Tradeteq, a technology provider for trade finance asset distribution, has launched what it calls the first-ever marketplace for buy-side investors to participate in the secondary trading of trade finance assets.
Originally launched in 2018, Tradeteq’s central offering is a cloud-based platform which allows originators to package trade finance products into standardised investments that can be bought and sold through private distribution networks and settled like common fixed income products.
With its new solution, Tradeteq Access Lite, the company is now aiming at giving investment managers access to deal flows from selected bank and non-bank originators. On the platform, investors can manage the end-to-end trading lifecycle, with instant notification of deals and the ability to match specific deal criteria and negotiate terms.
“Historically we have worked with very large asset managers and banks to provide an over-the-counter solution where we can automate their workflow processes,” Christoph Gugelmann, co-founder and CEO of Tradeteq tells GTR. “What we have noticed is that what a lot of originators need is support in finding the funder and being able to negotiate the transaction as a precondition to the creation of a tradable asset. That is why this marketplace is so important: the two sides can connect and negotiate on the platform, and then once they are successful, they can essentially press a button and Tradeteq will create the asset.”
While trade finance has traditionally been a bank-dominated business, it presents a compelling multi-trillion-dollar investment opportunity for institutional investors seeking sources of attractive risk-adjusted returns with low correlation to stocks or bonds.
“Trade finance offers tangible benefits to investors looking for alternative assets – particularly in today’s volatile climate,” says Nils Behling, co-founder and CFO at Tradeteq. “It’s low-risk and offers yield pick-up and uncorrelated assets that pay above commercial risk spread. The big obstacle has been lack of access but Tradeteq Access Lite is a crucial step towards democratising the market, enabling investors to tap into its full potential.”
The lack of a secondary trading market has left many corporates underserved when it comes to funding, contributing to a trade finance gap – the shortfall between supply and demand – of an estimated US$1.7tn. By distributing trade finance assets to capital markets, Tradeteq says it is enabling banks to increase their net interest income, free up their balance sheets and do more with less.
Tradeteq says that more than 40 members of the Trade Finance Distribution Initiative (TFDi), an industry-led group that sets the standards for global trade finance distribution, have already signed up to the platform. Participation is now open to credit funds, enabling them to capitalise on the growing trade finance asset class.