TFD Initiative

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Four key takeaways from the TFDi’s inaugural Trade Finance Investor Day

On October 20th, the Trade Finance Distribution initiative (TFDi) held its inaugural Trade Finance Investor Day at the prestigious Grove Hotel in Hertfordshire.

Led by André Casterman, CEO of the TFDi, asset originators, tech solution firms, distributors, and institutional investors representing firms from more than a dozen countries came together to discuss the integration of technology in trade finance.

Described by Christopher Hale, CEO and Founder of global trade tech platform Kountable, as a “well-organised, boundary-pushing event” unique in having a “difficult-to-assemble group of people, where everyone knew what was going on,” the first-ever Trade Finance Investor Day helped generate many productive conversations on the future of trade finance.

Here are our four key takeaways from the event:

The trade finance gap urgently needs to be solved

Trade finance is critical to helping produce and move goods across markets and creating jobs, products, and economic growth globally. However, the demand for trade finance has outstripped supply, particularly in emerging markets and for SMEs, and the gap is continuing to grow larger. In 2022, the trade finance gap rose to a record $2.5tn, up from $1.7tn in 2020.

Crucial to solving this issue is the introduction of trade finance assets into capital markets to attract further investment and liquidity. By doing so, more capital can be made readily available for businesses in urgent need of it.

Securitisation and tokenisation is vital to making investment more accessible

To make trade finance assets accessible to capital markets, the assets need to be issued as tradable securities or notes. By doing so, these securities can be sold to institutional investors, opening up funding sources beyond traditional asset originators and building market resilience.

Similarly, tokenisation can help make investment in trade finance more accessible to alternative investors, with Billy Sebell, Executive Director of XDC Foundation, the event’s Platinum Sponsor, giving a talk on this. With the total value of all tokenised real-world assets now more than $3bn, tokenisation provides an exciting way forward to ensure security and reduced risk in trade finance transactions.

The implementation of securitisation and tokenisation in trade finance has been helped with the Electronic Trade Documents Act in 2023, which made the UK one of the first countries to legitimise the use of digital documents for trade. The digitisation of trade documents helps third-party investors to invest in trade finance, adding liquidity and reducing overall costs.

Asset managers have a role in bringing together trade finance’s horizontals and verticals

Keynote speaker Suresh Hegde, Head of Structured Debt at Goldman Sachs AM, delivered a presentation on how asset management can transform trade finance into a sustainable asset class for institutional investors.

Asset managers play an important role in integrating the different aspects of trade finance, bringing together asset originators, investors, and tech providers to provide salient market insights and financial expertise.

The marketplace of the future

Gold Sponsor Tradeteq demonstrated its marketplace infrastructure at the conference, showcasing how technology can enhance trade finance deal workflow.

The Tradeteq platform allows asset sellers to list offers on its marketplace, presenting these to institutional investors, while displaying their track record and profile. This facilitates dealmaking between both parties, with Tradeteq also supporting asset sellers by transforming private debt assets into investable notes for presentation to investors. Furthermore, the platform standardises due diligence processes, providing improved efficiency and reduced costs for asset sellers.

Seeing the platform in action showed the many possibilities of the future of trade finance.

Christoph Gugelmann, Founder and CEO of Tradeteq, said: “I think the event has been a huge success! A lot of asset sellers connected with institutional investors over transactions. This is what we wanted to achieve. The momentum is building, with TFDi members now being able to connect physically as well as through the Tradeteq marketplace. Platform listing is free of charge for TFDi members.”

Following the event, André Casterman commented: “The feedback has been terrific and we brought together people who’ve never met. In the last few years, we thought that we must go beyond banking, to go to non-bank lenders and connect them with those who want to fund them – the institutional investors. We have regrouped people who have never met in person, but are actually working on the same mission, to fund SMEs and close the trade finance gap.”

We can’t wait to bring the Trade Finance Investor Day back in 2024!

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