Fourteen leading global financial institutions have launched a drive to use technology and standardisation for the wider distribution of trade finance assets.
ANZ, Crédit Agricole CIB, Deutsche Bank, HSBC, ING, Lloyds Bank, Rabobank, Standard Bank, Standard Chartered Bank, and Sumitomo Mitsui Banking Corporation are among the banks backing the Trade Finance Distribution Initiative (TFD Initiative).
TFD Initiative is powered by Tradeteq, the global trade finance distribution platform. Tradeteq’s technology allows banks and institutional investors to efficiently connect, interact, and transact.
The International Chamber of Commerce (ICC) United Kingdom and the International Trade and Forfaiting Association (ITFA), the leading international association for banks and financial institutions involved in cross-border trade and forfaiting, have each joined TFD Initiative as an observer.
Trade finance is private financing that helps businesses cover mismatches between payment obligations and payment receipts resulting from the buying and selling of goods and services. It is a vital piece of the financial sector that supports importers and exporters as they conduct their trade activities.
Trade finance presents a compelling multi-trillion dollar investment opportunity for institutional investors seeking sources of attractive risk-adjusted returns with low correlation to stocks or bonds. TFD Initiative will initially focus on creating common data standards and definitions to enhance operational efficiency and improve risk management, creating a blueprint for global trade finance asset distribution.
Surath Sengupta, Global Head of Trade Portfolio Management at HSBC said: “HSBC is at the forefront of the industry in harnessing the power of new technologies to make trade faster, safer and more competitive. While trade finance is currently an attractive asset class for banks, we believe technology will unlock investment from non-bank investors by removing complexity and making the underlying asset data both more structured and accessible.”
Nicolas Langlois, Managing Director and Global Head of Trade Distribution & Liability and RWA Optimization CSDG & Transaction Banking at Standard Chartered Bank, commented: “Closing the financing gap in trade finance is about providing financing to small and medium sized enterprises. This requires developing new digital solutions to package those portfolios in a standardised format accepted by a broad range of investors and to achieve speed of execution.”