Structured commodity finance—key issues for financing commodities
Produced in partnership with Sullivan
Structured commodity finance—key issues for financing commodities

The following Banking & Finance guidance note Produced in partnership with Sullivan provides comprehensive and up to date legal information covering:

  • Structured commodity finance—key issues for financing commodities
  • The nature and types of commodities
  • Financing commodities in the supply chain
  • Taking security over commodities
  • Pricing of commodities and protecting against market fluctuation
  • Protecting the value of financed commodities
  • Logistics and capability of the borrower and storage provider
  • Third-party liabilities and interventions
  • Regulatory and other issues

BREXIT: As of 31 January 2020, the UK is no longer an EU Member State, but has entered an implementation period during which it continues to be treated by the EU as a Member State for many purposes. As a third country, the UK can no longer participate in the EU’s political institutions, agencies, offices, bodies and governance structures (except to the limited extent agreed), but the UK must continue to adhere to its obligations under EU law (including EU treaties, legislation, principles and international agreements) and submit to the continuing jurisdiction of the Court of Justice of the European Union in accordance with the transitional arrangements in Part 4 of the Withdrawal Agreement. For further reading, see: Brexit—introduction to the Withdrawal Agreement. This may have an impact on the aspects of this Practice Note that deal with capital requirements and Basel III (see Taking security over commodities below). For details, see Practice Note: Brexit—impact on finance transactions—Key issues for trade finance.

The nature and types of commodities

There are different types of commodities, but they have some key characteristics in common.

Commodities are raw or unprocessed materials that are usually used in the production of other goods

Examples include grains and cocoa that are processed into foodstuff or agricultural produce, or crude oil that is refined into petroleum products.