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Financial Institutions develop Trade Finance initiative

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Fourteen of the world’s leading financial firms have backed the Trade Finance Distribution Initiative (TFD Initiative) on the 1st of April for the standardization of Trade Finance, asset allocation and regulatory requirements. Amongst the fourteen banks that have undertaken the initiative are; HSBC, ING, Lloyds Bank, Standard Chartered, Credit Agricole CIB, Standard Chartered Bank, Rabobank, ANZ, Deutsche Bank and Sumitomo Mitsui Banking Corporation.

Additionally, two institutions have joined the TDF Initiative as observers; the International Trade and Forfaiting Association (ITFA) and the International Chamber of Commerce. These are critical parties to the drive as they are leading international associations for FIs and banks that are involved in cross-border trade and forfaiting.

The TFD Initiative aims to create a blueprint for global trade finance distribution by establishing standard regulatory and data requirements and commonly accepted definitions for banks and non-bank financial institutions. The Initiative is powered by Tradeteq’s software, a technology which enables institutional investors and banks to efficiently transact, interact and connect with one another.

The TFD Initiative will focus on improving risk management and operational efficiency. André Casterman, Board Member at Tradeteq, explained in a recent press release.“I believe the TFD Initiative offers the opportunity to create a global network for trade originators and liquidity providers to connect, interact and transact efficiently, thereby establishing trade finance as an easily accessible and attractive asset class for non-bank institutional investors.”

In its essence, Trade Finance is private financing which helps businesses mitigate mismatches between payment receipts and obligations that may arise out of the international trade of goods and services.