ICA members vote in favour of safer trading regulations
Source: The International Cotton Association Date: 2014-06-05
At its recent extraordinary general meeting (13th May 2014), members of the International Cotton Association (ICA) voted in new changes to the ICA Bylaws & Rules that will affect counterparty trading for its members and have an impact on the current cotton trading environment.
With effect from the 1st June 2014, ICA members are no longer able to trade with firms on the Association’s ‘a(chǎn)dvisory notice list’. If they do, they risk being expelled from the Association.
The list, which has been renamed the ‘ICA List of Unfulfilled Awards: Part 2', contains the names of firms that have a proven link with a defaulter (a firm that has defaulted on a contract and has an outstanding arbitration award against them).
“One of the biggest challenges for us is award enforcement and strengthening the effectiveness of our List of Unfulfilled Awards or ‘default list’ as it is known in the trade,” says ICA President, Mohit Shah.
“ICA members are not allowed to trade with counterparties on this list, but we know that for some time firms have been circumventing the list by setting up and trading through ‘phoenix companies’ or using trading houses.”
The ICA regularly identifies or receives information indicating that a defaulter is linked to other firms. Once this information is verified by the ICA's Business Intelligence Team and approved by the ICA directors, the name of the firm is added to the ICA List of Unfulfilled Awards: Part 2 and ICA members are notified.
“Since the introduction of our Business Intelligence Team we are now able to expose the firms involved in dishonourable trading practices and reveal their links with defaulters so that our members can see exactly who they are trading with and make ‘safer’ trading choices,” says Mohit.
“Whilst the aim of this change is to stamp out dishonourable trading across the supply chain, we appreciate that some of our members may have existing contracts with firms that appear on the list or are trying to reach a settlement over an unfulfilled award. This is understandable - all we ask is that they inform us and work with us by being open and transparent about such trades.
“Trading with any defaulter, even by association, completely compromises the ICA’s principles of contract sanctity and creates incomprehensible injustice. This Association was set up as an association of people epitomising trust and integrity. There should be no room or tolerance towards anyone who trades with a defaulter. This to me is paramount and it must always remain in the forefront within our industry circles if we are to maintain cotton’s global prominence and create the safer trading environment that the industry is seeking.”
