Five more banks have thrown their weight behind the growing Trade Finance Distribution Initiative (TFD Initiative) – the industry-wide drive to use technology and standardization for the wider distribution of trade finance assets.
Commonwealth Bank of Australia (CBA), ABN Amro, London Forfaiting Company, Crown Agents Bank and Natixis are the latest to sign-up to the initiative. They join ANZ, Crédit Agricole CIB, Deutsche Bank, HSBC, ING, Lloyds Bank, Rabobank, Standard Bank, Standard Chartered Bank, and Sumitomo Mitsui Banking Corporation as members.
Trade finance presents a compelling multi-trillion dollar investment opportunity for institutional investors seeking sources of long-term, low-risk returns based on the tangible flows of goods and services. However, there is no scalable market infrastructure in existence to facilitate the exchange of trade finance assets between banks and institutional investors.
Common infrastructure
TFD members will work together to utilize and adopt a common infrastructure powered by Tradeteq, the global trade finance distribution platform. Tradeteq’s technology allows banks and institutional investors to efficiently connect, interact and transact. It uses machine learning technology for supply chain predictive analysis, transaction level credit scoring, risk management, reporting and portfolio composition.
Sylvain Labattu, Executive Director in Global Commodities & Trade team at CBA, said: “We view the TFD Initiative as a crucial process in the opening up of risk distribution in the trade finance asset class. Staying at the forefront of industry-wide technological and process developments enables us to better connect with and serve both our domestic and global corporate client base through excellence in structuring and distribution, access to data and analytics, and best in class corporate digital offering.
Simon Lay, CEO at London Forfaiting Company, added: “We are pleased to become a member of the TFD Initiative and help shape the use of enhanced technology in our industry. The interest in this forum signals that there is growing interest to establish trade finance as a liquid and scalable asset class to a new investor pool. We all stand to gain by increasing collaboration, leveraging new technologies and adopting standardized processes in the trade finance space.”
Duarte Pedreira, Head of Trade Finance at Crown Agents Bank, commented: “The TFD Initiative has the potential to reshape the trade finance market. By opening up the asset class and making it more accessible outside of the traditional banking world, the TFD Initiative is, in essence, creating a fairer playing field, where non-bank investors can also benefit from the excellent risk/reward opportunities presented by trade finance assets. Crown Agents Bank is proud to work alongside our peers to optimize the benefits of trade finance to our clients.”