letter of credit Group Work Once the letter of credit is issued ...... Role of Advising Bank Does the beneficiary desire that a bank of their choice add Confirmation? Open or Silent? How does Confirmation protect the beneficiary? Risks covered How might Confirmation affect the buyer (applicant)? Leveraging LC Confirmation Day 3 Beneficiary’s presentation of documents under a letter of credit Where to present? By when? What do banks search for when examining documents? Treatment of ‘discrepant’ documents Bill purchase and/or discounting of an exporter’s documents Goods have arrived at destination, but shipment documents are still between banks ...... How does a Shipping Guarantee work? Nature of such a guarantee; what is the importer signing up for? Why do banks occasionally refuse to countersign a Shipping Guarantee? Is the seller at risk if the buyer obtains delivery of goods before related documents reach? Special-purpose Letters of Credit Instalment and Revolving Letters of Credit – commercial considerations underlying use of such letters of credit Cumulative/Non-cumulative features Colourful letters of credit; pre-shipment finance to sellers through a Red, Green Clause Letters of Credit Commodity letters of credit – Energy, Hard and Soft commodity flows Examples of letters of credit used for non-trade transactions Letter of Credit Structures for Traders Transfer of letter of credit; why and how? When should a trader request for a transfer of a letter of credit? Behind-the-scenes view of a bank’s response to a transfer application Guidelines for the transfer process Group Work Day 4 Letter of Credit Structures for Traders The alternative to transferring a letter of credit; the strictly back-to-back letter of credit arrangement Perspectives of the trader’s bank Quasi back-to-back LC structure – when a trader’s contracts are complicated ... Demand Guarantees and Standby Letters of Credit Consequences of default under an international trade contract How can businesses mitigate such risks? Relative positions of Primary and Secondary Obligors What are banks attempting to achieve by offering to intercede as guarantor? What is the bank’s position when its client has committed a default in the underlying commercial contract? Rationale for the use of Bid Bonds, Performance Bonds and Advance Payment Guarantees How does a Bank Guarantee differ from a Standby letter of credit? Governing provisions; UCP600, ISP98, URDG758 Mishaps in the use of Guarantees/Standby Letter of Credit Does a Standby letter of credit expose the applicant to greater risk? Islamic Trade Finance Principles of Islamic Finance Role of Sharia Board Islamic Financing structures Murabaha Ijara Musharaka Salam Istisna
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