ITFA Press Release – ITFA establishes formal partnership with TFD Initiative

The trade finance industry is going through a series of changes – digitisation, the need for greater efficiency in cross-border flows, reducing the trade finance gap and managing banks’ balance sheets are all crucial priorities for the industry.

Our association represents financial institutions and various types of intermediaries engaged in trade and forfaiting – many of which are at the forefront of these changes. We, and many of our members, recognise that this is a global industry and as such, requires global collaboration.

This is why we are formally partnering with the Trade Finance Distribution Initiative to support the distribution of trade finance assets and establish a secondary market with diverse bank and non-bank participation.

Sean Edwards, Chairman of ITFA, comments: “The distribution of trade finance is a vital step for the industry as it navigates a series of structural and regulatory challenges and seeks to close the USD1.5 trillion trade finance gap. ITFA is proud to partner with the TFD Initiative and support the industry’s push towards establishing a secondary market.”

The TFD Initiative was established in April 2019. ITFA initially joined the TFD Initiative as an observer and we have witnessed first-hand the significant momentum and support it has received across the industry, with the number of members doubling from 14 at launch to more than 30 today.

The partnership will give all ITFA members full access to the TFD Initiative’s workstreams, and enable them to participate in live projects and proof of concepts. This will enable our members to collaborate with a broad section of the industry, network with a community of trade financiers, buy-side institutions and technology partners and attend a series of events and industry workshops.

André Casterman, Chair of the Fintech Committee, ITFA added: “This initiative delivers new technology-based market practices to digitise and automate trade distribution. It fosters collaboration amongst various fintechs and provides the necessary education to attract institutional investors. Technology now enables trade originators to benefit from an automated originate-and-distribute process leading to higher balance sheet velocity and increased origination capacity.”

With institutional investors growing increasingly interested in trade finance as an alternative investment class, these new market participants represent the future of funding for those in the sector.

We believe this will provide crucial benefits for our members and the wider industry by making trade finance an easily accessible and distributable asset class, improving access to financing for corporates and SMEs, and mitigate the capital requirements for banks under the incoming Basel IV framework.

The full ITFA press release can be accessed here. More background on the initiative is also available in our recent newsletter article entitled “ITFA shifts its fintech gear to address global ambitions”.

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