Originate-and-distribute model can close trade finance gap - white paper

The whitepaper was published in collaboration with online trade finance distribution platform Tradeteq, the International Trade and Forfaiting Association (ITFA) and the International Chamber of Commerce (ICC) United Kingdom.

The TFD Initiative, powered by Tradeteq’s industry leading trade finance platform, currently counts 13 trade finance banks and institutional investors as members. It aims to address the business and regulatory issues impacting banks and non-bank financial institutions by developing consensus built standardised best practices for the wider distribution of trade finance assets.

Explored in the paper, is the impact of post-2008 banking regulation on the trade finance industry – arguing that the introduction of non-bank capital is key to helping resolve the sector’s financing gap.The use of the originate-and-distribute model has typically been limited to inter-bank risk sharing, say Tradeteq officials. However, technological developments have now made it possible to involve non-bank investors and bring them into the trade finance sector.

Originate-and-distribute should be the go-to solution for banks, according to the paper. The paper further highlights the model as a solution to handle capital constraints without restricting trade finance availability for clients the world over.