Trade finance technology specialist Tradeteq has launched Tradeteq Access Lite, a marketplace for investors to participate in the secondary trading of trade finance assets, according to a press release.
More than 40 members of the Trade Finance Distribution Initiative (TFDI) have already signed up on the platform, the release stated. The TFDI is a group that sets the standards for global trade finance distribution. Its membership includes many of the world’s largest banks and asset managers.
Tradeteq said in the release that the market for trade finance assets is projected to be worth $10 trillion by 2027, but many would-be investors have been locked out due to the lack of a secondary marketplace. By building such a marketplace, Tradeteq hopes to make trade finance a liquid asset class.
“Trade finance offers tangible benefits to investors looking for alternative assets, particularly in today’s volatile climate,” said Tradeteq Co-Founder and Chief Financial Officer Nils Behling in the release.” It’s low risk and offers yield pickup 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 toward democratizing the market, enabling investors to tap into its full potential.”
The new marketplace has the potential to introduce new money into the realm of trade finance, which was reported to have a $1.7 trillion gap between what was needed and what banks actually lent in 2020.
A survey by the Asian Development Bank found that small- to medium-sized businesses (SMBs) were among the worst affected by the trade finance gap, accounting for 40% of rejected trade finance requests.
To meet the credit needs of SMBs, including trade financing, many startups are experimenting with alternative lending models. For example, Nigerian FinTech Duplo offers businesses a buy now, pay later (BNPL) service integrated into the supply chain between distributors and retailers.
Read more: BNPL Is the Working Capital Bridge for African SMBs
For all PYMNTS B2B and EMEA coverage, subscribe to the daily B2B and EMEA Newsletters.
