Baft (Bankers Association for Finance and Trade) has issued an updated version of its English law standard for trade loans to reflect “significant developments” in the market and regulatory landscape. 

The association’s Master Trade Loan Agreement (MLTA) provides a standard template used to facilitate lending between financial institutions for trade transactions, with versions available for trades covered by either English or New York law. 

Previous versions of both MLTAs were issued in 2014, but following changes in regulation, market expectations and industry practice, Baft convened a working group and – with the assistance of law firm Sullivan & Worcester – this week published a refreshed edition of the English law standard. 

Craig Weeks, senior vice-president at Baft, says the update reflects its work on “defining and delivering best market practices to facilitate efficient delivery of trade finance products for our members and their clients”.  

“Standardising documentation to make trade transactions more ‘user friendly’ is foundational to our purpose,” he says. 

Geoffrey Wynne, head of Sullivan’s trade and export finance group, adds that the latest MLTA “seeks to be a cornerstone agreement for bank to bank trade loans around the world”. 

There has been “a lot of change since 2014”, Wynne told this week’s Baft Europe Bank to Bank Forum. “So it was not very difficult, if you looked at the MLTA of 2014, to see that it needed some changing.”

Baft says the demise of currency benchmark Libor and the UK’s exit from the European Union are reflected in the latest version. Other changes reflect feedback on operational and legal matters raised by the working group, as well as efforts to make the standard more flexible. 

Guidance notes seen show that the order of clauses in the standard has been reworked, and an offer and acceptance mechanism for trade loans has been introduced. 

A function allowing trade loan requests has been expanded to include more specific provisions and details on commercial terms, rather than optional wording, with fields that can be populated on a case-by-case basis. 

The latest version also introduces a “booking office” concept, allowing borrowers or lenders to select a particular branch or office that is party to a trade loan request or acceptance. 

Additional provisions have been added to cover voluntary prepayment, taxes and data protection, and the updated document also includes optional fields for incorporating sustainability clauses into a trade loan request. 

“In the past, terminology, loan structures and supporting documentation varied across banks and geographies,” Baft says.  

“Standardisation and consistency of trade loan documentation helps improve the industry dialogue between borrowers, lenders, investors and regulators.”