Trade Finance News, Updates & Trend Across the Globe

Are Logistic Companies Waking up to Trade Finance?

The logistics industry has a complex structure of players that enable products sourced globally to get to the last mile destination. There are freight forwarders, Regional and Global Ocean Carriers, air freight, Non Vessel owning 3PLs and others that provide a range of services.

Most logistic providers have not progressed with supply chain finance solutions. Until recently, UPS was the only game in town. Few people know that UPS bought a bank back in 2001, First International Bancorp, and got into the factoring business. Today, they focus on three finance solutions:

Source: http://spendmatters.com/tfmatters/logistic-companies-waking-trade-finance/

Hong Kong, Singapore to Collaborate on DLT Trade Finance Platform

Hong Kong’s banking regulator and de facto central bank has announced a new collaboration with Singapore aimed to digitize trade finance using distributed ledger technology (DLT).

Making the announcement today at a fintech event, the CEO of the Hong Kong Monetary Authority (HKMA), Norman Chan Tak-lam, said the joint project with the Monetary Authority of Singapore (MAS) will focus on a DLT proof-of-concept called the Hong Kong Trade Finance Platform (HKTFP).

Already having seen involvement from seven Hong Kong-based banks, the project is designed to digitize trade documents and reduce risk and fraud in the industry. Ultimately, the authorities plan the creation of a cross-border infrastructure that would serve as a bridge between HKTFP and a similar trade platform in Singapore.

Source: https://www.coindesk.com/hong-kong-singapore-to-collaborate-on-dlt-trade-finance-platform/

Corda for Cargo: R3 Inks Another Trade Finance Partnership

In its latest effort to use distributed ledgers to modernize the paper-intensive business of trade finance, R3 has agreed to work with Bolero on an electronic bill of lading service.

Announced Monday, the partnership follows R3’s pilot with Japanese financial giant Mizuho to digitize letters of credit and bills of lading, and a trade finance app developed by 11 international banks using the consortium’s Corda platform.
R3’s newest partner, the U.K.-based Bolero, already offers an electronic bill of lading and title registry, with a common legal framework, but the reach of that service will be extended by developing an oracle on Corda, the companies said.
Part of R3’s broader mission is to “help connect digital islands,” Todd McDonald, a co-founder and head of partnerships at R3, told CoinDesk.

Source: https://www.coindesk.com/corda-cargo-r3-inks-another-trade-finance-partnership/

Global Trade Finance Market Research Report 2017-2022

Bharat Book Bureau announces the addition of the report “Global Trade Finance Market Research Report 2017-2022 by Players, Regions, Product Types & Applications [https://www.bharatbook.com/business-market-research-reports-952808/global-trade-finance-players-regions-product-types-applications.html ] ” to its offering.

Summary

The global Trade Finance market is valued at XX million USD in 2016 and is expected to reach XX million USD by the end of 2022, growing at a CAGR of XX% between 2016 and 2022. This report offers an overview of the market trends, drivers, and barriers with respect to the Trade Finance market. It also provides a detailed overview of the market of different regions across United States, Europe, China, Japan, India, Southeast Asia and Others. The report categorizes Trade Finance market by By Activity, By Scope, and application. Detailed analysis of key players, along with key growth strategies adopted by them is also covered in this report on Trade Finance market is valued at XX million USD in 2016 and is expected to reach XX million USD by the end of 2022, growing at a CAGR of XX% between 2016 and 2022.

Source: https://www.marketwatch.com/story/global-trade-finance-market-research-report-2017-2022-2017-10-25-102033131

BNY Mellon becomes partner bank in ADB’s Trade Finance Program

BNY Mellon has become a partner bank in the Asian Development Bank’s (ADB) Trade Finance Program (TFP).

The agreement, made official at a signing ceremony during Sibos, covers a range of trade finance instruments, including loans and guarantees, and will allow BNY Mellon to continue its strong growth in Asian trade services by facilitating support to a wider range of customers, including small- and medium-sized enterprises (SMEs).

Backed by the ADB’s AAA credit rating, the TFP enables companies throughout Asia to engage in import and export activities through the provision of loans and guarantees by ADB’s partner banks. Since 2009, the program has supported over 9,200 SMEs across developing Asia – totaling over 13,000 transactions valued at over $25.5 billion. Sectors range from commodities and capital goods, to medical supplies and consumer goods.

Source: https://www.fx-mm.com/news/70907/bny-mellon-becomes-partner-bank-tfp/

Africa drives Access Bank’s trade finance growth

The Access Bank UK Limited, a wholly-owned subsidiary of Access Bank Plc, a Nigerian Stock Exchange-listed company, has witnessed strong growth in its trade finance business linking the Middle East region with Nigeria and other sub-Saharan markets, Jamie Simmonds, CEO of The Access Bank UK told Gulf News in an interview.

The bank which began its Dubai operations from the Dubai International Financial Centre (DIFC) in 2015 said the DIFC office has become a regional business hub for the bank, attracting trade finance deals from across the Middle East and from Asia.

The bank works on a five-year plan and matches the liability side of the balance sheet with planned asset growth. In addition to the capital raised from its parent, the liability side is significantly supported by customer balances, Simmonds said.
Source: http://gulfnews.com/business/sectors/banking/africa-drives-access-bank-s-trade-finance-growth-1.2106124

Trade finance needed to foster intra-African trade

East and southern Africa leads in intra-African trade with the highest share of between 18 and 19 percent, which reflects Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community’s (SADC) effective agenda in consolidating trade and development in Africa.
North Africa and Central Africa have the lowest share of intra-African trade of 5.3 and 2.1 percent, respectively.

This information is contained in the Trade Finance in Africa Survey Report by the African Development Bank Group published in September 2017, which tracks the changes that have occurred in the trade finance market in Africa during the period 2013-2014.

Source: https://southernafrican.news/2017/10/27/trade-finance-needed-to-foster-intra-african-trade/

De-risking in trade finance: time to act

As financial authorities express concern about de-risking in correspondent banking, a similar phenomenon is emerging in trade finance, driven by the high costs of KYC compliance.

There is a danger that some banks in some regions, such as Africa, will have difficulty connecting to the trade finance world. Banks need to collaborate to help corporate clients to connect with their customers and address the still unsatisfied demand for international trade services.

De-risking is a hot topic in the cash clearing universe as some correspondent banks withdraw from certain countries, currencies, or products to control costs and risk. At the same time, de-risking is becoming a phenomenon in the trade universe for the same reasons.

Banks’ correspondent relationships are conducted via Swift’s global network, which numbers 11,000 banks in 200 countries. Via Relationship Management Application (RMA) keys, banks can connect with each other. The RMA is a Swift-mandated filter that enables financial institutions to define which counterparties can send them FIN messages. Any unwanted traffic is blocked at the sender level, reducing the operational risks associated with handling unwanted messages and providing a first line of defence against fraud. RMA Plus, a more granular version of RMA, goes one step further by letting institutions specify which message type(s) they want to receive from, and send to, each of their counterparties.

Source: http://www.bankingtech.com/1034352/de-risking-in-trade-finance-time-to-act/

Hopes raised as first African bank joins trade finance fintech platform

South Africa’s Standard Bank has become the first African bank to join CCRManager’s digital trade finance platform, a global project to ease trade and supply chain finance distribution.

CCRManager (CCRM), a fintech firm backed by the Monetary Authority of Singapore, launched its platform earlier in the year, as previously reported by GTR.

Thirteen banks across 11 countries are already members of the platform, transacting live deals. These include Bank of China, DBS Bank, ICICI Bank, Swiss Re Corporate Solutions, UniCredit, BBVA, Yes Bank and now Standard Bank. The remaining banks are based in Japan, Hong Kong, Middle East and UK, but have not been named.

Source: https://www.gtreview.com/news/africa/hopes-raised-as-first-african-bank-joins-trade-finance-fintech-platform/

Sponsored roundtable: Assessing India’s trade finance scene

GTR: The current government of India has been taking steps to make trading and transacting simpler and easier. How do you assess the progress that’s been made on that front?

Somasekhar: In India, we have a robust foreign trade policy compared to three decades earlier. When we see the foreign trade policy, many of the items are becoming freely importable. The documentation part of the foreign trade policy has gradually been simplified over a period of time. Previously, we had around 21 to 25 documents that a customer had to submit to the authorities. Today, it has been reduced to seven or eight documents. There has been simplification of documents over the past several years in this regard.

One issue is with physical documents. Although many of the banks have completed their digitalisation process, the synchrony with customs was not available and is now being looked into. The customer gives the documents to the bank. In some cases, the bank has an interface with the customer systems, but banks in turn do not have an interface with the customs offices. This maintains the need for the physical documents to ensure that we adhere to the guidelines of customs or the regulator.

Verma: The Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) are great developments on that front. What did not happen in the last five decades has happened in the last two and a half years. It is a great change that I see. While there are a few teething issues, we believe that it is a great step in the right direction.

Somasekhar: We agree it is a positive step. Compared to 20 or 30 years back when banks were generally dealing in physical documents today, we are able to at least see them in the system once the data is uploaded by customs. We can be sure that goods have come into the country or gone out of the country. But still, there are some bottlenecks. For example, when goods are delivered in manual ports, there is no entry in the EDPMS or the IDPMS immediately but only at a later date.

Source: https://www.gtreview.com/news/asia/sponsored-roundtable-assessing-indias-trade-finance-scene/

5 Exciting Global Trends in Trade Finance

Businesses thrive under pressure. And while every year brings its own set of challenges, it also brings its new sets of opportunity. Thus, as we look forward to the final quarter of 2017 and the beginning of 2018, it is exciting to consider potential innovations in trade finance.

Here are some trends to look forward to in the next few years. While they will prove to be challenging, they also prove to be exciting opportunities for those looking to invest in trade.

Faster Manufacturing

Just as trade finance played a role in the early development of international trade, it’s also played a role in its innovation. One incredible way in which this has happened was through the creation of a faster rate of manufacturing.

International trade has encouraged a number of companies to develop faster mechanisms of development. This has allowed more products to be put on the market at a faster rate due to technologies such as 3D printing.

While these technologies have provided a number of challenges to manufacturers, in the long run, they will result in increased capacity for businesses. This is good news for investors and customers alike.

The Role of Robotics in Trade Finance

A 3D Printer in action
3D Printing, Robotics in Trade Finance

Like 3D printing, robotics is a relatively new trend in the economy that’s bound to cause a few challenges. For investors, it’s also an unavoidable reality.

The best thing you can do is take advantage of the robotics movement. That could involve deeper investment in manufacturers or taking advantage of the wide variety of robotics ETFs on the market.

Either way, smart investors will treat this as an opportunity for growth.

The Continued Rise of E-Commerce

E-commerce has been growing for over a decade. And that trend is continuing on an international scale today.

For investors, this means there is time to develop a strategy that situates around the continued growth of this consumption method. It’s clear that e-commerce is so much more than just a passing trend: so make sure you give it the financial respect that it deserves.

The Role of Blockchain

Blockchain is going to play an absolutely tremendous role in trade. Blockchain companies offer a number of opportunities to the discerning investor. Whether it’s the ever-constant benefits of operating as a digitized company or the elimination of unpaid settlements, Blockchain’s growth is an exciting trend for trade investors around the world.

Combatting a Trade-Hostile Environment

While the current environment offers a number of opportunities to investors, it is not perfect. Between the EU’s imperiled existence and the rise of trade-hostile politicians around the world, there are policy dangers in the current business environment.

While weaker investors will flee, this is not a smart choice. The best option is to stay on top of the news and look for ways to thrive in the current market. By making these choices, you are far more likely to ensure your success.

Get Ahead Of The Curve

If you want to succeed in a challenging business environment, you will need to innovate. We’re here to help you with that.

We’re committed to helping traders around the world succeed. Whether it’s through commodities or global trade, we can play a role in your success.

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

4 Current Commodity Tips You Need to Know About

 

Commodities are an incredibly strong investment choice. A great way to build a diverse portfolio, they lack the volatility of stocks while providing great room for financial growth.

But investing in commodities without knowing what you’re doing is a bad idea.

If you want to make this investment, you’ll need to develop an intelligent strategy. Here are some commodity tips to help you make that move.

Commodities Explained

Before you read any other commodity tips, you need to understand the concept. Commodities are structured trades around the delivery, sale, import, and export of a particular good. Popular commodities include oil, gold, and soybeans.

The most popular strategy for investing in commodities is signing a futures contract. These ensure that you will own the commodity for a set amount of time before selling it on a certain date at a specific price.

Here are a few tips for making the most out of your commodity trades in 2017.

Why ETFs Are A Good Choice

If you’re looking for an effective way to invest in commodities, one of the best ways to do it is through ETFs. ETFs, or Exchange-traded funds, can either monitor a commodity or a specific market index.

ETFs can be a great way for beginners to invest in commodities. They are easy to manage and involve a lot less red tape than a futures index. While investing in ETFs is not the only way to make a profit off of a commodity investment, it is the best way to get acquainted.

How To Use a Short Position

Many have a strong preference for the simple game of going long on their commodities. But this can be a mistake. There’s a lot of money to be made off of the short sell, and it also isn’t particularly difficult.

If you detect a market depreciation, you should sell shares in a commodity. Let the commodity depreciate in value: when you feel it has bottomed out and will experience a resurgence in value, you should buy shares.

This will allow you to minimize the cost of purchasing valuable commodities while profiting off of purchases of a commodity at a low value. Every trader should stop worrying and love the short.

Read The News (Financial and Otherwise)

Commodities are very complex. But in a way, they can also be relatively simple to understand. As a matter of fact, indexes for every commodity from corn to currency will appear in the newspaper. And not just in the business section.

Staying on top of everything from policy to boardroom rumors can help you make the right decision. So devote at least an hour to the news each day.

Be An Oil Skeptic

Oil is one of the most popular commodities. And while it can perform well or poorly in various technical analyses, an essential part of risk mitigation involves taking a look at the international political environment.

Whether it’s through long-term transformations in the energy market or instability in OPEC nations, the future for oil is questionable. In the name of risk mitigation, we would advise approaching oil with caution.

Beyond Commodity Tips: Work With Us

Tips can take you far. But you can go even further by working with seasoned financial professionals.

We’re experts in various areas of trading. One of these areas is commodities trading. But whether you’re looking to succeed at the trading of commodity ETFs or to continue boosting an already thriving portfolio, we’re the best people to work with.

Contact us to take your trading strategy to the next level.

Trade Finance News, Update & Trends Around The World

Bank Of America Merrill Lynch Supports Blockchain Innovation For Trade Finance

In an interview released on September 22, 2017, Peter Jameson, co-head of product management, GTS EMEA at Bank of America Merrill Lynch, spoke on the merits of blockchain technology and what it can bring to trade finance.

Jameson’s take on blockchain technology is optimistic and he thinks it can provide immediate benefits. He said, “The distributed nature of blockchain means that you could quite easily move from a place where a lot of things have to happen in sequence to a technology where a lot of the players involved in the transaction can do what they need to do all at the same time.” The so-called atomic swap, or instantaneous exchange of ownership, can easily be facilitated by blockchain-based settlement systems and executable distributed code contracts (also called smart contracts). Jameson said this capability is very powerful, given “the slow nature of some of the trade transactions today.”

Source: https://www.ethnews.com/bank-of-america-merrill-lynch-supports-blockchain-innovation-for-trade-finance

ICOs: the next goldmine for trade finance lenders?

An increasing number of non-bank lenders are looking to initial coin offerings (ICOs) as a source of funds for trade finance lending.

ICOs – also referred to as token sales – are unregulated means of crowdfunding, using cryptocurrency. In theory, through an ICO, you can raise money from anybody, anywhere in the world.

This is done by issuing digital tokens. Early backers are usually motivated by a prospective return on their investment, as a startup’s success would often translate into a higher token value.

For trade finance lenders, it offers access to an unorthodox – and, theoretically, unlimited – pool of investors in a market that is booming. In July, a report by research firm Autonomous found that startups had raised in total a record US$1.27bn in the first half of 2017 through ICOs, while the top four ICOs of the year, according to research firm Smith and Crown, have to date raised US$660mn between them.

Source: https://www.gtreview.com/news/fintech/icos-the-next-goldmine-for-trade-finance-lenders/

The C-Suite Challenges of a Trade Finance Bank

An insight into the challenges that plague the C-Suite of a bank determined to lead the trade finance business. Is Digitization the answer?

Trade Finance has been a well established and important business for Banks and Financial Institutions. Hardly any domestic or international Trade activity can take place safely and successfully without some form of trade financing, in fact as much as 80% of annual global merchandise trade is enabled through some form of trade financing. This financing can range from traditional instruments like Letters of Credit, Bank Guarantees to a more contemporary form of open account based supply chain financing.

Source: https://www.finextra.com/blogposting/14522/the-c-suite-challenges-of-a-trade-finance-bank

Trade Finance Revenues Slip $2.8 Billion At Top Banks

Top banking firms across the globe saw a $2.8 billion decline in transaction banking revenues in the first half of the year, marking a seven-year low for this area of banking, finds a new report from analysis firm Coalition.

Reports Tuesday (Sept. 19) revealed news that global transaction banking revenues jumped 4 percent year over year, hitting $18.6 billion for the first half of the year. The Americas and Asia led the increase, which also enjoyed a spike thanks to cash management revenues, which saw $11 billion in revenues in H1, a 7 percent increase and a six-year high. Coalition analysts pointed to an increase in deposit productivity.

Citigroup, HSBC and JPMorgan led the transaction banking and cash management increases, researchers noted. But the drop in trade finance reflected a decline in commodities trade finance, with corporate customers reducing activity, especially in Asia, the report found.

Source: https://www.pymnts.com/news/b2b-payments/2017/coalition-says-trade-finance-revenues-fell-2-8-billion/

Trade finance fund may be an answer as Fed, ECB prepare to unwind

As the US Federal Reserve (Fed) and the European Central Bank (ECB) prepare to unwind their easy money policy, which was in place since the financial crisis almost a decade ago, funds which are into trade finance among others may benefit.

With a rebound expected in global trade, and as banks become vary to finance companies in need of working capital, alternative sources like trade finance funds are gaining prominence even as analysts are expecting turbulent times in stock markets, which have been hitting record highs amid growing risks including geopolitical tensions and rising global debt.

“It’s a [Trade Finance] fund that will benefit from rising rates. In a rising rate scenario, equities and bonds take a beating, and this [trade finance] is an investment in the real economy,” said Doug Bitcon, head of credit strategies at Rasmala.

Souce: http://gulfnews.com/business/sectors/markets/trade-finance-fund-may-be-an-answer-as-fed-ecb-prepare-to-unwind-1.2094114

ABN Amro implements CBA trade finance front-end across global operations

Norwegian software vendor Commercial Banking Applications (CBA), today announced that ABN AMRO will be implementing the new IBAS Customer Front-End System for Trade Finance across its global operations as part of a project to offer additional functionality to customers, increase efficiency and reduce total cost of ownership.

The new IBAS front-end interfaces seamlessly with CBA’s IBAS Global Trade Finance Factory (IBAS GTF) mid- and back office solution. IBAS GTF is already being used by ABN AMRO to manage its trade finance operations across Europe, Asia Pacific and North America. The bank expects to put the new IBAS front-end into production in Q4 2017, replacing Surecomp’s allNETT solution in the Netherlands and manual processes elsewhere.

Source: https://www.finextra.com/pressarticle/70735/abn-amro-implements-cba-trade-finance-front-end-across-global-operations

Trade finance revenues hit seven-year low

Global trade finance revenues reached their lowest level in seven years, with a 5% decline year-on-year for the first half of 2017.

Total trade finance revenues for the ten largest global transaction banks (Bank of America Merrill Lynch, Barclays, BNP Paribas, CITI, Deutsche Bank, HSBC, JP Morgan, Société Générale, Standard Chartered and Wells Fargo) fell to US$2.8bn compared to US$2.9bn in the same period last year, according to the latest report by analytics company Coalition, which monitors bank activity.

Trade finance revenues comprise of traditional trade finance such as LCs as well as structured trade finance products. Structured trade finance revenue declined significantly, driven by reduced commodity trade finance activity across all regions, Coalition’s research director Eric Li tells GTR.

Source: https://www.gtreview.com/news/global/trade-finance-revenues-hit-seven-year-low/

DIGITALISATION AND TRADE FINANCE: WHAT’S NEXT?

Globalisation and the proliferation of technology have transformed the business world as we know it. But digitalisation is a priority for one industry in particular: trade finance. Greater use of technology could bring numerous benefits to the industry and even help plug the trade-finance financing gap—estimated at US$1.6 trillion by the Asian Development Bank (ADB).

As the ICC (International Chamber of Commerce) Banking Commission’s latest Global Survey on Trade Finance highlights, however, this is also a sector that has yet to fully realise the benefits of new technology. Fortunately, there is plenty that can be done to accelerate the digitalisation of the industry.

Source: https://internationalbanker.com/finance/digitalisation-trade-finance-whats-next/

AfDB, UBAF to Co-Sponsor Seminar on International Trade Finance

The African Development Bank (AfDB), in partnership with the Union de Banques Arabes et Françaises (UBAF), will co-sponsor a seminar on international trade finance in Abidjan, Côte d’Ivoire, from 3 – 5 October 2017.

Representatives of banking institutions from Côte d’Ivoire, Mali, Benin, Burkina Faso, Guinea, Togo, Senegal, Chad, Gabon and Niger will take part in this event, with the goal of improving their professional practice in international trade finance. Issues related to specific foreign trade financial products and the risks associated with managing these operations will be addressed.

This seminar will enable participants master trade finance issues, particularly documentary credit and standby letters of credit. It will also provide information on issues involved and characteristics of various trade finance products, including credit risk, conformity, communication and tools through practical case studies of traditional and structured transactions for commodities financing.

Source: https://www.newsghana.com.gh/afdb-ubaf-to-co-sponsor-seminar-on-international-trade-finance/

Commerzbank names Asia trade finance head

Deepan Dagur has been named head of trade finance and cash management, Asia, at Comerzbank.

Dagur is based in Singapore, reporting to Nick Johnson, regional board member for Asia, and March Kirchhoff, global head of trade finance and cash management.

He replaces Brigitte Volz, who took over a new role in the operational development group. He joins from ANZ, where he spent five years in various senior transaction banking roles. He previously worked with Standard Chartered, consultancy Bain and Company, investment bank Salomon Smith Barney and UBS Warburg.

Source: https://www.gtreview.com/news/on-the-move/commerzbank-names-asia-trade-finance-head/

$1.5 Trillion Trade Finance Gap Persists Despite Fintech Breakthroughs

Businesses of all sizes continue to struggle to access sufficient credit, resulting in a global trade finance gap of $1.5 trillion in 2016, according to an Asian Development Bank (ADB) Brief released on September 5. Developing Asia’s share of the trade finance gap was 40% of the global total.

In its fifth annual study, 2017 Trade Finance Gaps, Growth, and Jobs Survey, ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 515 banks and 1,336 firms from 103 countries. While the global trade finance gap stabilized in 2016 compared to the 2015 record high of $1.6 trillion, it still translated to missed growth opportunities and job creation.

“A sizeable trade finance gap is a drag on trade, growth, and job creation,” said Steven Beck, Head of Trade Finance at ADB. “We hope the results of the survey will encourage private and public sectors to ramp up collaborative efforts to improve businesses’ access to trade finance. Our Trade Finance Program (TFP) is here to assist and address these market gaps.”

Source: https://www.finchannel.com/business/67518-1-5-trillion-trade-finance-gap-persists-despite-fintech-breakthroughs

THE TRADE FINANCE GAP STANDS AT U$1.5 TRILLION. WHAT CAN CFOS DO?

What is happening to global trade?

There are three forces driving the US$1.5 trillion trade finance gap:

  • High number of rejected trade finance applications from the Asia Pacific (APAC) region
  • High rejection rate of applications from SMEs and midcap organizations
  • Reduced lending by banks to SMEs due to perceived risk (Know-Your-Customer issues) and declining profitability in trade financing

Taking a deeper dive into the trade-finance shortfall, the ADB report says Asia and Pacific are continuing to drive this gap. The general lack of trade finance provision is due to a high number of rejected applications – against the backdrop of the largest number of proposals/requests made for trade finance (see chart below).

It’s likely to be the perceived risk of emerging market financing that is driving this shortfall.

Source: https://www.cfoinnovation.com/story/13635/trade-finance-gap-stands-u15-trillion-what-can-cfos-do?destination

 

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

 

Adam Smith Associates At GTR Asia (Singapore)

Building on its reputation as the largest and most popular trade finance gathering anywhere in the world, the conference returned to Singapore on September 5-8 at Marina Bay Sands. With over 100 speakers, 45 exhibitors, 60 sponsors & partners the event provided an effective and impartial marketplace for all involved in trade, commodity and export finance.

Officially completing its 9th year, attendance exceeded the 900 plus delegates of 2016’s event and welcomed over 1,000 delegates, affirming that GTR Asia Trade & Treasury Week as the essential place to be for anyone involved in international trade and treasury.

Topics discussed include:

  • Protectionism vs multilateralism, realignment towards China, economic trends and scenarios
  • Trade finance gaps in 2017: The impact on trade, growth and jobs
  • The Belt & Road Initiative: The jewel in Asia’s crown?
  • Great expectations: How is the industry preparing for the era of fintech-enabled trade finance?
  • Trader perspectives on the commodity rebound and challenges in structured commodity finance ›› Country profiles: Vietnam, the Philippines, India, Bangladesh and Sri Lanka
  • Understanding potential threats to trade and economic stability in Asia
  • The role of insurers in managing and mitigating risk in uncertain times
  • Managing and financing Asia’s supply chains and the importance of working capital optimisation
  • Achieving sustainable trade: The challenges ahead
  • Are more investors accessing the trade finance market? What are they looking for?
  • ‘The business of treasury’: Operational challenges and the strategic environment

Mr Rudra Kundu, Managing Director was a panelist at the at the “Trade & Commodity Finance” stream from Adam Smith Associates Pvt Ltd.  Wherein the interview was conducted by Mr Rudra on topic

Are more investors accessing the trade finance market? What are they looking for?

Clement Schappler, Chief Risk Officer, EFA Group & Pankaj Kumar, Chief Executive Officer, Riqueza Capital were interviewed
by Rudra Kundu, Managing Director, Adam Smith Associates Pvt. Ltd.

● Examining the key factors in new kinds of investors looking at trade finance assets: How has this manifested itself in Asia? Is a different outlook required from that of traditional investment banking?
● What are investors looking for? Is it the type of yield or whether the asset is backed by insurance? Are we seeing more long-term interest? How difficult is it to get the right level of trade expertise?
● To what extent can supply chain finance play a role in handling investors and underwriting investments? To what degree have legal concerns been addressed?

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

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.

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!