BankingGlobal group of banks launch drive to develop multi-trillion dollar trade as an asset class

Global group of banks launch drive to develop multi-trillion dollar trade as an asset class

A joint drive to use technology and standardisation for the wider distribution of trade finance assets has been announced by 14 global financial institutions.

A joint drive to use technology and standardisation for the wider distribution of trade finance assets has been announced by 14 global financial institutions.

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).

In addition, 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.

The private financing that helps businesses cover mismatches between payment obligations and payment receipts is a vital piece of the financial sector that supports importers and exporters as they conduct their trade activities. It’s hoped this new TFD initiative will present a compelling multi-trillion dollar investment opportunity for institutional investors seeking sources of attractive risk-adjusted returns with low correlation to stocks or bonds.

The 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. Tradeteq, the global trade finance distribution platform is driving the programme, allowing banks and institutional investors to efficiently connect, interact, and transact.

“Trade finance is the lifeblood that is needed to support businesses and enable them to thrive in our communities”

“I believe the TFD Initiative offers the opportunity to create a global network for trade originators and liquidity providers to connect, interact and transact efficiently, thereby establishing trade finance as an easily accessible and attractive asset class for non-bank institutional investors,” concluded André Casterman, Board Member at Tradeteq.

ANZ’s Damian Kwok, Head of Trade Portfolio Management and Head of Trade and Supply Chain, Australia, New Zealand, Pacific, observed: “Trade finance is the lifeblood that is needed to support businesses and enable them to thrive in our communities. Therefore, it is imperative that the financing community continues to work together to support the growing requirements.”

Shaahien Mottiar, Head of Trade: Southern & Central Africa and Head of Trade Asset Management at Standard Bank, said: “The application of technology is now enabling the involvement of non-traditional trade participants and investors. The TFD Initiative is a catalyst in driving the growing modernisation of trade and trade finance, and in developing an asset class directly connected to real economy transactions. For developing markets this means bridging the gap between perceived and real risks, and in-turn, creating opportunities for renewed sustainable growth and development.”

Further information on the TFD Initiative can be found here.

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