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About the course

Understand trade financing, commodity flows & emerging markets with this course

A course bringing together trade finance product concepts, application to supply chains and financing structures typically used to facilitate commodity flows. The course is pegged at an intermediate level. Attendees are expected to be equipped with prior knowledge about mechanisms relating to Open Account, Letters of Credit, Bank Guarantees and Documentary Collections. For those less familiar with these topics, pre-course reading material will be provided. Focus of the programme shall be on financing arrangements as described in ‘Course objective’ below.

Course objective: To provide a comprehensive view of the interplay between trade finance instruments and supply chains as they apply to the commodities business. The objective is to cover Supply Chain Finance and Commodities Trade Finance. We begin with Pre-Finance on Day 1, proceeding to Payables-centric solutions on Day 2, followed by Warehouse/Inventory Finance on Day 3 and Receivables-centric solutions on the final day of training. In order to provide comprehensive coverage, the course will also cover related topics such as Risks in Commodity Trade contracts, INCOTERMS & Transport Documents, Marine Cargo Insurance and Commodity Price Hedging. Attendees will receive training on developing a risk-sensitive approach to commodities trade financing.

Agenda

Day 1

FTS Eligible - Financial Training Scheme for Singaporean citizens and PRs only (more information)

Day 1: Emerging markets

Risks in international trade as they apply to emerging markets

  • Political risk
  • Performance and operational risks
  • Credit and bank risks
  • Price risk
  • Illegality of contracts
    • Document of title

Case study

Financing trade in challenging markets

  • Commodity trading - markets and players
  • Evolution of the trader’s business model
  • Structured trade finance and the value chain
  • Risk analysis of a commodity finance transaction

Case study

Other considerations

  • Implications of Basel Capital Accord
  • Rationale for the ‘structured’ approach to trade finance
  • Characteristics of good collateral

Day 2: Contracts, structures and documentation

Key documentation considerations

  • Transport documents
    • Documents representing goods
  • Title, negotiability and endorsements
  • Documents of title
  • Incoterms
  • Charter-party contracts
    • Obligations of shipper / charterer and vessel owner
    • Loading and discharge of cargo

Case study

Risk considerations for pre–finance

  • Pre-export
  • Application of Green Clause Credits
  • Risks relating to grower / producer finance
  • Valuing producer risk
    • Ownership of the commodity / asset
    • Licenses, export quotas, foreign currency controls

Case study

Risk considerations for post-finance

  • Pre-payment
  • Application of Red Clause Credits
  • Limited recourse
  • Absence of obligation to reimburse upon failure to deliver
  • Difference between pre-financing and pre-payment
  • Case study

Day 3: Structured finance

Warehousing considerations

  • What is an asset-backed structure?
  • The business case for warehousing
  • Problems with pledges over inventory stocks, physical dispossession
  • Legal infrastructure required to support warehouse receipt finance
  • Is a WH receipt a title document or only evidence of receipt?

Case study

Financing issues with warehousing

  • Warehouse receipts finance
  • WRF structures
  • Raising finance against warehouse receipts-backed securities

Case study

Collateral management

  • Collateral Management Agreement (CMA)
  • Liability of collateral managers
    • Negotiating CMA documents
  • CMA components
    • Review of a CM Agreement
  • Mishaps in collateral management arrangements
  • Case study
  • Tolling finance
    • Performance and country risks
  • Causes leading to non-delivery by processor
  • Security interests of financier
  • Insurance solutions

Day 4: Alternative financing

Types of other financing structures

  • Other financing structures
  • Switch
  • Clearing currencies and escrow account
  • Receivables-backed finance

Case study

Insurance issues

Principles of marine insurance

ICC A/B/C, contingency cover

Security over insurances (assignment vs. loss payee)

Why do banks need political risk insurance cover?

Contract frustration

  • Confiscation of assets

Credit insurance

  • Covering risk of default in payment by buyer

Legal traps

  • Breach of warranty
  • Failure to act as if you were uninsured

Price risks

  • Price risk management in commodity trade
  • Price discovery exchange
  • Traded vs. OTC
  • Link between cash and futures markets
  • Understanding contracts to hedge
  • Benefits / Advantages for the customer and the bank
  • Case study

Trust the experts

Srinath Keshavan

Srinath Keshavan is a seasoned practitioner of trade finance. He is empanelled with a global bank to deliver training in Financial Crime Compliance related to Anti-Money Laundering & Sanctions Evasion Risk. He is also a long-standing presenter of training programmes for Euromoney and World Ba...

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