Early in September ITFA launched its new Unfunded Master Risk Participation Agreement (MRPA) and associated user guidelines for use by its members. Later this month it has also arranged for Sullivan to issue a CRR compliant legal opinion.
The ITFA Unfunded MRPA is for use for unfunded participations in a variety of trade finance transactions and will help banks and insurance companies to collaborate, better understand and participate in risk mitigation of trade finance assets, whether they are a seller or a participant in the market.
One of the major additions as compared to the BAFT MPA, is the introduction of terms specific to ‘instrument facilities’, which allows the seller to mitigate individual instrument risks arising out of facilities for the issuance of payment instruments (such as guarantees, bonds and standby letters of credit) and the purchasing of receivables.
ITFA has published details on its website for members, along with a mark-up against the 2018 BAFT MRPA for comparison and ease of understanding.
The launch of the ITFA unfunded MRPA follows an update to the NY MPA published by BAFT in tandem with ITFA in May 2019, which serves as the industry standard for secondary market transactions under New York law, to facilitate the buying and selling of trade finance-related assets globally.
The NY MPA in turn closely followed the major update to English law MPA in September 2018, which was published with detailed guidance for users and updated the original BAFT MPA published in 2008 to reflect the ever changing legal, regulatory and market landscapes.
Sullivan’s international trade finance team is delighted to have assisted ITFA and its members in this major market development.