New ICC Rules on Forfaiting to Take Effect Jan. 1
The International Chamber of Commerce set new uniform rules on forfaiting to govern the international forfaiting market estimated at more than US$300 billion annually. Forfaiting is a financial transaction designed to aid trade finance. It involves buying receivables from exporters. The forfaiter assumes the risks involved in the receivables in return for a margin on the deal.
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The new ICC forfaiting rules take effect Jan. 1, providing a set of rules for the sale of instruments used for financing trade -- which include bills of exchange, promissory notes, documentary credits and invoice purchases. The new rules are a result of a three and a half-year project by ICC and the International Forfaiting Association (IFA) to create new rules for a multilateral trading system for the 21st century.
They were adopted during a meeting of the ICC Banking Commission in Mexico City, which ends Nov. 15.