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Types of trade and commodity finance transactions


This overview is a guide to the Banking & Finance content within the Types of trade finance subtopic, with links to the appropriate materials.

What is trade finance?

The term 'trade finance' (or ‘trade and commodity finance’) is used to cover a number of different forms of financing and methods of payment, from secured syndicated financings to letters of credit. Broadly speaking, trade finance is used by buyers and sellers of goods internationally to provide credit support for the different stages of the sourcing, production and sale of commodities.

The term ‘trade finance’ encompasses structured and unstructured transactions.

Unstructured trade finance transactions

Unstructured trade finance is typically a way of financing trade (usually to assist with a borrower’s capital management), but without a secured loan facility. See Practice Note: Introductory guide to unstructured trade finance.

Unstructured trade finance takes the form of certain financial undertakings and instruments. These include:

  1. •

    bills of exchange and

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ESMA publishes technical advice as part of Listing Act implementation

The European Securities and Markets Authority (ESMA) has published its technical advice to the European Commission to facilitate the effective implementation of Directive (EU) 2024/2811 (the Listing Act), by advising on the delegated acts to be adopted and amended concerning the Market Abuse Regulation (EU) 596/2014 (EU MAR) and the Markets in Financial Instruments Directive 2014/65/EU (MiFID II). Regarding EU MAR, the advice identifies critical moments for public disclosure during protracted processes, clarifies the circumstances in which delayed disclosure is not permitted, and proposes a methodology under the Cross-Market Order Book Mechanism (CMOB) to pinpoint trading venues with significant cross-border activity. With respect to MiFID II, it examines the criteria for registering multilateral trading facilities and their segments as small and medium-sized enterprise (SME) growth markets.

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