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Blockchain versus GDPR and who should adjust most
| 18-10-2018 | Carlo de Meijer | treasuryXL
It has now been more than four months since the European Union General Data Protection Regulation (hereafter GDPR) came into effect. This regulation aims to strengthen privacy and personal data protection in the EU, by giving private persons more control over their personal data. But it also offer a uniform set of regulations for businesses with customers in the EU region, with the risk of hefty fines in case of non-compliance.
This event however has caused a lot of concerns in the blockchain industry. At first glance some GDPR provisions seem in direct conflict with the fundamentals of blockchain technology, and may even be intrinsically incompatible with what the new European privacy rules seek to uphold. For blockchain the most controversial GDPR mandate is the “Right to be Forgotten”, giving individuals the right to request that their personal data be removed from a record. Because of its decentralised character with immutable blockchains, data however cannot be deleted. Blockchains are designed to last forever. That puts blockchain in direct opposition to the GDPR.
Main question is: Are there ways to be found so that GDPR and blockchain may co-exist? Can blockchain work properly in tandem with the new GDPR regulations without harming its fundamentals? And how should regulators react?
EU General Data protection Regulation (GDPR): what does it mandate?
The General Data Protection Regulation (GDPR) is a far-reaching privacy legislation that is designed to enhance the protection of personal data and give individuals in the EU greater control over their own data. The GDPR is requiring not only transparency into what companies will do with consumer data, but also mandating clear consent mechanisms to ensure that consumers understand what companies are sharing, with whom, and for what purpose. GDPR thereby regulates the collection, processing, transfer and retention of every EU citizen’s personal data, requiring companies to provide visibility and control to individuals, on demand. Non-compliance with GDPR can result in heavy fines.
GDPR however has a number of key provisions that could heavily impact blockchain.
Read the full article of our expert Carlo de Meijer on LinkedIn
Carlo de Meijer
Economist and researcher
Global Political Risks by ICC Consultants
| 15-10-2018 | ICC Consultants | treasuryXL |
In deze blog worden de internationale politieke ontwikkelingen geanalyseerd die impact kunnen gaan hebben op de financiële markten en de mate waarin. De visie van ICC Consultants is gebaseerd op een groot netwerk binnen de wereldwijd toon-aangevende researchhuizen en 40 jaar ervaring in de financiële markten. Middels de weblink onderaan deze blog kunt u meerdere rapporten van ICC Consultants downloaden.
Iranian brake vs Saudi and Russian spigots
US president Trump has been trying to have his oil cake and eat it. On the one hand, the mercurial leader has been tightening the screws on Iran thereby keeping hundreds of thousands of barrels of oil from the market. On the other hand, the American president has been ripping into oil producers for being responsible – in his eyes – for high prices: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump’s Russian counterpart Putin said last week: “We had a very good meeting with President Trump in Helsinki. But if we had talked about [oil], I would tell him that if he wants to find the culprit for the surge in prices, ‘Donald, then you need to look in the mirror.’”
The main question keeping oil traders and analysts at wake these days: will the fall in Iranian exports be compensated by Saudi Arabia and Russia pumping up more crude or will we see an impending supply crunch cause a further spike in the oil price? Already, Brent’s fifth consecutive quarterly increase makes it the longest streak since 2008. The magical $100 mark is getting mentioned more and more . September 2014 was the last time when Brent hit this level. US petrol prices have already been at the highest level since 2014 for quite some time.
November 4 is the US sanctions deadline for companies to stop buying Iranian oil. In anticipation of that cutoff date, Iranian oil exports have already fallen considerably. In June crude shipments from Iran totaled about 2.3 million barrels per day; last month those exports came to 1.5 mb/d.
Expectations for how much oil will be lost have steadily risen. Some analysts now even fear that Iranian exports could fall back all the way towards 500,000 b/d. Already, shipments to South Korea, France and Japan have halted.
Secret shortcuts?
The Economist Intelligence Unit describes six ways in which Teheran could and will try to keep crude flowing:
Through these various methods Iran will be able to at least get some oil out to customers. However, from next month onwards, the number of barrels Teheran manages to export will no doubt decrease further.
No end in sight
A deal between the US and Iran is nowhere close as the International Court of Justice ruled against Washington in a case brought by Teheran whereby the judges ruled that the US is breaking the 1955 Treaty of Amity. Washington has replied by not accepting the ruling but by claiming it will withdraw from the treaty. Moreover, over at Washington the so-called NOPEC Act is getting a fresh look. This bill would remove the sovereign immunity that has long shielded OPEC members from legal action by the Americans. A version of NOPEC had managed to make it through Congress in 2007, but it was pulled after then president Bush threatened to veto it. This time also, the bill probably won’t make it, but it nevertheless makes clear that tensions between the US and (other) oil producers are on the rise. Another example of this is the Justice Against Sponsors of Terrorism Act (JASTA), which allows victims of the 9/11 attacks to sue Riyadh. The law is seen as key to why state-run Saudi Aramco was hesitant in publicly listing its shares on US markets in an IPO that has since been shelved.
In Iran, the political class and the mullahs could be prompted to continue their hardline by the results of a recent poll in which large majorities declare their support for the country’s current foreign policy.
Swing producers to the rescue?
It remains to be seen whether other suppliers will fill in the gap caused by the Iranian crisis. By this time, Saudi Arabia is producing at levels that amount to its highest on record: 10.7 mb/d. Some experts doubt whether the kingdom will be able to significantly raise its production numbers.
Russia is also closing in on its maximum production level, due to – among other things – the lack of international capital flowing in to finance domestic energy projects and the challenges importing essential equipment caused by sanctions Russia faces as a result of among other things its actions in Ukraine and Georgia and its spy adventures all over the west. Russia’s deputy energy minister claims that current potential for upping production is around 200,000-300,000 b/d up to the end of 2019 from the current level. Already, Russian oil production has risen to a post-Soviet record of 11.4 mb/d.
The other giant producer, the US itself, struggles with infrastructure bottlenecks. Drillers in the western parts of Texas have put too much pressure on the regions infrastructure. Thereby driving up costs and putting downward pressure on the price for a barrel of oil; if you don’t have the means of turning the crude to practical usage, the oil obviously becomes less valuable. The more so since pipelines are also in desperate need of upgrades and extensions.
The more Saudis and others pump up to compensate for Iranian (and for example Venezuelan) shortfalls, the more spare capacity disappears and the more already lingering doubts about how much more the big players can add to their production levels will build up.
Slowing world economy
Considering all of the above, it seems upward pressure on oil prices from the supply side is the most likely in the months to come. What about the demand side? According to BP, oil consumption in the developed markets has peaked. Therefore higher demand in the future will largely depend on the emerging markets. As Bloomberg columnist David Fickling put it: “When they sneeze, the global oil market may yet catch a cold.” And a cold seems to be doing the rounds lately within the EM. Fickling points out that for EM oil is already as expensive as it was during the peak in 2008. This as a result of the slump many EM currencies find themselves in. For example, the oil price in reals broke its 2008 record last March and is now 50% higher than its level ten years ago. So, from this perspective, we could see some downward pressure on oil prices as crude is simply becoming too expensive for many nations.
In addition, general economic worries are on the rise as IMF chief Lagarde attested to last week when see said: “For most countries, it has become more difficult to deliver on the promise of greater prosperity, because the global economic weather is beginning to change.” So as global financial conditions are becoming less forgiving – with rising interest rates, a strengthening dollar etc – high crude prices are inflicting even more pain on oil importing emerging countries in particular. They see their current account deficits growing. Usually you would expect a depreciation of the currency of such a country resulting in more exports that would make up for the increased costs of buying oil. Not now: growth of world trade is slowing and many of these countries have high dollar debts that have become a major burden due to the strong dollar.
So demand side constraints are building up. In the short term supply side risks i.e. the kicking in of sanctions against Iran could drive the prices up a bit more, but world economic growth is to slow in 2019 and together with overly bullish long positions outnumbering bearish short ones by a ratio of more than 12:1 (the record was 14:1 back in April) we expect demand side factors to overtake worries about the supply side and causing a pullback of Brent towards $70-$80 levels in the months to quarters ahead.
Chart-technical analysis
A large upward trend is already dominant since early 2016. Objective measures of trend direction – the price is above both the upward sloping 50-day and 200-day moving average – indicate the same. As such, the level of $89 – the 61.8% Fibonacci retracement level of the multi-year decline from 2014 – is the minimal technical target in the coming weeks and months.
Still, bear in mind that past weeks’ strong gains have left Brent crude oil very stretched as it is trading around two standard deviations above its 50-day moving average. Also, the 14-day Relative Strength index has reached overbought levels (above 70) that, in the past quarters, were accompanied by at least – temporary – top forming (see graph). All the above will likely set the stage at least a sideways consolidation or a pullback first to digest these strong gains.
Furthermore, market sentiment towards the oil complex is highly positive. For example, the Daily Sentiment Index (trade-futures.com) showed a vast amount of bulls (> 90%) for WTI crude oil last week. Moreover, the Commitment of Traders report shows that hedge funds & other speculators are still holding rather large net-long positions in both Brent and WTI crude oil. Such optimism also makes oil vulnerable for a setback. If so, we can expect a decline towards short-term support in Brent just above $80. Finally, prices below $80 to a significant degree will likely trigger a larger correction towards the next support area near $72.
Het rapport is geschreven door Andy Langenkamp, politiek analist bij ICC Consultants. Op de website van
ICC Consultants kunt u meer rapporten downloaden.
Corporate Trade Finance Products : Letter of Credit
| 11-10-2018 | by Nijay Gupta | treasuryXL |
What is Letter of Credit/Documentary Credit under UCP 600 – ICC Paris:
A letter of Credit is a sort of Guarantee issued by a Bank – Opening Bank, on behalf of a buyer(applicant) favouring the seller (Beneficiary) to honour the compliant documents presented thru a Bank (negotiating bank) in terms of the LC conditions. In order to secure payment, the Supplier of goods is given a sort of guarantee by the buyer’s bank to pay (at Sight or Usance or Deferred Payment) on presentation of Documents in terms of LC. So, the LC can provide payment on Sight Basis, Usance Basis or Deferred Payment Basis, based on the Terms of Payment agreed between Supplier & Buyer. The buyer/Opener of the LC is assured Delivery of Goods within the dates of shipment mentioned in the LC.
LC is also known as Documentary Credit, as banks deals in documents and not in goods.
The LC is governed by the UCP 600 (2007) Revision publication by ICC, Paris, provides the set of rules governing LC in Domestic/International Trade in almost all 175 countries. The 39 Articles of UCP 600, gives the details of the various types of LC’s, role/rights/liabilities of various parties i.e.
Advising Bank (Correspondent bank of the LC issuing bank), may act as LC Transferring or Negotiating Bank too for the availability of LC for Negotiation leads to be known as : Restricted LC or LC avaialable with…. Bank
Negotiating Bank (Generally Sellers Bank),
Re-imbursing Bank (generally overseas correspondent bank, where the LC issuing bank maintains its Nostro a/c).
The articles also provide the way various Documents like Bill of exchange, Invoices, Cerifiticate of Origin, BL/AWB, Inspection Certificate, Insurance Policy etc to be preapred and presented to the LC Issuring bank for Payment (Sight document), Acceptance & Payment (Usance/Deferred Payment documents).
What are the various Types of Documentary Credit:
Irrevocable: The LC, which can not be cancelled/amended without the consent of all the parties to the LC, is the most common type of LC is used in Domestic/International Trade. In this, the LC issuing bank guarantees the payment of LC as per the Tenor of the Documents on presentation of compliant documents to the beneficiary.. This is the most common type of LC is used in domestic/international Trade. All types of LC’s are Irrevocable, unless a bank issues Revocable LC, specifically. UCP discussed only about issuing of Irrevocable LC, though the banks can issue Revocable LC or combination of other types of LC as below.
Revocable LC, (which could be cancelled by LC issuing Bank or Applicant without the consent of Beneficiary before the shipment is made) is not in practice and not provided in UCP 600, though the same can still be established by the LC Issuing bank at the request of the Applicant. Irrevocable Confirmed: In this type of LC, the Payment Guarantee is given by LC Advising or a Bank nominated by LC issuing Bank . The bank adding confirmation to the LC is done only at the request of LC issuing bank and the Conforming bank can be in the country of exporter or elsewhere. Since this type of LC requires payment of confirmation charges by the Beneficiary, the use of this type of LC is restricted in case of Geo-political conditions in the buyer country or high risk buyer only.
Irrevocable Transferable: The LC which can be transferred by the Advising Bank at the request of Beneficiary, in part/full or for lesser amount by keeping the profit for the beneficary of LC. Once LC is Transferred, it can not be transferred back to Benficiary of LC. Under this, the LC Transferring bank is the only bank authorised to Negotiate/Pay for documents over and above the LC opening bank
Irrevocable Confirm: LC can be confirmed by a bank in Beneficiary’s Country (generally done by LC Advising bank) or by a bank in other country, when beneficiary is not very sure about the standing of the LC issuing bank or Geo-political situation in buyer’s country. LC is confirmed at the request of LC issuing bank and Confirming bank may ask beneficiary to pay for the confirming charges. On presentation of documents, confirming bank shall becoming like LC issuing bank and is bound to pay/accept documents, as per LC conditions.
Irrevocable Back to Back: Its not provided in UCP but its used by Beneficiary for opening another/local LC backed by the Original LC on same terms and conditions to provide security for payment for supply of goods to the origianl beneficiary .
Irrevocable Revolving: This type of LC provides flexiblity of Re-instating the amount of the LC, on utilisation of the LC amount by exporting the goods as per terms of LC. This type of LC is usefull, for exports of different goods at different period without committing the total value of all exports in one LC. This reduces the requirement of lower LC limit or Cash margin for opening of the LC by applicant (importer).
Irrevocable Stand-By LC: This was inititated at the time when US banks were not authorised to Issue Guarnatees or take Guarantees . But this is very popolus amongst the suppliers of goods and services in today’s time all over the world. This type of LC, provides a guarantee to the supplier of services, equipments, airlines etc to be paid on completion of the serives or agreed time period. Its very common in Airlines and Equipment suppliers on lease or rental basis.
Which type of LC is desirable in Domestic & International Trade:
An Irrevocable LC is quite fine, which allows payment on compliance with the LC terms and this also allows surety of shipment by exporters within the terms mentioned in the LC, though there is no guarantee of quality of goods being supplied by the exporters. That is why Banks say, Bank Deal in Documents and not in Goods and its known as documentary credit.
Should there be a Geo-political situation in the LC issuing bank’s country or the standing of the LC issuing bank can not be established, its better to go for a Confirmed LC. Other types of LC’s are practiced based on the requirement of Importer and Exporters in Trade. LC can have a combination of types of LC together too and i.e. Why LC is the most flexible instrument used in Domestic and International Trade.
What Importer (Applicant) should do before opening LC:
What Exporter (Beneficiary) should do on receipt of LC:
What is the future of LC in view of E-Banking and Online business/trade:
Though most of the business is overtaken by online operators, the need for LC shall continue at least for next 25 years. In order to get well worsed with LC, I suggest all to read articles UCP 600 of ICC, Paris and practice with various types of LC, rights & responsibilities of the LC Issuing Bank, Advising Bank, Negotiating Bank, applicant, Beneficiary & Confirming/Re-mbursing/Transferring banks etc in usage.
Nijay Gupta
Founder & CEO NK GUPTA Consulting