A COMPREHENSIVE INTRODUCTION TO COMMODITY TRADE FINANCE

In the latest of its comprehensive guides, on 13 August, the International Chamber of Commerce provided a guide to the core aspects of commodity trade finance.  Commodities can be defined as being typically mass-produced goods which are sold and delivered in bulk (exceptions may be precious or rare metals). They include raw materials and agricultural products.  There are a number of risks inherent in commodities that can make financing them risky.  “Commodity trade finance” is the financing of the physical trade (purchase and sale) in commodities.  As well as explaining how commodity trade finance works, it also mentions how e-documents and instruments like electronic-bills of ladings and promissory notes may be employed.  The UNCITRAL Model Law on Electronic Transferable Records (MLETR) was issued in 2017, but adoption rate has been slow – only 3 jurisdictions (Bahrain, Singapore and Abu Dhabi) have incorporated the MLETR to date, with the latter 2 only this year. Once the major trading hubs adopt MLETR, the article says that this will ease the exchange of electronic records.

https://icc.academy/wp-content/uploads/2021/08/A-comprehensive-introduction-to-commodity-trade-finance.pdf

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Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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