Five business associations have joined with the International Chamber of Commerce (ICC) Banking Commission to regulate and synchronize market terminology for global supply chain finance products and services.
The Global Supply Chain Finance (SCF) Forum will clarify existing definitions and supply chain finance terminology and will be led by the ICC Banking Commission, Euro-Banking Association (EBA), Bankers Association for Finance and Trade (BAFT), Factors Chain International (FCI), International Factors Group (IFG) and the International Forfaiting Association (IFA). The project was launched in Dubai.
The project is going to cover the global Supply Chain Finance Industry to address the need for greater coordination within the trade finance industry and will extend to products and services offered by financial institutions such as banks and factoring and forfaiting companies.
Kah Chye Tan, Chair of the ICC Banking Commission said: “SCF is a growing market with considerable business opportunities identified for the near future. Given increased collaboration among the wide range of bank and non-bank representatives facilitating domestic and cross border trade, and the advent of Internet and new communication technologies, it is more important than ever before for all market participants to adopt universally-accepted terminology that corresponds to the rich array of processing, financing and risk management techniques currently being developed by the industry to support increasingly globalized supply chains.”
Supply chain finance, covering a wide range of products, programs and solutions in the world of international trade is aimed at the full range of importers and exporters. Since supply chain finance is often seen as complement, subset or even a superset of global trade finance, there is an inconsistency in definitions and general language around the financing of trade. This is a challenge for importers, exporters, bankers, financiers and other service providers and to clarify the market and to reach a consensus on SCF market terminology the Forum will outline definitions for the industry. The six associations that make up the Forum will conduct a series of non-binding, open consultations, including where needed, corporates and end-clients. The goal is to complete the set of recommended definitions within a year.
“In short, this initiative will promote competition and innovation while providing market nomenclature clarity for all stakeholders,” Tan said.