Using Blockchain Technology Companies for Trade Finance

One of the most propitious industries for blockchain technology is trade finance. Many of the world’s largest banks are putting time into its research and development.

Thanks to a consortium of 71 global financial leaders, R3CEV, much has been uncovered about potential uses of blockchain technology.

Since 2016, R3 has executed several pilot runs in the marketplace to complement their research. They will continue to improve these strategies until ready to fully enter the market.

Block chain
Here’s the future of trade finance with blockchain technology companies.

So, what are some of their findings of potential use? Here’s the future of trade finance with blockchain technology companies.

Monitor Real-Time Status and Condition

One of R3’s members, CBA, is a leading contributor to the research of blockchain technology. Currently, they are undergoing 3 different projects to analyze blockchain use.

They are conducting a trial run with exporters who ship cotton. A humidity monitor is placed inside the canister, which is linked to IoT and GPS.

This monitor allows consumers to track their shipments with real-time status. Also, they are able to evaluate the condition of their product as it travels through.

Other national blockchain technology companies are running pilots, similar to this study. In Singapore, Hellosent is conducting similar tests. However, they’re studying the import of French wine.

Framer
A growing issue for grain farmers is a financial loss due to trade insolvencies.

Eliminate Unpaid Settlements

A growing issue for grain farmers is a financial loss due to trade insolvencies. An estimated $50 million was lost in 2014 because of this activity.

It takes roughly 4-6 weeks for a farmer to receive payment for their shipments. At that, often times conflict arises between farmers and buyers over payment complications (failing to pay the appropriate amount, late payment, etc.).

Australian start-up, Full Profile, has taken matters into their own hands.

Their blockchain platform allows farmers to now receive automatic payment upon delivery of grains. This will significantly reduce the risk of dispute between farmers and buyers.

Once Full Profile’s application is fully functional in a domestic setting, they will expand on external trade.

Digitize 

The use of blockchain technology can also be beneficial to reducing financial loss and risk. Upon further development, it will be able to digitize sales and legal arrangements.

Trade finance is an unwieldy industry, that relies heavily on settlements and contracts. Currently, most of these agreements are handled the old-fashioned way: paper copies.

Blockchain technology will remove the need for this paper-based system. This ultimately reduces the risk of financial loss as documents are often lost, mishandled, or tarnished.

Electronic documentation can be tracked much more efficiently. Also, it cuts out the need for a third-party verification system.

Interested in Learning More About Blockchain Technology Companies?

Blockchain technology creates transparency in financial trade between buyers and sellers. From the moment an order is made up until payment, blockchain is capable of simplifying the trade process.

Are you based out of India and looking to jump into the world of international trade? You’re at the right place.

At Adam Smith Associates, we aid our clients through all of their trade finance needs. Contact us to learn how we can help you!

News & Updates Around The World On Trade Finance

HashCash Redefines Global Trade Finance with HC TRADE built on Ethereum Blockchain

HashCash® today introduced HC Trade Finance, a blockchain technology product that brings a breakthrough for global banks and financial organizations in the business of financing corporate trade.

Traditionally, the business processes around financing a corporate trade activity is a paper intensive process. The risk of fraud is typically high for the financial organization underwriting it. Manual processing of documents also leads to reconciliation or book keeping inconsistencies and audit hassles. This soars up cost for the financial organization and creates barriers to supply chain financing for corporates.

All this in turn leads to inefficient working capital management and affects the overall economic output.

Source: https://www.benzinga.com/pressreleases/17/08/p9958908/hashcash-redefines-global-trade-finance-with-hc-trade-built-on-ethereum

Deutsche Bank to beef up trade finance in emerging markets

Deutsche Bank plans to beef up its trade finance business in the developing world, creating new jobs and investing in technology, it said on Wednesday.

The focus is on Africa, Latin America, the Middle East, Asia, and central and eastern Europe, Germany’s largest bank said. It plans to hire between 20 and 30 people for those locations and will invest “a middle two digit million euro figure” in information technology over the next three years, it said.

Daniel Schmand, who heads the bank’s trade finance division, told journalists that he sees unmet demand for trade financing in particular for small and medium-sized companies.

Source: https://www.reuters.com/article/us-deutsche-bank-emerging-idUSKCN1AW0WP

Video: What to do and not to do in trade finance transactions

https://www.txfnews.com/News/Article/2938/Video-What-to-do-and-not-to-do-in-trade-finance-transactions

Bangladesh secures trade finance and infra packages

Development banks have extended infrastructure and trade finance packages to Bangladesh. The Asian Development Bank (ADB) approved a US$200mn loan package to improve the country’s urban infrastructure, while the International Finance Corporation (IFC) has signed a US$40mn working capital loan with Bank Asia, a local lender.

In the case of the ADB, the finance will fund 600km of road builds and improvements, 300km of drains and install 180km of pipes for water supply, with 60,000 metered household connections. It will fund priority infrastructure in the pourashava (municipalities) of Bangladesh, where populations are dense and facilities are generally basic and overstretched.

Source: https://www.gtreview.com/news/asia/bangladesh-secures-trade-finance-and-infra-packages/

UN endorses ICC Uniform Rules for Forfaiting

In a historic moment, the ICC Uniform Rules for Forfaiting—ICC Publication no. 800 (“URF 800”)—were officially endorsed by the United Nations Commission on International Trade Law (UNCITRAL) in its 50th plenary session held in Vienna on 14 July 2017.

Forfaiting is a trade financing technique based on without recourse discounting of an instrument representing an exporter’s receivables payable at a future date, such instrument evidencing a payment claim or a debt obligation of an importer or a bank / financial institution pursuant to a letter of credit, standby letter of credit, guarantee, aval, bill of exchange or a promissory note created under an export transaction.

The URF 800 are the first ever global rules for forfaiting—the result of three-and-a-half years of joint effort by ICC and the International Trade and Forfaiting Association (ITFA)—developed after taking into account feedback from major trade finance banks, forfaiting companies and exporters. The aim of URF 800 is to create a standard set of rules that can be applied within the forfaiting markets worldwide.

Source: https://iccwbo.org/media-wall/news-speeches/un-endorses-icc-uniform-rules-forfaiting-urf-800/

HSBC and IBM develop cognitive trade finance tool

HSBC and IBM have developed a cognitive solution to automate and digitise trade finance documentation.

The solution, which is already in use in Hong Kong and the UAE, uses IBM robotics technology to analyse documents, digitising and extracting the relevant data before feeding it into HSBC’s transaction processing systems.

The aim is to remove the labour intensity from trade finance. HSBC’s global trade and receivables financing (GTRF) team processes more than US$500bn in documentary trade each year, meaning more than 100 million pages must be manually reviewed and processed.

Source: https://www.gtreview.com/news/global/hsbc-and-ibm-develop-cognitive-trade-finance-tool/

A GAP IN GLOBAL TRADE FINANCE OF AROUND $1.6 TRILLION PER YEAR

Latest survey results and analyses by the Asian Development Bank (ADB) point to a gap in global trade finance of around US$1.6 trillion annually—much of it in developing markets, particularly in Asian developing countries. The concern is that, according to “2017 Rethinking Trade & Finance”, the latest report of the International Chamber of Commerce (ICC): “It is increasingly clear that banks will be unable to materially close this gap in Trade Financing, and that there is a misalignment in the availability of funds and liquidity”.

With worldwide trade developing at a fast speed, trade finance is the “oil in the engine” of international commerce and tool number one for treasury managers. The banking sector has recovered from the last financial crisis, and liquidity seems to no longer be an issue.

However, banking regulations have pushed banks to fund the needs of supposedly less risky multinationals and large corporates in developing countries. Risk-weighted asset regulation within Basel II, along with capital-adequacy ratio or solvency ratio requirements, have driven banks out of the micro, small and sometimes even medium-sized enterprise (MSME) segment. Banks are being challenged by capacity constraints, developed protectionist rhetoric coupled with trade-restrictive initiatives in key G20 economies, which are having a dampening effect on expectations of trade-driven growth and leading to a slowdown in import-based economic activity globally.

Source: https://corporatefinance.co/finance/gap-global-trade-finance-around-1-6-trillion-per-year-2/

Maersk seeks role in trade finance as banks retreat

Maersk, the world’s biggest container shipper, is venturing into trade finance, as it seeks to fill a lending gap left by indebted banks pulling out of the crisis-hit shipping industry.

Moving into traditional bank territory and further down the shipping value chain, Maersk Line, part of A.P. Moller-Maersk , is offering to finance shipments and remove the paper trail from financing deals.

Maersk says it has no need to ask for collateral – one of the biggest headaches for banks and customers in trade finance deals – because it is carrying the goods on its vessels.

Source:  http://timesofindia.indiatimes.com/business/international-business/maersk-seeks-role-in-trade-finance-as-banks-retreat/articleshow/60087830.cms

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

Infosys – is it heading downwards?

Infosys has spent a lot of time in the initial subdivisions of wave 2 and wave II of 3. This weeks crack pushes it into wave III of 3 and we should be on our wave towards 3=1 near 735.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Dow Transport, Dollar Index and Karachi 100 technical analysis

DOW TRANSPORT

Dow Transports – broke the wave 1 low to start wave 3 down to 8820. The 20dma near 9260 should be resistance.

DOLLAR INDEX

The Dollar finally got over the 20dma and now the next resistance is at 94.20. If the downtrend is to continue short term then 94.20 should not be surpassed. Above that consider that a larger degree wave 4 up started as shown. Note that wave 3 can be complete as it has 9 legs [5+4=9 for an impulse], even as IV and II have a very high ratio. If true then wave 4 will retrace to 38.2% at the upper end of the channel and near the wave IV high at 96.25 before wave 5 down starts.

KARACHI 100

Karachi breaks the rising channel trendline for the entire rise since 2009, giving the first sign that a bull market may have ended. The 5th wave was truncated as it did not achieve its full potential at the upper end of the long term channel and that was a surprise. The chart shows wave C down starting for the current leg and the fall so far is in 5 waves down. Any pullback to the broken  trendline near 44000 should face selling pressure and we should head towards C=A near 38200 in the next move down.

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Commodity Technical Updates Gold, Silver, Nickel, Copper, Crude MCX and more

GOLD

Gold weekly charts show that we closed down for the week. And did so at the 1300 level a third time raising the chances of a triple top. Odds go up that staying below 1300 we go back lower towards the lower end of the triangle near 1186. Short term support to watch is 1269 a and after that 1251

SILVER

Silver prices facing resistance at the 61.8% retracement of the previous decline from April to July. The level is 17.25. If prices do not go above this mark then they may enter a fresh corrective phase down from here. 16.69 is the first support at the 20dma.

COPPER

Copper – the trendline of the last two highs rising to 3.02$ is an important short term resistance level from where prices can react short term. So keep a watch on it. This is a weekly chart.

CRUDE MCX

Crude broke below the rising trendline from the June bottom. MCX prices may go back to test the neckline support at 2745. Resistance is near 3100

Nickel MCX

Nickel bounced back in wave b of iv. A reverse parallel channel shows support at 655-652 and the upside in wave v from there at 725 or higher if it extends

 

SUGAR CSCE

Sugar – The recent rise in Sugar prices ended in some kind of triangular structure and the decline is getting impulsive. This makes me look at the next best alternate for Sugar prices. This shows that the fall is wave 5 and that is not good news on the big picture view that I have backed for long. 11.43$ is the current target for wave 5 based on 5=1. But we should keep it open for prices to extend to the lower channel and neckline near 10.50 as well.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Trade Finance as a Business Development Strategy

Without trade finance, there wouldn’t be Indian spices, clothes, or jewelry in the United States. Or Apple’s iPhones in China, much less any other international product at any respectable distance from its origin.

In fact, according to Investopedia, the World Trade Organization (WTO) estimates that international world trade has expanded 80%-90% thanks to trade finance.

For this to continue, companies need to include trade finance in their business development strategies.

How do you do that? Learn how you can incorporate trade finance into your business development strategy.

Incorporate Inland Trade Finance in Market Penetration and Market Development

Market penetration and market development are key parts of a business development strategy. Market development involves selling more of your service or product to repeat customers.

While market penetration is about expanding your product or service to other cities and provinces, it can involve inland trade finance. As you may have to renegotiate local and provincial trade deals.

For instance, let’s say you sell jewelry. A business from a neighboring city may purchase your jewelry and sell it to its customers.

You have a long history with this client. And know that your product is selling quickly in your customers’ shop. In which case, you could propose selling the client more jewelry for a bulk price.

After negotiating, the client agrees. However, despite the long, positive history you’ve had with the client, the client may not feel comfortable paying you before you export the jewelry.

This is where a trade financier or banking institution comes in, providing a letter of credit promising that you will export the jewelry upon payment.

Consider the Internet and Brick-and-Mortar Stores

If you’re already selling more of your product or service to clients, perhaps it’s time to branch out to another channel such as the Internet?

If you run a successful e-commerce store, maybe it’s time to start a brick-and-mortar store as well?

That way, your customers have more options where to buy your products.

Especially when it comes to brick-and-mortar stores, trade finance can help you secure new import and export trade deals—especially when there are multiple currencies involved.

Creating a New Product or Service for Repeat and New Customers

With repeat customers, you’re doubling the number of products the repeat client is importing.

And, with new clients, your new product or service will expand your client base. It’s important that you first create new products for your repeat customers before jumping to new customers, as it involves more risk.

Again, trade finance can help cultivate more trust during this period of growth. Since trade financiers or banking institutions can create letters of credit, laying out the terms the importer and exporters must follow.

Final Thoughts About Your Business Development Strategy

Know that growth doesn’t happen in a day; it’s harder for businesses to jump from market penetration to supplying new products to new clients.

This is why we recommend that you approach growth slowly. However, know that trade finance may help increase the number of clients you trade with, no matter where they are.

What’s your take on trade finance? How has it helped your business? Check out our blog for more information.

Euro, S&P 500, USDJPY, NYSE Composite & US 30 Years T Bonds Analysis

USDJPY

USDJPY – broke the trendline of the previous lows and may have started the next major leg lower. Wave iii down would point to 106.47 and resistance near 110.90

S&P 500

The first  waves of a decline appear to be complete on the S&P, ideally the next move should be wave iii down towards the 2407 swing low, near the wave iv mark. 2470 is the 20dma resistance.

US 30 Years Treasury Bonds

US Treasury bonds sold off from the 61.8% mark and the upper end of a flag. Ideally wave II is complete and wave III down unfolds which should see bond yields spike up in the coming weeks.

EURO

Making a near term change to my view on the Euro based on what I have already said about the dollar going lower. The 20dma support held and weekly charts align with this. Wave v of 3 may still be developing and should push the Euro higher closer to the 1.20 mark. After that we may look for a wave 4 dip.

 

NYSE Composite

The NYSE composite is a very different index of US stocks. It sold off this week from the upper end of a parallel channel of the lows for the 6 year period. Prices have been pushing against the smaller green channel since 2016 for months now and in doing so have reached the while channel before the decline. The very small blue channel for the last few months was broken and so that could at least start a move to the lower end of the green channel.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

Commodity Technical Analysis Report

COPPER

Copper could pull back to the 20dma at 2.83, and if it closes below that then take it seriously for a possible deeper set back

LEAD MCX

Lead prices sold off and did not continue as expected. The daily momentum crossed over to the sell side. Chances are that wave III did not take off, and a close below 147.54 would indicate that we are again in a correction and may retest 140 or lower.

ZINC MCX

Zinc prices recently paused near a key Fibonacci resistance where b=138.2% of a, as shown. If the recent high is surpassed then we continue higher in wave iii to levels discussed before. Failure however would trigger an expanded flat set up where wave c at 173 maybe seen in a decline. In an expanded flat wave b goes higher than the top and c goes lower in a ratio of 161.8% of a.

CRUDE

Crude fell below the level discussed day before. The implications are that the entire rise from the June bottom is corrective. The rising trendline on the chart at 47.10 is the last support below which we should be in wave E down.

Failure to go above the 61.8% mark means that we may now be forming wave E of a running triangle. Wave E can either test the neckline at 42.80 and bottom there or maybe even break below it. If 42 is broken then maybe even a alternate pattern will develop with a dip to the 61.8% retracement mark near 37.3. Ideally we should not break 42.

GOLD

Gold – sold off in two days again from the upper end of the rising channel and the 1300 mark for a third time. The daily momentum rolled over to the sell side. so unless we see a fresh pick up in gold maybe it will repeat the same pattern. 1261 is the trendline support a break of which will confirm that we are heading back to 1206 nekline

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

Trade Finance News & Updates Around The World

Eleven banks have passed a major milestone in the digitisation of documentary trade finance.

They have developed a prototype application on R3’s distributed ledger platform, Corda, that has the potential to significantly reduce inefficiencies and costs by streamlining the processing of sight letters of credit.

Bangkok Bank, BBVA, BNP Paribas, HSBC, ING, Intesa Sanpaolo, Mizuho, RBS, Scotiabank, SEB and U.S. Bank have been collaborating with R3 and technology partner CGI over the last year on numerous trade finance projects, building and testing applications. Using lessons learnt from these projects, the group has now developed a trade finance application on Corda that incorporates shippers and carriers. Several R3 member institutions now intend to pilot the platform with the goal of making it widely available in 2018.

Source: https://www.finextra.com/pressarticle/70297/eleven-banks-develop-trade-finance-app-on-r3s-corda-dlt-platform

HSBC and IBM use robotics to speed up trade financing

HSBC has partnered with technology group IBM to bring the traditionally paper-heavy trade financing process into the digital age.

The initiative is the latest effort to make trade transactions, which HSBC said can involve as many as 15 different 40-page documents, more efficient.

The UK bank is working with IBM to use advanced robotics to identify, digitise and extract data from such documents and feed this into its own transaction processing systems.

Natalie Blyth, HSBC’s head of global trade and receivables finance, said: “By digitising this process we will make transactions quicker and safer for both buyers and suppliers, leading our industry forwards, and we will reduce compliance risks through an enhanced ability to manage huge volumes of data.”

Source: https://www.fnlondon.com/articles/hsbc-and-ibm-use-robotics-to-speed-up-trade-financing-20170810

HFC Boosts Trade Finance

Knowledge on trade finance is very important for Banks.

This was the comment made by the acting chief executive officer HFC Bank in Fiji Raj Sharma at the HFC Bank and Asian Development Bank (ADB) trade finance client seminar at Tanoa Waterfront Hotel in Lautoka yesterday.

He said the seminar would enhance the knowledge of their customers to know about trade finance facilities offered by HFC Bank. “This year we have signed an agreement with ADB under this trade finance facility,” Mr Sharma said. “This means with ADB, it gives us a window to have access to over 200 banks globally.” He added: “Trade finance facility has a lot of advantages and we as a local bank would have difficulty to setup a corresponding relationship with other banks.

“We have learnt about trade finance facilities in terms of letters of credit that could be given to the customers, opening of account.

Source: http://fijisun.com.fj/2017/08/08/hfc-boosts-trade-finance/

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

 

Strategic Trade Risk Mitigation Solutions

 

Are you about to enter the domain of international trade and expand base in India? If yes, it is imperative for you to know about the variegated challenges you might have to face. To name a few, politics, law, finance and more, can affect your venture. With tonnes of responsibilities to shoulder, you may find it hard to concentrate on the trade risks and their solutions. In such circumstances, a trade finance company can come to your assistance.  The professionals can not only tell you about the potential risks, but also advise you in trade risk mitigation planning.

Here are 4 Mitigation Strategies to look into.

Decide On An Apt Business Partner

Your business partner in India is your support in an unknown, foreign territory. Choose a partner, which has professionals, who are familiar with the business practices, culture and regulations in the host country. Remember, a strategic alliance, with the right collaborator can provide you with a sound idea about your target market.

From document filing to obtaining permits and registering the business, your partner may assist in a wide sphere of necessary actions.

 

Evaluate The Political Environment

Changes in the political landscape of India, a developing economy, may destabilize the import/export policies and foreign exchange rate. Also, such changes can usher in the collapse of the entire system. This includes a massive transformation in the legal and security environment bringing about disruptions in trade. Conduct a thorough research of the political background before you make your decision. The trade risk mitigation strategies that follow, curtail the probable losses that can unbalance your business plans.

 

Design An Effective Business Model

India is a vast country with diverse geographic features and market segments. Therefore, creating a business model catering to the demographics is a necessity. You may opt for a multi-part model with tailored strategies to suit the demands of each region. For this purpose, factor in the aspects like, social, economic and cultural differences, that influence the business environment. The model should elucidate all the indirect and direct costs including tariff and duty calculations, shipping methods, protectionist laws, etc.

One of the most significant determinants while creating a business model is understanding what the customers want. Try to learn about the market demand, so that you can focus on offering exactly what the people are looking for. For instance, whether the customers are inquiring about premium or basic products should be assessed. Once you have an in-depth perception, you can steer clear of supply chain disruptions.

 

Prepare An Alternative Plan

Lastly, devise an exit plan. Anything may happen – a flood, a political turmoil or infrastructural issues resulting from them. Therefore, while planning the model, you should make a calculation of the losses that you might incur in your venture. Establish and track the metrics that measure your failure or success level, and establish objectives accordingly.

The associated risks of establishing trade relations with India are numerous. Recognizing them through careful market scrutiny and venturing to opt for trade risk mitigation strategies reflect the attitude of a successful business owner.

For more information on what you can gain by working with us, contact us today!