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Trade finance marketplace LiquidX has launched an automated digital distribution tool for trade finance assets, as part of efforts to do away with inefficient paper-based processes.

The fintech company says that US$400-500bn of bank-intermediated trade finance is distributed annually, predominantly manually. Its solution addresses this by allowing banks and asset managers to initiate single-click trading with their investor networks under existing agreements, or to the LiquidX network of over 50 funders. This enables banks and asset managers to increase their trade finance volumes while eliminating manual processes that are a source of delay, inefficiency, fraud risk, and error, the company adds.

LiquidX is integrating the digital distribution functionality into its trade finance platform, which includes receivables finance, supply chain finance, dynamic discounting, and inventory finance, as well as enabling it to be operated independently of its origination platforms. The company’s CEO, Jim Toffey, tells GTR will mean that bank customers can plug the company’s distribution technology into their existing infrastructure.

“Distribution allows banks to balance portfolios, manage credit limits and earn incremental returns on assets. Sharing of assets amongst a club of relationship banks is often at the direction of the corporate customer, meaningful to the way they manage their lenders,” he says. “However, the process is paper-based and inefficient, requiring large volumes of documentation to be processed and exchanged in a very short space of time. There are operational risks and time pressures which can impact our banking customers – and, in turn, the corporate customer whose asset is being funded. This essential feature allows all participants to scale, reduce risk, manage operations, and increase efficiency through the entire lifecycle of the transaction.”

The company is one of several seeking to streamline trade finance asset distribution – seen as a crucial way of getting more liquidity into the trade finance market. The development follows a move earlier this year by Tradeteq, a technology provider for trade finance asset distribution, which completed what it says is the world’s first trade finance-based non-fungible token (NFT) transaction, on the Singapore-based XDC network.

“The ICC estimates that trade across the G7 could increase by US$9tn in the next five years with digitisation,” says Toffey. “We are building the complete digital ecosystem that will allow trade to flourish and flow without manual impediments. Now banks and asset managers can originate, distribute, seamlessly access trade credit insurance, and generate better business intelligence – all on the LiquidX platform.”