ITFA launches Swift short-term trade loan template

The International Trade and Forfaiting Association (ITFA) has released a template to help banks document short-term trade loans issued via Swift MT799 messages.

Short-term trade loans are commonly used by borrowing banks with clients in emerging markets to obtain financing in foreign currency. However, in the absence of standardised industry documentation, banks have typically relied on their own bespoke formats, leading to variation in practice, the association says.

The template was developed by an ITFA working group led by its head of market practice Paul Coles and including Geoffrey Wynne, head of law firm Sullivan’s trade and export finance group, James Collins, senior manager of trade finance at FCMB Bank (UK), and others.

Swift MT799 is a free-format message used by banks to communicate non-binding information related to trade finance transactions, such as terms and intent. While it doesn’t trigger payments or guarantees, it is often used as part of the process to document short-term trade loans.

The association says the template does not aim to cover every permutation in how Swift MT799 messages are used, but instead aims to provide a benchmark for “what good looks like” while keeping the wording concise and practical.

It is intended for standalone, one-off loans documented solely via Swift messaging, unlike other more comprehensive frameworks like the Baft (The Bankers’ Association for Finance and Trade) Master Trade Loan Agreement.

The template is based on FCMB Bank (UK)’s existing short-term trade loan format.

Author: ISAAC HANSON source: https://www.gtreview.com/news/global/itfa-launches-swift-short-term-trade-loan-template/