ITFA Market Practice update

Aside from the recent success shared in this release regarding the roundtable with Moody’s (link available to ITFA members only), we would like to update our members on some other initiatives that the ITFA Market Practice Committee is currently engaged in.

BAFT MPA update

We are pleased to confirm that BAFT has now kicked off the process to review the MPA formats.

ITFA has been at the forefront of efforts to modernise and improve the MPA. Our contribution to this important project has been recognised by BAFT building on the detailed feedback from our member survey, and this gives us the opportunity to ensure that the views of the practitioners in our industry can be heard and integrated into the document.

A priority list of items to focus on is currently being discussed by the BAFT working group, and we will aim to keep our members updated on the progress of this over the coming weeks.

Our hope is that the two versions of the MPA (both English and New York law) can be improved to reflect some of the more recent changes in our market, and to address some of the shortcomings of the original versions. As a market standard template, the BAFT documents have facilitated the execution of MPAs in our industry, and whilst they will never be able to accommodate every requirement of all potential users, we welcome this opportunity to review and update these important agreements.

CRR IV Article 194 Legal Opinion Renewal

As part of this modernisation, ITFA commissioned an industry-level legal opinion in May 2015 for the benefit of the two associations’ respective members.

The legal opinion addressed a requirement under CRR IV Article 194, whereby EU-governed institutions needed to be able to provide, upon request of the competent authority, a legal opinion that captured the eligibility of any credit protection arrangements under this Article.

As industry practice is to renew such opinions every two years, we have started the process of commissioning a refreshed opinion to be made available to members from May 2017.

CRR IV Article 194 Legal Opinion Jurisdiction Expansion

Some members have enquired as to whether the opinion would be expanded to cover other jurisdictions beyond England, the EU and the other countries listed in the opinion. Results from the member survey showed some concentrations for countries such as China, UAE, Singapore, India, Qatar, USA. The results were too diverse to be conclusive though, and the relative cost-benefit for providing additional opinions on each jurisdiction too limited to be justifiable, especially as the matrix of permutations is too large.

ITFA has therefore decided to not expand the jurisdictions covered by the CRD IV Article 194 Legal Opinion, but will nevertheless keep the issue under review.