[co-author: Rajan Dhami]

Sullivan Monthly Breakfast Seminar, 23 January 2020

At Sullivan's January 2020 London Breakfast Briefing, Sam Fowler-Holmes provided an overview of key challenges facing the trade finance sector in 2020. From sanctions to LIBOR, with a hint of Brexit, Sam covered a broad range of topical issues.

The keys points from his presentation include:

• Sanctions – With a global framework of inter-connected but independent sanctions regimes and non-standardised sanctions wording, the market has settled on a number of key provisions. However, the scope and wording can still significantly vary depending on the bank or the borrower.
• The Fifth AML Directive – On 10th January 2020 the fifth AML Directive came into force. Whilst most organisations will be in compliance if they were already complying with the 4th Directive, additional participants including entities in the fintech space which will also now be affected by the AML regulations.
• LIBOR – The 2021 deadline to move away from LIBOR is not far away. With recent publications and press releases from the Bank of England and the Sterling Risk-Free Reference Rates (RFR)Working Group, organisations should be ready for the transition, know how the new rates work and inform their customers of the change.
• Environmental, Social, and Governance (ESG) and sustainability – Whilst not a new topic, ESG is firmly on corporate and financial institutional agendas. Whilst still lightly regulated with most of the framework guidelines being voluntary, there is a clear focus on sustainable finance and regulation is unlikely to be far away.
• Fintech and the digitalisation of trade – There is a positive move towards a paperless world. However, commercial issues facing the market, such as the inter-operability of platforms and legal challenges, which include the lack of recognition of electronic promissory notes and bills of exchange, are still significant.
• Brexit – The current status quo is likely to be maintained during the current transition period, however future relationships will be determined by future trade agreements. Three common questions continuously arise in relation to Brexit: choice of governing law, choice of jurisdiction and enforcement of English court judgments.

Please click here for a link to a video of the seminar to find out more about challenges in the trade finance.