Trade finance standardisation project backed by 14 giants
A number of global financial institutions have launched a drive to use technology and standardisation for the wider distribution of trade finance assets – the Trade Finance Distribution (TFD) Initiative.
ANZ, Crédit Agricole CIB, Deutsche Bank, HSBC, ING, Lloyds Bank, Rabobank, Standard Bank, Standard Chartered Bank and Sumitomo Mitsui Banking Corporation are among the 14 banks backing the TFD Initiative.
The TFD Initiative is powered by Tradeteq, whose technology allows banks and institutional investors to connect, interact and transact.
The International Chamber of Commerce (ICC) UK and the International Trade and Forfaiting Association (ITFA) have each joined TFD Initiative as an observer.
The 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, says: “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 and liability and RWA optimisation CSDG and transaction banking at Standard Chartered Bank, comments: “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.”
ANZ’s Damian Kwok, head of trade portfolio management and head of trade and supply chain, Australia, New Zealand, Pacific, adds: “Trade finance is the lifeblood that is needed to support businesses and enable them to thrive in our communities.”
The TFD Initiative aims to bridge the gap between the US dollar-dominated commodity trade finance sector, and institutional investors who are not traditionally engaged in this part of the real economy.