Trade Finance Talks Issue 2

Issue 2
Trade Finance
talks
Summer 2019
The Trade Gap:

Gender, Finance and Interoperability
Tackling Male Dominance in Trade Finance,

with LSE’s Grace Lorden
Fighting Financial Crime:

A View from Steven Beck, Asian Development Bank
Stenn’s Dr Kerstin Braun on Tackling the $1.5tn

Trade Finance Gap - A Non Bank Perspective
Bank of America Merrill Lynch’s Best Practices for

Supply Chain Finance
Trade Finance in Africa: Mind the Technology Gap
Trade Receivables Securitisation and

Off-Balance Sheet Financing: 2019 Update from Finacity
Basel III’s Next Iteration,

Sullivan’s Key Regulatory Themes of 2019
tradef inanceglobal.com
Trade Finance Talks 1
Thanks to
Moor Finn Partners
Peter Mulroy
Gwendoline de Viron
Grace Lordan
Christoph Gugelmann
Andre Casterman
Dr Kerstin Caroline Braun
Doreen Fick
Steven Beck
Baris Kalay
Dr Rebecca Harding
Martin Smith
Marcus Dolman
Geoffrey de Mowbray
Michelle Treasure
Richard Simon Lewis
Carl Patrick Stephen Hunter
Jacco de Jong
Carter Hoffman
Ulrich Brink
Charles Nahum
Geoffrey Wynne
Richard Bishop
Sean Edwards
ITFA
FCI
BCR Publishing
Assistant Editor
Carter Hoffman
Design and Layout

Jerry Defeo
Photographs and
Illustrations
Freepik Company S.L.
Address
2nd Floor
201 Haverstock Hill
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Limited (t/a Trade Finance Global). Copyright © 2019. All rights
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can accept any legal responsibility whatsoever for the con-
sequences that may arise from any opinions or advice given.
This publication is not a substitute for any professional advice.
2 Trade Finance Talks

1.1 NOTE FROM THE EDITOR
Deepesh Patel
Editor, Trade Finance Global
Welcome to our second edition of Trade Finance Talks by TFG, our publication which brings
together trade expertise, education and thought leadership on international trade and
receivables finance.
The first half of 2019 has been ripe with developments. From Brexit, to US-China trade wars,
the macroeconomic environment has seen vast shifts, contributing to an entirely new
global outlook, accelerating the pace of change for global trade. The intense regulatory
environment, born out of these and other threats, have created many challenges for firms
in all areas of international trade. Given all of this, businesses must still do what they can to
seek opportunities amidst the somewhat gloomy landscape. At the end of the day, trade
must go on.
In this second issue of Trade Finance Talks, we will explore the trade gap, that is, the gender
gap, the finance gap, and the interoperability gap. We will explore ideas surrounding
how to encourage and bolster female participation within the male dominated trade
finance industry, dive into $1.5 trillion finance gap, and look into reasons why many of the
technological tools employed by the industry lack the ability to operate with one another
and why this needs to change in the future.
We thank our contributors, partners and sponsors for making Trade Finance Talks happen.
Deepesh Patel
Editor

6
Contents
6 1.1 Introduction from FCI
Peter Mulroy
8 1.2 Male Dominance within Trade Finance and FCI
Balancing the Gender Gap
10 1.3 The End of Balance Sheet Lending?
The Trade Finance Distribution initiative explained
12 1.4 Non Bank Perspective: Stenn International, 8

Tackling the $1.5tn Trade Gap
2 Global Markets Update

16 2.1.1 Africa Overview - Trade and Receivables
Grace Lordan
London School of Economics
18 2.1.2 African Trade Finance: Mind the technology gap
20 2.2 Asia - Fighting financial crime and addressing
market gaps in trade
22 2.3 Mainland Europe - Best Practices for 10

Supply Chain Finance
24 2.4 North America Overview - The New Normal of Trade
26
Christoph Gugelmann
2.5 APAC Overview - Trade and Receivables Tradeteq
28 2.6 UK Focus - Exporting is great – but continued support is
needed
30 2.6.1 Trading up – how UK business can maximise the
10
export opportunity
32 2.6.2. Eye On: Exporting - Opportunities, Challenges

and Tips
André Casterman
3 Technology, Blockchain, and Data ITFA

36 3.1 Global Trade 2.0
38 3.2 Hidden trade and anti-money laundering –
the challenge for banks
12
40 3.4 DLT, Blockchain and International Trade –
Where are we at today?
4 Insurance, Securitisation, Risk and Legal -

Updates from the Experts
45 4.1 Factoring Laws - An FCI Update Stenn International
50 4.2 Trade Receivables Securitisation in 2019
52 4.3 Legal and Regulatory Themes in 2019
54 4.4 Trade Opportunities and Risk Mitigation

16
56 5 TFG Partner Conferences
Doreen Fick
ABSA

18 38
Will Hunnam Dr Rebecca Harding

Orbitt Coriolis Technologies
20 40
Steven Beck Carter Hoffman

Asian Development Bank Trade Finance Global
28 45
Geoffrey De Mowbray Mr. Ulrich Brink

British Exporters Association Bette Westenberger Brink
30 50
Richard Simon Lewis Charles Nahum
UK Export Finance Finacity
32 52
Carl Stephen Patrick Hunter Geoffrey Wynne

Coltraco Ultrasonics Limited Sullivan
36 54
Jacco de Jong Richard Bishop

Bolero International Parker Norfolk

1.1 Introduction from FCI
Peter Mulroy
Secretary General, FCI
INTRODUCTION
This special edition of Trade Finance annual global volume 50 years later. following ten-year period, FCI would
Talks launches what we hope will be In fact, FCI released its 2018 official report an increase in volume to EUR
a special annual edition and preview figures for the world factoring market 2.76 Trillion in 2018, a compounded
of the FCI annual meeting, to be held this week, which shows the Global annual growth rate of 8% over
this year 9-14 June in Ho Chi Minh Factoring and Receivables Finance this ten-year period. It is quite an
City, Vietnam. TFG is a great source Industry increased by 6% in 2018. achievement that the industry not
of information and data on trade only grew during this period but more
finance matters in general providing FCI has been planting the seeds and than doubled in size. In fact, the
an insider’s view of the evolution spreading the factoring fertilizer receivables finance industry played
of the factoring industry globally. for the last 50 years, in terms of an important role in the continued
This 2019 Edition is no exception, promotion, legal guidance, advocacy health and eventual growth in global
created to increase awareness of the and education, which has culminated trade, particularly by continuing to
factoring industry, to provide insight in this phenomenal growth story. In finance SMEs during this challenging
on developments impacting the the continued spirit of promoting period.
industry, and attempting to make the factoring industry, FCI is pleased
sense of the current state of affairs. to announce this important and The factoring and receivables finance
This 2019 edition marks the end of an strategic partnership with TFG, by industry has achieved incredible
era for FCI, which celebrated last year announcing our partnership of this success and FCI has helped support
the organization’s 50th anniversary. special 2019 edition. This publication this growth, through advocacy,
provides great insight on important education, and thought leadership,
Factors Chain International, today matters relating to the trade and and providing our members with the
known around the world as FCI, receivables finance industry. necessary tools to ensure success.
was formed in 1968 as a Dutch FCI is clearly the undisputed leader
non-profit association, with the Now, even though the story painted and voice for the factoring and
Secretariat based in Amsterdam, above shows a rosy picture, it is not receivables finance industry in the
Netherlands with only 15 members without its challenges. Considering world today. Our partnership with
from 12 countries. Today, FCI has the extreme economic and political TFG is of strategic importance to FCI
nearly 400 members located in 91 volatility around the world since the and the Industry, and this special
countries. The 1960s witnessed the Great Recession in 2009, the rise in edition publication is an excellent
launch of a global industry, when nationalism and protectionism, and tool to evidence this amazing growth
the first invoices were factored in the trade wars that are breaking out story, and to learn more about
the UK by investors from the US around us, this has all contributed factoring and receivables finance. As
factoring industry, and which spread to a slow-down in global trade. But partners, it is our hope that this fine
throughout Europe from there. The despite this, factoring has remained publication will contribute to a better
growth in factoring volume was rather resilient over the past decade. understanding of our industry.
rampant during the next 50 years, The industry generated volume of
growing from less than US$ 20 Billion EUR 1.28 Trillion in 2009, at the height
in 1968 to over US$ 3.2 Trillion in of the financial crisis, but in the

About FCI
Founded in 1968, FCI is a non-profit association and global network of leading factoring and receivables
finance companies, whose common aim is to facilitate international trade through factoring and related
financial services. In 2016 the activities of IFG (International Factors Group) were integrated into FCI.
FCI provides four pillars of service: a global business network, education, advocacy and networking. FCI
offers its members a framework to conduct cross-border factoring. The General Rules of International
Factoring (GRIF) forms the legal basis under which nearly all cross-border correspondent factoring
business transactions are conducted. The General rules for FCIreverse is the legal basis for reverse factoring
transactions. The supplemental Agreement for Islamic International Factoring allow our members to
make Sharia compliant transactions. FCI members also use a proprietary communication system called
Edifactoring.com. Like SWIFT, edifactoring.com provides a sound and secure means by which members
can issue factor guarantees, send invoice data, issue dispute notices, and transmit payment messages. FCI
maintains a high level of service excellence by requiring all members to follow certain standards, including
the requirement to enrol their employees in various e-learning courses and seminars, which are offered to
all FCI members via the FCI Education Academy. FCI members must follow all rules as stipulated in the
FCI Constitution, the General Rules of International Factoring (GRIF), and the Rules of Arbitration. FCI also
developed a new supply chain finance (SCF) framework called FCIreverse, to allow our members to on-
board anchor buyers and their domestic and international suppliers across the globe and to provide the
necessary compliance in markets located far from the home base of our members.
1.2 Male Dominance
within Trade Finance
and Balancing the
Gender Gap
Grace Lordan
Associate Professor in Behavioural Science, London School of Economics
Managing Director, Behavioural Science at Work
www.gracelordan.com
I teach executive courses at the is somewhere in between. However, wages earned per hour. The question
London School of Economics as within finance, there is notable is why?
well as in various corporate settings. segregation by speciality, with trade
In addition to the courses on high finance being one of the most male Like all other social phenomenon
stakes decision making focusing dominated of the specialities. I would there are a number of competing
on capital structure, behavioural argue that we should care about the hypotheses. These include, among
risk, and general conduct, I often representation of women in trade others: statistical discrimination,
cover diversity and inclusion. This is finance beyond what it means for taste discrimination, and the
because who we choose to hire in an the individual themselves. Trade working environment. However,
organisation determines its future finance professionals provide an an often overlooked hypothesis is
success. invaluable service to the economy, that differences in male and female
where a large proportion of potential personalities impact labour market
As someone whose research is customers are females. I emphasise outcomes in trade finance. Research
interested in understanding why potential as the share of females shows that the average female is
people choose the occupations that actually accessing trade finance is more risk averse, less competitive,
they do, trade finance is particularly also disproportionately low. more keen to avoid uncertainty,
interesting. Looking at it from the less extrinsically motivated, and are
outside in, a few stylised facts are So, to begin with, we have a low more cooperative. Some of these
highly relevant. Since the 1970’s proportion of women in trade traits are clearly associated with
women have chosen to converge finance. On top of that, those women higher rewards in trade finance
into many occupations that were that do enter the trade finance space jobs. Do note that these are not bad
previously dominated by men, such experience a lower level of attainment traits; in many instances they are
as accounting and law, but not others, on certain key outcomes, such as likely to be preferred. However, we
like the STEM professions. Finance the propensity to get promoted and often encourage females to adopt

“male” traits in order to give them promotion decisions, we should see allow organizations to definitively
an advantage at work. I have seen progress. Firms looking to rock the determine what did and did not work.
this articulated in training courses boat even more should look for entry Such insights allow firms to avoid
in big firms and written in career level talent outside of traditional continued investments into costly
development reviews. Is it rational to economics and finance degrees, and interventions that suck up time and
adapt different behaviours at work place more value on non-cognitive money for little or no return.
to succeed? The evidence suggests skills and the hard skills necessary for
that it is not. Overall it suggests that the tasks within the job a new hire
females who do adopt “male” traits will do. These skills can be assessed
suffer a backlash since both men and prior to interview, allowing a more
women have certain expectations objective recruitment process and
about how women should act. When the prospect of hiring from broader
behaviour is outside of these norms, pools of talent.
it is often not welcomed. To the
extent that trade finance continues Moving forward, some of the
to reward these traits that are over challenges of hiring and retaining
represented in males, the job will women can be informed by
always have more males. It is worth methods in behavioural science.
re-assessing whether male traits like Not all jobs can be filled with a blind
this should be valued so highly. Often recruitment process, like those in
the value placed on these traits is symphony orchestras. Nevertheless,
unconscious. If the industry becomes there is a lot that can be done.
aware of this subconscious bias, and More encouragingly, if done well,
works to overcome it in hiring and behavioural insights are cheap and

1.3 The End of Balance
Sheet Lending? The
Trade Finance
Distribution initiative
explained
Fourteen leading global financial institutions have launched a drive to use technology
and standardisation for the wider distribution of trade finance assets.
Christoph Gugelmann André Casterman

CEO, Tradeteq Chair, ITFA Fintech Committee
Non-Executive Director,Tradeteq
The TFD Initiative institutional investors to efficiently and is a vital piece of international
connect, interact, and transact. The business and commerce. A network
The low risk profile of trade International Chamber of Commerce of institutions, including banks,
finance as an asset class is widely (ICC) United Kingdom and the financiers, and technology providers,
acknowledged, but it remains one of International Trade and Forfaiting supports importers and exporters as
the largest financial markets yet to Association (ITFA), the leading they conduct their trade activities
be tapped by institutional investors. international association for banks and reduces the risks involved in
Infrastructure technology, credit and financial institutions involved cross-border transactions.
and risk management processes, in cross-border trade and forfaiting,
and reporting are critical to lowering have each joined TFD Initiative as an The traditional trade finance process,
barriers to entry and improving observer. using instruments like letters of credit
transparency. to provide a corporate safety net,
has largely remained unchanged
TFD Initiative is powered by
The Market Need for decades, if not centuries. Over
Tradeteq, the global trade finance the past few years, however, this
The global trade finance industry
distribution platform. Tradeteq’s has come at an increasing cost to
is worth more than US$25 trillion
technology allows banks and banks’ balance sheets. Regulations

such as Basel III are placing pressure lacks the infrastructure and global efficiently. Technology offers the
on banks to reduce their capital network of buyers and sellers that greatest opportunity to overcome
requirements, casing leading enable any market to grow and thrive. these challenges and also brings in
institutions to explore new ways to Furthermore, there are significant a potential new source of liquidity in
reduce or share the risks involved. variances in relation to transparency, the shape of new non-bank investors.”
credit, risk management, and -Sean Edwards, Chair of ITFA, Head
This offers a unique opportunity to reporting across the industry. of Legal and Special Adviser to the
institutional investors seeking stable, This makes the trading process Global Trade Finance Department at
long-term yields. The low risk profile cumbersome and slow. SMBC Europe.
of trade finance as an asset class is
widely acknowledged and presents By bringing the industry together ITFA’s involvement in this initiative
a compelling multi-trillion-dollar to collaborate, the TFD Initiative will re-enforces its position as the trade
investment opportunity. It is based on help trade financiers and institutional market association embracing
tangible flows of goods and services, investors speak the same language community-wide fintech innovations.
making it less susceptible to bouts of and create the infrastructure required The corresponding white paper can
volatility observed in other financial to make trade finance distribution be found on
markets. Furthermore, default rates more accessible and appealing as an www.tradefinancedistribution.com.
for trade finance products are lower, asset class.
and time to recover in case of default
is much shorter than for other “Distribution of trade risk was once
products and asset classes. simple but, with the introduction
of more stringent regulatory
However, trade finance has not been requirements and capital rules, has
tapped by institutional investors. It become more difficult to achieve

1.4 Non Bank
Perspective: Stenn
International,
Tackling the $1.5tn
Trade Gap

President, Stenn International
The market for international trade how they’re affecting trade financing exacerbated as buyers worldwide
finance is always evolving. But the and what SMEs can do to adapt. reconsider their supply chains to
more things change, the more they avoid the tariffs.
seem to stay the same. Take for
instance the $1.5 trillion trade finance
The Causes: Economic and China’s Economic Slowdown
gap, ICC’s measure of unmet demand Geopolitical Uncertainty
for trade banking solutions. One After the 2008 financial crisis, China
would think that new technologies From Asia to Europe to North represented a major engine of
and the lure of market expansion America, nearly every continent is growth for the global economy. But
would help traditional lenders make experiencing uncertainty. Case in at the end of 2018, China reported
a big dent in this gap, but a recent point: the drop-off in world trade the slowest growth rate in 28 years.
follow-up study showed that at one- growth at the end of 2018 and the So as China slows, so does the rest
third of banks surveyed, the rejection prediction for a soft landing in the of the world. This is concerning for
rate has accelerated. world economy through 2020. Here neighboring economies in Asia,
are a few specific situations that are with the potential for an even wider
The lack of access to financing is not feeding this uncertainty: spillover.
the only factor impacting the trade
finance market. Geopolitical events US-China Trade War Brexit
and macroeconomic conditions
are dampening the appetite for The U.S.-China trade war has added Brexit will likely disrupt trade, supply
investment – any scent of risk is economic pressure to both countries. chain cash flow and overall business
enough to give a lender pause. $200 billion USD worth of Chinese operations as UK and EU buyers move
products are subject to tariffs, and operations out of the UK and ask
However, non-bank trade finance tariffs on an additional $325 billion are suppliers to keep extra inventory. The
companies like Stenn are jumping in on the table. These costs ultimately UK, Europe and the rest of the world
with both feet. This article examines trickle down to small suppliers are locked in a period of uncertainty
what’s causing current conditions, in China. The situation could be until at least October 2019.

The Effects: Key companies want delayed payment of methods, mostly centered on
terms of 90 – 120 days because they accounts receivable or purchase
Challenges for SMEs don’t want to pay for goods that have order financing. Providers pay
not been sold or delivered yet. This suppliers at shipment of goods,
Engaging in global trade in this imbalance creates cash flow issues for giving the importer time to sell the
shifting environment puts several smaller suppliers who lack the clout goods before paying the invoice. Both
stressors on SMEs, namely: to make demands of their own. suppliers and buyers benefit because
it preserves their access to cash flow.
Access to Funding Global Volatility
As one of the largest non-bank trade
As the $1.5 trillion trade finance gap Because of their smaller footprint, finance providers, Stenn works with
demonstrates, SMEs in emerging SMEs are the first to be hindered suppliers in over 50 countries and
markets face major funding by global volatility. As trade wars, counting, with a footprint comparable
challenges. The gap exists partly for instance, continue to evolve, to large banks. This experience
because capital requirements such as companies – and those funding them has helped us make our financing
Basel III and vetting regulations such – will be more cautious to engage products better and more flexible
as Know Your Customer have caused in international trade. This leads to than what banks can offer – it’s our
banks to limit cross-border finance even fewer trade finance options and main focus. Thus, Stenn is able to
activities. In some emerging markets, stricter payment terms, both of which serve SMEs in need of trade financing
even local banks only focus on large stifle growth. as well as larger corporates needing
customers. Lack of access to trade solutions on the payables side.
finance options limits SMEs’ ability
to grow because the funds they have The Solution: At the end of the day, serving both
are tied up in unpaid receivables and Non-Bank Trade Finance sides of the supply chain to close the
sitting inventory. finance gap is our primary objective.
Non-bank trade finance providers And hopefully, helping to fuel
Power Struggle like Stenn have become a vital international trade for all.
resource for SMEs looking for liquidity
Additionally, SMEs on the supply side solutions in the current environment.
often experience a power imbalance These partners provide SMES with
with buyers. Buyers from large working capital through a variety

Global Markets
Update
2
Trade Finance Global speaks to international

trade experts and region specific leaders on
some of the emerging themes around trade,
receivables, and supply chain finance in 2019

2.1.1 Africa
Overview - Trade
and Receivables
Doreen Fick
Trade Finance - Product Management and Development, ABSA
Review on African Trade and Receivables Market
There is no doubt that Africa Traditional Trade Finance throughout Africa with Tunisia,
has some of the fastest growing Morocco, and South Africa issuing the
economies in the world and is also Traditional Trade Finance products highest volumes.
described as the future economic such as Documentary Collections,
growth engine of the world. The Letters of Credit and Guarantees are Bank Guarantees and Standby
International Monetary Fund (IMF) well acknowledged for the additional Letters of Credit
expects Africa will achieve growth assurances they provide to trade
of 3.5% in 2019. It has listed Ethiopia, transactions. The ICC shows that Bank Guarantees and Standby Letters
Rwanda, Ghana, Côte d’Ivoire, commercial Letters of Credits still of Credit prominently feature in a
Senegal, Benin, Kenya, Uganda, and account for 73% of trade finance continent where the risks are well
Burkina Faso as some of the countries transactions processed by banks in documented and guarantees have
with top performing economies. On Africa. In our experience the Asian become a prerequisite before projects
the downside, the continent’s two continent, one of Africa’s biggest or services are awarded. As per SWIFT
largest economies - Nigeria and trading partners, has a preference data, South Africa, Kenya, and Nigeria
South Africa have been experiencing for Letters of Credits and Global have issued the most guarantees
tough economic times with Nigeria Corporates and International Banks in 2018 with Algeria, Morocco, and
expected to bounce back during 2019. who perceive Africa as high risk will Mauritius receiving the highest
often request South African banks numbers of Inward Guarantees. On-
A significant percentage of this to provide additional confirmation Demand Performance Guarantees
growth can be attributed to local and to Letters of Credits issued by other are favourites in the Mining and
international trade. Trade Finance African countries. Construction Industry throughout
Global indicates that trade finance Africa. One construction project
accounts for 3% of global trade worth Documentary Collections can require a Tender-, Advance
$9 trillion annually. The International Payment, Performance and Retention
Chamber of Commerce (ICC) predicts Documentary Collections where Guarantees whilst Rehabilitation
that growth prospects from Africa banks are only acting as a post box Guarantees in favour of the
will mainly come from the following are still very relevant in Africa. SWIFT Department of Mineral Resources
sectors: Agricultural; Chemical, Fuel figures for 2018 indicate that over 89 are the norm to ensure the land is
and Mining; and Machinery and 000 Export collections and 36 500 restored to its original state in the
transport equipment. Import Collections were produced Mining Sector. International Buyers

and Sellers regularly request Standby Open Account Finance or Letter of monitoring and recording, dual vessel
Letters of Credits as backup in their Credit terms. Supplier Finance and tracking and identification of dual
trade transactions. These guarantees, Receivables Finance programmes goods and products, in addition to
if properly managed, can contribute a have longer implementation normal sanctions screening checks.
significant portion to any bank’s top periods due to complex Regulatory, The ICC shows that Banks in Africa,
line revenue figures. Write offs can Compliance, and Know Your Client more than Global Banks, feel that the
however be significant should these (KYC) requirements. Once off the enablement of digital channels will
occur. ground though, the programs are have the potential to significantly
quick to operate, gives comfort to the increase sales of the trade finance
Open Account Finance bank and provide instant financing to products.
cash strapped companies.
Open Account Finance products To conclude, Africa has good growth
such as Supplier Finance, Receivable Africa’s Tech Revolution prospects of which trade finance will
Finance, and Trade Loans are also be a significant part in it. To ensure
gaining more traction in Africa. These Africa has made great strides thanks success, many banks operating in
products unlock and assist with to technological innovation and Africa, including Absa, are becoming
much needed working capital for is set to continue embracing the regional banks to cater for the needs
Buyers and Sellers and will help to opportunity technology brings at a of global corporates who want to
address the significant Trade Finance significant rate. In 2018, investments operate within the African continent
gap on the continent. One of the in technology start-ups across the on a standardised approach. To
areas of growth noted is Trade Loans continent grew by 108% to $1.163 achieve this, banks should build
which has seen a significant increase billion according to Partech Africa, standard target operating models
in Africa. This flexible, short-term a French venture capital firm. across regional offices, establish
borrowing facility can be linked to a Emerging technologies such as correspondent banking relationships
specific trade transaction which helps Artificial Intelligence and Blockchain in countries where they might not
to reduce the credit risk of the client. are growing in credibility and have a physical presence, invest
Biometrics and Identity Management heavily in technology to adhere to
Trade Loans are becoming more prevalent all the regulatory and compliance
with the increased focus on data requirements and use economies of
Trade Loans can be used to assist protection. Trade will specifically scale to remain profitable and deliver
with pre- and post-financing of benefit from sophisticated systems good returns.
regular or once-off trade transactions that are able to assist with Financial
throughout the African continent and Crime and Anti-Money Laundering
can be offered regardless of whether compliance requirements. Features of
the transaction was executed on these systems will include transaction

2.1.2 African Trade
Finance: Mind the
technology gap
Will Hunnam
Co-Founder, Orbitt
Africa is uniquely placed to trade with growing markets in financial institutions have started to tackle the unmet
the East, established markets in the West, and domestic demand of Africa’s trade finance gap, currently estimated
markets on her own continent. In order to benefit from at US$120 billion by the African Development Bank (ADB).
the ensuing economic advantages, the continent’s

From a distance, the headline-grabbing initiatives appear origination through to due diligence and transaction
to have understood the root cause of the challenge management up to deployment and portfolio
and seem to be taking the necessary steps to address management.
it. These include the $850 million of Chinese financing
for the African Export-Import Bank (Afreximbank) As much as technology can provide the necessary tools
and $4.5 billion of commitments from Development to save time and improve efficiency, it also opens up
Finance Institutions (DFIs) to the Global Trade Liquidity the possibility for banks and non- bank players to better
Programme (GTLP) launched by the IFC and Citi in 2009. collaborate on deals, thus improving and increasing
However, when we look closer at the market data, a capital deployment.
different picture emerges.
Technology is widely used to support the internal trade
The traditional overdependence on banks has led to a finance processes of African banks, DFIs and alternative
skewed distribution of funding to the continent’s growing lenders. The digital tools that they deploy range
trading businesses. Domestic and international banks from Microsoft’s basic suite of programs to the more
still account for over 30 percent of total trade transactions sophisticated systems such as Ecobank’s OMNI eFSC
in Africa, while the amount of bank-intermediated trade (Electronic Financial Supply Chain) software. However,
finance devoted to intra-African trade is estimated at these solutions exist in silos with disjointed usage and
just 20 percent of the continent’s total trade, according application, thus representing digital islands.
to the AfDB. Large African corporates absorb the lion’s
share of this trade finance while small and medium- By harnessing network effects, counterparties can further
sized enterprises (SMEs) and first-time applicants face optimise their shared and proprietary value. In real terms
significant challenges in accessing credit facilities from this means faster, broader and more efficient provision of
banks. trade finance products to growing businesses in Africa.
The continent’s leaders and investment professionals There isn’t a one-size-fits all technology solution to
have several options for tackling the trade finance gap. Africa’s trade finance gap. Networked platforms need
Much of the attention to date has either been on the collaboration and significant investment from all the
already-bankable, large African corporations or the participants in the ecosystem. For Africa this means the
international companies with banking lines overseas. banks, DFIs and government bodies. A strong digital
trade network would also encompass the regulators,
Little has been said about the SMEs who are locked out trading companies, logistics hubs, shipping firms,
of their local banking systems with limited access to financial service providers and customs authorities.
alternative funding options abroad.
SMEs are often the backbone of

economies and African countries
are no different. The World Bank
estimates that SMEs contribute
up to 60% of total employment
and 40% of GDP in emerging
economies.
With this in mind, we at Orbitt

are of the opinion that by
zooming in to understand the
obstacles to trade faced by SMEs
in Africa, it is possible to develop
bottom-up solutions to address
these challenges.
Digital solutions have a key

role to play in closing the trade
finance gap. To date, there has
been a lack of discussion about
how key players within the ecosystem can leverage An economic area is no longer defined by traditional
technology to improve access to trade finance in Africa. boundaries, rather by digital data flows, and Africa needs
to digitise its Free Trade Area to enable it to incorporate at
But technology alone cannot be a panacea and will need scale. Many countries across the continent have already
the support of a multifaceted and unified approach. proven that they can leapfrog development in other areas.
This will require combining the efforts of local and With technology as a driver and institutional support as a
international banks with the broader influence of mechanism, Africa has the chance to set the pace for the
multilateral institutions. future of trade across the world.
In removing friction points and repeated processes, Orbitt is Africa’s first digital deal origination and
Africa-focused investors, intermediaries and businesses processing platform, connecting robust trade and
can reduce their overall transaction costs. This is investment opportunities with Africa-focused advisers
applicable across the transaction cycle from deal and investors.

2.2 Asia - Fighting
financial crime and
addressing market
gaps in trade
Steven Beck
Head of Trade and Supply Chain Finance
Asian Development Bank
Preventing criminals and terrorists Trade Finance Scorecard: Trade Workshop to tackle five issues
from using the global financial affecting our ability to fight crime in
system is critically important. Regulation and Market the financial system, as the next step
Implementing global regulation Feedback after the publication of the Scorecard.
across jurisdictions with multiple
stakeholders is a challenge, which The Trade Finance Scorecard: The Workshop, hosted in Singapore
can have unintended negative Regulation and Market Feedback 28-29 March 2019, brought
consequences. (Scorecard) is the start of a work in together over 50 senior leaders
progress. The objective is to launch from international bodies, industry
The 2017 Trade Finance Gaps, a process which complements associations, regulatory authorities
Growth, and Jobs Study of the Asian the work of industry bodies, the and banks, to develop concrete steps
Development Bank (ADB) identified Financial Stability Board (FSB), the to solve persistent problems in AML/
unintended consequences from anti- Financial Action Task Force (FATF), CFT. Organizations such as the
money laundering and combating and regulatory authorities around the Financial Stability Board, the Bankers’
the financing of terrorism (AML/ world. Association for Finance and Trade
CFT) regulation as an important (BAFT), the Wolfsberg Group, the
contributor to global market gaps, AML/CFT in Trade Workshop International Chamber of Commerce,
estimated at $1.5 trillion, for small as well as global banks and bank
and medium-sized enterprise (SME) The ADB’s Trade Finance Program regulators played key roles.
financing in developing countries. (TFP) organized the AML/CFT in

The Workshop led to agreement be developed to inform industry of crime can deprive legitimate SME
on several substantive next steps. A the impact of SARs reports and to business of the support they need to
major step forward, for example, is assist in improving the quality of grow, create jobs and contribute to
the agreement to create a standard these reports and accompanying development.
Suspicious Activity Reports (SARs) documentation for investigative
template for use across jurisdictions, purposes. Our efforts to identify persistent
enabling better data collection and issues in this space and to convene
analysis. The proposed template will Trade-based money laundering and stakeholders to advance solutions
enable the application of artificial terrorist financing are serious plights. to these issues are core to our
intelligence and other emerging Our Trade Finance Gaps, Growth and objective of achieving Sustainable
technology to make better use of Jobs Study shows efforts to stem anti- Development Goals; to ensure
such reports, enable the identification money laundering in the financial availability of financing while
of trends across jurisdictions and system contributing to the annual advancing financial sector regulation
otherwise improve the impact of trade finance gap of US $1.5 trillion. and compliance, all with a view to
SARs in intelligence, investigative, We need to stop criminals from using contributing to trade-supported
and prosecutorial activity around the financial system, but we know international development and
the globe. A feedback loop will also misdirected efforts to stop financial economic inclusion.

2.3 Mainland
Europe - Best
Practices for Supply
Chain Finance
Baris Kalay
Head of Trade Finance for Global Transaction Services, EMEA,
Bank of America Merrill Lynch
Best Practices for a effect”. SMEs often begin using SCF misalignment between key
programs as suppliers, where they stakeholders. It is not uncommon to
Successful SCF Program quickly realize the benefits that see procurement executives, unaware
this method can hold on liquidity of decisions taken by the treasury
Europe’s low interest rate and risk management needs for all or technology teams, who are not
environment, reflected in the parties involved. Through this, when informed early enough for system
European Central Bank’s holding it comes to dealing with their own integration. The subsequent delays
of the benchmark refinancing rate payables, these firms are more apt caused by this misalignment can
at zero percent, continues to have to implement similar SCF programs last months. Best practices point to
implications for both buyers and for their own suppliers. In a similar the existence of “senior sponsors”
suppliers in the region. Many larger manner, this is likely to continue within the organization as they can
buyers, seeking to hold onto cash down the chain encouraging more align stakeholders and manage the
longer for use in other revenue firms to adopt their own programs. implementation, execution, and
generating aspects of the business, growth phases.
have lengthened payment terms That said, supply chains are becoming
increasingly more complex with
with their suppliers. Furthermore,
new operational frameworks and
Data – How analysis can
the low rates are affecting the aim to
maximize returns, passing increased technology. To ensure the continued help to achieve goals
pressures along to suppliers. In success of SCF programmes in
many cases, the suppliers facing the Europe and elsewhere, firms must According to a PWC paper on SCF, a
greatest deal of liquidity pressure consider several essential points. typical SCF programme covers 20%
are smaller organizations. This is of the spend value and includes less
why Supply Chain Financing (SCF) is Stakeholder Management than 100 suppliers. This same study
shows that supplier appetite and the
becoming a key form of financing for
mid-cap companies as well as SMEs. – First step for success supplier on-boarding process are on
the top of the list for influencing both
The growing popularity of SCF success and bottlenecks.
One of the common problems
amongst SMEs can also be banks face when implementing an
attributed, in part, to the “domino Choosing the right suppliers is a
SCF program is the organizational

function of supplier segmentation, intend to enhance their SCF requirements. Selecting a leading
which depends on how well solutions. This commitment shows bank with a wide investor network
banks analyse data. Banks that that successful programs do help and know-how on Risk Distribution
can understand the supplier’s organizations to achieve their targets. is a must for maintaining program
requirements and offer them a variety Two crucial factors enabling the growth.
of alternatives in addition to SCF, will growth of SCF programs are credit
be able to provide additional support capacity and the increasing number SCF is becoming increasingly popular
to corporates to help them achieve of suppliers joining the programs. among corporates, as it addresses
their goals. key components of working capital
Banks and corporates should optimization, and creates enhanced
To help our clients unlock continue their productive relationship transparency and efficiency across
opportunities in working capital, at during the lifetime of the program the supply chain. Successful
Bank of America Merrill Lynch we When it comes to dealing with implementation and management
analyze the data holistically, without suppliers, continuously marketing of these programs requires close
any product silos. This allows us to SCF, arranging joint events, and cooperation across multiple functions
cover the full supplier spectrum by regular visits are key to best practice. and stakeholders. A holistic view
offering a number of solutions such across the payment spectrum is also
as commercial cards for smaller Most corporates see SCF programs crucial, as it will enable companies
suppliers. as an important reciprocity tool for to enhance cash flow, improve Days
their bank relationships. To avoid Payable Outstanding (DPO), more
multiple types of documentation and effectively control financing costs,
Growth – Marketing and KYC standards, they usually chose a and strengthen supplier relationships.
Distribution “leading bank” to run the programs. A deeper data analysis across all
They then involve relationship banks payment segments is key to achieve
Eighty-four percent of the companies ensuring that credit availability in the all these goals.
that have existing SCF programs program can match the increasing

2.4 North America
Overview - The New
Normal of Trade
Dr. Rebecca Harding

CEO, Coriolis Technologies
The world is focused on the current It is hard to under-state the trading system. The approach
trade war between China and the importance of this battle between the certainly divides opinion: on one
US. Some $620bn in goods trade two largest economies in the world. hand are those who say this is the
alone is at stake and there is a real It is a conflict of economic systems as end of multilateralism and is a
danger of escalation. Because of the well. Trade being used as a weapon dangerous moment in history; at the
consequences in what is actually a struggle for other end of the spectrum are those
of current US influence and coercive power. who say the unchecked rise of China
policy towards has been going on for too long and
Chinese The US has long complained of damaged US
technology and unfairness in trade, and trade finance, interests. Few
its perceived terms. It points at governments who would disagree,
intellectual support their businesses to export however, that
property through richly funded Export Credit the rules of
abuses, there Agencies. US EXIM of course is trade do not
is also a risk of among the biggest, but the current reflect the
this turning US administration believes in a way in which
into a foreign free market with less rather than trade itself has
relations crisis. more intervention from the state. evolved since
Some pundits As a result of this the EXIM charter the financial
are already renewal has not yet been confirmed crisis and that
calling this the leaving it supporting businesses that they should
new Cold War are looking for funding of less than reflect the role
as a US-style $10m a year. As one of the aerospace of trade that is
internet and a businesses at this year’s EXIM event not measured
Chinese style asked, “In a world where trade is in formal
internet are being weaponised, why would we statistics.
developed, and deliberately disarm?”
separated by, There are two
of course, the What is important here is the fact areas where
Great Firewall that the US is itself catalysing the the world of
of China. process of change in the global finance will

be changed by all of this. First, the
role of the dollar as the global trade
currency may weaken – not because
the US economy is intrinsically
weaker, but because US companies
who want to do deals along the Belt
and Road, or with Iran will have to
find alternative currencies to do that
in. There is already evidence that
Belt and Road projects are being
priced in Renminbi, for example.
Second, the EU has aimed to provide
an alternative, special purpose
vehicle, to enable trade between
European businesses and Iran. This is
a legitimate institutional response to
a financial problem but take up is at
present low with banks in particular
arguing that it is still too risky to
breach sanctions imposed by the
US; the decision by Google to end its
business with Huawei is a business
response to the same thing: the US
placing a market price effectively on
business relations with “the enemy”.
So whether you agree with the means

or not, the US is re-defining trade
policy around the world. What is
fascinating is that the US negotiating
stance, whether it is towards China,
Japan, the EU or the UK is identical:
eliminate the trade imbalance if there
is one, promote US agriculture and
manufacturing business, protect US
intellectual property from overseas
influence and make sure that there
is no currency manipulation by the
central bank to make exports more
competitive. Like their business
counterparts, the challenge will be for
national governments to decide on
the value they place on their control
over trade and monetary policy over
commercial and foreign relations
with the US. This is the new normal of
trade.

2.5 APAC
Overview - Trade
and Receivables
Martin Smith
Head of Markets Analysis, East & Partners
Tapping into Emerging Australasian Trade Finance Trends

Voice of the Customer as transaction banking and merchant Australian institutional enterprises
Analytics payments. highlighting a knowledgeable trade
account manager as the single key
Benefits of further investment in bank initiative in winning their trade
In the face of global trade volumes ‘fintech’ for trade finance include business.
falling from record highs as faster transaction speed, lower fees,
corporates digest damaging ‘trade more appropriate facility matching, Businesses are seeking specific trade
war’ rhetoric, rising protectionism, less administrative error correction advice for their business or sector
and regulatory change, businesses requirements, and lowered fraud vertical with the ability of account
have identified three key emergent risk. Difficulties in linking disparate managers to deliver best pricing
trends that are shaping the future stakeholders including corporates, and general advice on trade finance
of trade finance markets: innovation carriers, and financiers results in funding strategies.
in trade, traditional relationship issues applying standardisation
management, and multibanking for to electronic bills of lading, not to Businesses are increasingly seeking
trade. mention incorporating the complex a single touch point with their bank
legal implications. Streamlining these for managing their specific working
Innovation in Trade processes is a much-needed step in capital needs and structuring
the right direction. solutions that provide end-to-end
Long overdue advances in trade solutions. Banks achieving best
finance automation and straight- Traditional Relationship of breed Trade Account Officer
through-processing (STP) such as Management satisfaction ratings are shown to
digital platforms, blockchain, and convert that goodwill directly into
the Internet of Things (IoT) could Despite competitive pitching superior wallet share outcomes,
radically reduce administrative costs, levels rising, aligning customer’s posing important customer volume
transaction fees, and document changing trade finance demands retention implications.
processing delays. Less friction with a bank’s product and service
undoubtedly will result in greater offering is a difficult challenge Multibanking for Trade
cross border goods and services flows given the rapid rate of innovation
in an area which has been criticised set to take place. Old fashioned Declining wallet share is a critical
for falling behind the pace of digital relationship banking however is challenge for both domestic and
innovation taking place in other paramount with four out of ten international trade finance banks in
business banking product lines such

the region. Wallet share, the volume existing facilities. Competitor pitching
of business per customer captured activity and outbound sales action
by their primary trade financier, is is relatively similar in intensity in About East &
deteriorating quickly after a sustained
period of growth, on average sliding
Australia and Asia, with nearly one
third of enterprises reporting that Partners
by five percent year on year. Pricing they did not receive a competitive
competitiveness continues to approach for their trade business in East & Partners,
increase as margins come under the last six months.
pressure, evidenced by higher founded in 1987,
customer churn intentions. Forecast Conclusion
customer churn is highest among is a leading global
SMEs however it is important to note The key takeaway for trade banks is
three times more SMEs are unsure customer preferences are changing
specialist market
(22.4 percent) relative to the Top rapidly and with significant variance research and analysis
500 (6.8 percent) if they will switch. by segment, sector, geography and
Indecision has never been greater. trade profile. Can their trade product firm working in
and service offerings keep pace with
Why are customer’s switching? customer expectations? Providing the corporate,
Trade Finance needs in Asia are practical guidance on innovation,
investment, business
still primarily driven by growth in allocating a knowledgeable trade
the underlying trading business, account officer and limiting rising and SME banking
followed by Currency Trading Support customer churn will be the telling
which has surpassed Supply Chain factors for success in trade in 2020 and financial services
Management (SCM) initiatives for and beyond across the APAC region.
the first time. In Australia, Currency markets, providing
Trading Support is also one of the both multiclient and
fastest growing areas of needs for
institutional enterprises however one bespoke research and
in two firms are primarily motivated
by SCM initiatives for seeking out consulting services
new trade financing or refinancing
to client banks and
financial services
providers.

2.6 UK Focus - Exporting
is great – but
continued support
is needed
MARCUS DOLMAN GEOFFREY DE MOWBRAY

Vice President – Customer Finance, Rolls-Royce plc Founder, CEO & Director – Dints International
Chair, British Exporters Association Chair, British Exporters Association
In the face of unprecedented levels There have been a number of new

of political uncertainty and barriers Separate data published by the initiatives over the past year – many of
to trade, UK businesses require more Organisation for Economic Co- which BExA has lobbied for – and all
proactive support to achieve long- operation (OECD) showed that of which have been welcomed by the
term export success, write Marcus between 2016 and 2018 UK total association and its members.
Dolman and Geoffrey de Mowbray, exports grew at 13.8%, faster than
Co-Chairmen of the British Exporters Germany (10.5%), France (10.1%) and For one, in August last year, UK
Association (BExA), an independent Italy (11.4%). government unveiled its new and
national trade association much-anticipated Export Strategy,
representing the interests of the Although these figures are a pleasing which sets out its ambition to
export community. indication of the resilience of increase exports as a proportion of
exporters across the country, there GDP from 30% to 35% and to produce
The potential implications of Brexit is no room for complacency. The “more tailored support” to UK
on tariffs, customs charges and success of UK businesses overseas is companies.
procedures, exchange rates, and the a critical pillar of the health of the UK
free movement of people and supply economy, and UK businesses need to Key elements of this support will be
chains has resulted in protracted export more to improve the country’s peer-to-peer learning to encourage
uncertainty for the UK’s exporters. balance of payments. more businesses to export; the
development of the Department for
Nevertheless, the latest figures to
come out of the Office of National
New government measures International Trade (DIT)’s website
into a “single digital platform” for
Statistics offer some encouragement: practical advice and assistance on
UK exports hit a record-breaking Exporting, whilst rewarding, is not exporting; and the creation of an
£639.9bn for the 2018/19 financial without its challenges, and BExA is online tool to enable UK businesses
year, with total exports growing at a engaged with many government to easily connect to overseas buyers,
rate of 3% and increasing by £18.5bn departments and committees markets and other UK exporters.
compared to the previous year. to drive export policy forward. BExA has long campaigned for a

whole-government approach to day concerns and wider policy issues.
exports, and was pleased to see
that the Strategy also sets out a The main obstacle to growing exports
vision for greater interdepartmental is persuading UK businesses to look
collaboration and unity. beyond our borders. DIT research
shows that almost half a million UK
Sadly, since the launch, Brexit businesses who classify themselves
delays have diverted attention as potentially able to export don’t
away from this important initiative, do so. This reluctance is one
implementation of which needs to issue which requires urgent
move forward regardless of what’s attention.
happening on the political front.
Moreover, many businesses
Last year also saw a boost to UK are still not clued up on
Export Finance’s financing power: the where to get information
export credit agency’s Direct Lending on exporting – or aware
Facility is set to increase by two one- of exactly what it is that
off additions of £1bn for the financial they need to know –
years 2020/21 and 2021/22. and to this end BExA is
UKEF’s previous capacity for direct ramping up its own its
lending for UK exports sat at £3bn, efforts to ensure
and there had been fears among it is signposting all the
the British exporting community relevant resources.
– communicated by BExA to the
DIT and HM Treasury – that the A lot of hard work goes into
programme was being rationed as it exporting, and to honour and
neared this limit. recognise the people responsible for
making UK trade happen, BExA
More recently, UKEF has introduced has recently launched a
its new General Export Facility Lifetime Achievement
(GEF), which will allow it to support Award, open to all
exporters’ overall working capital UK exporters in the
requirements, rather than linking latter part of their
support to specific export contracts. career who have
Through this new facility, a wider made significant
range of exporters will be able to contributions
access and benefit from UKEF to UK exports
support, notably smaller businesses and the export
and companies with shorter community. It’s one
manufacturing cycles. of a number of new
initiatives that BExA is involved in,
BExA is acutely aware that for many all geared towards championing UK
small and medium-sized enterprises exports.
access to finance is an endless
struggle: according to figures from
UK Finance, the amount of loans
and credit outstanding to small
businesses has fallen by nearly £6bn
in the past five years.
UKEF’s mantra that “no viable UK

export to fail due to lack of financing”
is hugely encouraging but it must
continue to grow to meet market
demands and be flexible to support
smaller projects that the banks are
reluctant to back.
Forging ahead
As exporters prepare for a post-Brexit
trading reality, BExA will continue
to work with government, other
trade associations and business to
represent the interests of the export
community, addressing both day-to-
2.6.1 Trading up – how
UK business can
maximise the export
opportunity
Richard Simon Lewis

Head of Origination, Client Coverage,
Marketing and Communications, UK Export Finance
Trade is a vital part of the largest exporter of goods and services the UK get the exporting edge by
government’s industrial strategy, in the world. However, there is a lot helping business of all sizes, win, fulfil
and the UK is well placed to grow its more that can be done to ensure and get paid for export contracts.
economy by fully realising the export the UK achieves its full exporting
opportunity. potential. UKEF is front and centre of the UK
Government’s measures to grow
UK businesses have an international Export finance and insurance can trading relationships around the
reputation for high-quality, desirable give UK companies the exporting world, sitting at the heart of the
products and services. This reputation edge, especially when paired with government’s Export Strategy which
applies to all sectors and regions world-beating quality of UK products seeks to raise exports as a share of
of the country, from engineering and services. GDP to 35%.
in Northern Ireland to transport As we leave the EU and beyond,
in Wales, energy in Scotland and The right finance or insurance, UKEF’s support will help businesses
financial services in England. specifically export finance and grow their trading relationships
insurance, can make all the difference with new partners all over the world.
As economies and incomes in – for example, giving UK businesses In the last two years UKEF has
emerging markets continue to the ability to offer competitive significantly increased its capacity
grow, UK businesses have an payment terms, helping businesses for over 100 markets, as well as
opportunity to raise their ambition to compete internationally. increasing its direct lending capacity
beyond established export markets. by £2 billion for the next two financial
Trade with the UK also benefits Academic research shows that years.
developing countries, giving access companies selling overseas that have
to high-quality goods and services access to trade finance have export UKEFs flexible support and agility
while helping boost economies and volumes as much as 60% higher. has been a key factor in hundreds of
simultaneously creating future trade major export wins for UK businesses.
partners. That’s why, for the last 100 years, Recently we supported our first
UK Export Finance (UKEF), the UK contracts in Angola, providing £450
According to provisional data from Government’s export credit agency, million from UKEF to support the
the IMF in 2017, the UK was the sixth has been ensuring companies across construction of three new hospitals

and upgrade two power stations
by ASGC UK and IQA Group. UKEF
has also continued its commitment
to building power security in Iraq,
supporting GE UK with $1.02 billion
to build two new power stations
and refurbish numerous electricity
substations across the country.
UKEF has also improved its support

for smaller businesses, implementing
a partnership model with the major
high street banks that helps smaller
companies access UKEF trade
finance support directly from their
bank more quickly and efficiently.
In order to better support companies

in the UK supply chain, UKEF has
extended its support to companies
that are not exporting themselves
but supply directly to an exporter.
This support will help UK companies
contribute to international supply
chains and establish themselves in
new markets.
And in the Chancellor of the

Exchequer’s Spring Statement in
March 2019, he announced a new
General Export Facility, providing
access to support for overall working
capital requirements rather than
specifically export-linked.
Companies that export are more

profitable, create more jobs and are
more productive. Export finance
and insurance from UKEF is already
helping hundreds of UK businesses
sell internationally. We want to do
so for even more, helping the UK’s
world-class exporters achieve truly
global success.

2.6.2 Eye On: Exporting-
opportunities,
challenges and tips
Carl Stephen Patrick Hunter

Coltraco Ultrasonics Limited

Like Trade Finance Global, capital challenges such as those competition, customer requirements
brought on by long payment and logistic and financial demands.
Coltraco Ultrasonics terms or upfront costs. TFG helps This exporting experience is brought
is a Department for companies grow and increase trade. directly into our company to make us
International Trade Export They also provide case studies about “better, faster, cheaper”.
other exporters with business wins
Champion. Our role is to and success stories. For example, Lastly, to export you need to develop
champion international Trade Finance Global kindly featured a global network of trusted partners,
Coltraco Ultrasonics on their distributors and agents.
trade and encourage
newly launched Exporter Hub. TFG
fellow British companies interviewed Coltraco’s CEO Carl We export 89% of our output to 109
to begin exporting if Hunter about “What is Global Britain countries, support our customers
and how can it win in overseas through our global network of
they are only currently markets?” back in August 2018. strategic partners and ODA service
trading domestically, or stations, and digital presence in
to explore new regions It is a pleasure to speak to TFG again our core market sectors of marine,
with the announcement that we Naval, offshore oil & gas, renewables
for those exporting to a are the winners of the prestigious energy, fire, safety engineering,
few countries. DIT enables Queen’s Award for International telecommunications, data centres,
their enthusiasm for Trade, for Outstanding Continuous power generating, and electricity &
Growth in overseas sales over the last gas distribution.
international trade with the six years.
national Export Strategy, We encourage all businesses
Who are Coltraco Ultrasonics you to export – there is a world of
which compliments BEIS’ opportunity.
may ask? Well, we are committed to
Industrial Strategy. We innovation; we are proud to design
also warmly support the and manufacture in the United
Kingdom. We are honoured to be
dynamic leadership of partners with the GREAT campaign
UK Export Finance as and we fly the flag for UK Plc
an example of the great worldwide. Our CEO is an Expert
Panel Member of the Business
convening authority of Integrity Initiative at the Department
HMG with the UK financial for International Development,
sector to support UK member of the UK-USA SME
Dialogue, a Business Mentor to the
exporter banks to finance Commonwealth and a Decision-
their exports but also UK Making Panel member of the Bank
of England. Our CEO was admitted
exporter customer banks
to the degree of Honorary Doctorate
overseas to finance their of Science from Durham University
companies to purchase and is Professor-in-Practice at
Durham Business School and
UK goods and services. supports the Overseas Leadership
Set amidst all of these is Programme at the FCO.
DIT’s GREAT campaign –
My tips for those seeking to export
the single most successful are to have a clear idea of your vision,
cross-departmental mission and strategy in place before
marketing achievement starting.
in HMG and one designed A second top tip is to know your

as a platform for exporting values. Integrity is at the core of what
we do – from our design through to
by beginner, intermediate, manufacture and customer service.
and advanced exporters We understand the opportunities
alike. Furthermore, we of international trade and have
spent 25 years travelling to 30+
warmly support the countries annually across a variety
Prime Minister’s Trade of advanced and emerging markets
envoy network and the in Asia, the Middle East, Europe,
North America, Africa, and South
network of global HM Trade America. 40% of our exports go to:
Commissioners. 10% to the Middle East, 15% to the
EU and 17% to the USA which is
Trade Finance Global provides just our lead national market. Exporters
such a method to ease working are exposed to a greater array of

Technology,
Blockchain, and
3 Data

3.1 Global Trade 2.0
Jacco de Jong
Global Head of Sales
Bolero International
Distributed Ledger Technology Amongst Corporates
The ledger can be open to public Think of the hybrid car hybrid vehicle, is there a hybrid
scrutiny or closed (requiring trade documentation equivalent for
permission) and its hash technology A good comparison would be with blockchain where existing digitisation
promises great security. It should the electric car. We all know that the platforms, for example, can work
allow for the faster and safer transfer super-efficient, low-emission electric together to provide a practical
of authenticated trade documents, car is the future of the automotive solution today?
reducing opportunities for fraud. industry, but even today the number
of such vehicles on our roads remains The necessity for network-building
This is why blockchain is now rightly relatively small. This is due to a variety
regarded as having great potential of reasons including lack of charging For starters, digitisation platforms,
among corporates, carriers and points, the time they take to charge have a ready-made trading network
freight forwarders who can see it and the range the battery provides. already in place, connecting banks,
will help eliminate painfully slow, corporates, carriers and other trading
error and fraud-prone paper-based What has happened, however, is that counterparties. These are rapidly
processes that remain in widespread tried-and-tested internal combustion expanding because of the established
use. technologies have been improved security and efficiency of their
and combined with more efficient systems and their understanding of
Yet while many very promising batteries to create hybrid vehicles trade mechanisms.
blockchain-based solutions have that achieve hugely greater MPG and
emerged, there are a number reduce emissions without requiring a Standardisation in digital trade
of hurdles that still need to be vast new infrastructure. documentation is also another area
overcome in terms of infrastructure, where blockchain will benefit. For a
tapping into existing networks, Similarly, we know that blockchain document as important and versatile
standardisation, acceptance, and technology will have a major role as a bill of lading, standardisation
legal enforceability. It is important to play in the exchange of trade offers huge advantages for everyone,
that these are addressed before we documentation, yet we could be supercharging interoperability of
see a viable, standalone blockchain waiting a while before organisations systems around the globe. But
trade documentation platform on can reap the benefits. without critical mass, blockchain
which all parties feel comfortable solutions are unlikely to make any
transferring a bill of lading. As with the development of a headway on their own. They will need

to link up with solution-providers jurisprudence of, for example, English trusted digitisation solutions with
who have achieved adoption and law. distributed ledger technology, we
credibility among exporters, carriers, can access the efficiency and security
and banks. There is a wider point here, which is benefits right across the supply chain
that for digitisation to be successful, already today.
The advantages of using a legal it must not just match, but look to It is the kind of interoperability that
framework radically improve day-to-day working provides immediate gains at a time
processes in international trade. This when corporates need to respond
The use of ‘Smart contracts’ is not easy when there are multiple rapidly to new opportunities and
is a central part of blockchain parties using multiple documents challenges. Right across the whole
transactions, but do they provide in different time zones and range of trade documentation, hybrid
sufficient security on the legality jurisdictions. A real understanding solutions already slash from days to
and enforceability of those of how international trade works hours the time it takes to complete
transactions? While smart contracts and the trusted and legal execution presentation, financing and payment,
can be used to effect and record of transactions is required before boosting working capital, efficiency
the performance of contractual a solution can be designed and and productivity for all parties.
undertakings on the blockchain, implemented which operates to
they are of limited value when it everybody’s advantage. So while companies wait for
comes to the formation of those blockchain-based solutions to achieve
contracts which require some form of Technological innovation on its own global acceptance, a hybrid approach
master agreement that participants will not be enough, which is why will deliver benefits now, delivering
agree to abide by. Without clear we need the best of both worlds safer, smarter and faster digitisation
legal infrastructure, achieving – the practical benefits of today’s immediately.
adoption is likely to be extremely digitisation platforms that are tried-
difficult. How can legal disputes and-tested and built on real-world
be resolved, or counterparties have trade processes – and the advanced
any confidence in transactions? efficiencies and security that
Being able to interoperate with an blockchain will deliver.
existing digital trade ecosystem for
example, however, eliminates this The hybrid combination of trusted
obstacle when the solution is based B2B networks and DLT
on an internationally accepted legal
framework underpinned by the If we combine established and

3.2 Hidden trade and
anti-money
laundering – the
challenge for banks
Dr. Rebecca Harding

CEO Coriolis Technologies
Author, The Weaponization of Trade: the great unbalancing of politics and economics
AML and KYC have become themselves: ‘The problem is not be derived. Unsurprisingly, countries
a central pillar of bank trade what we know – it is what we don’t in emerging markets, and particularly
know.’ Since 2012 nearly $20bn in Africa have data that is as high as
finance decision making. A fines has been imposed on banks 200% higher using this approach.
whole industry has built up for fraud and non-compliance and But equally, big financial centres also
around them to advise on how much of this has arisen because the have high divergence between what
to avoid risks, how to check banks themselves have simply not they report about their own trade and
every client, large or small and known how to predict the AML risks what other countries report about
in the supply chains of their clients. their trade with them. Luxembourg,
how to increase supply chain
There are sophisticated checks for Switzerland, and Ireland all report
transparency. FinTech startups sanctions, credit risk and AML, but significantly less trade than actually
are becoming RegTech start- these are limited by virtue of the fact takes place.
ups as new technology based that, by definition, they are historical.
solutions seek to capture a As a result, any reaction is too late by Areas not elsewhere specified
share of the $100bn that banks the time it is implemented. account for 5% of world trade.
Commodities not elsewhere
spend on compliance. The The problem rests in trade itself. specified, are some 6.5% of world
RegTech sector looks likely to Some US $2.1tn of trade at any one trade. So what are ‘Areas not
grow by 25% annualised to point in time is hidden in the trade elsewhere specified’? This partner is
reach a value of $7,208m by flow itself. Some countries produce perfectly legitimate and, according
2023. lagged or no data, either for exports to the United Nations, consists of all
or for imports. But mirroring the flow those countries that are too small
What is the reason for this? Perhaps from the partner’s perspective means or too unreliable to have proper
the best answer comes from a banker that a much fuller picture of trade can reporting mechanisms. Similarly

Commodities not elsewhere specified ensure that fines can be paid without
are goods that have not been damage to the overall balance sheet
classified for tax purposes – a general when they are imposed. These
bucket that could include anything. strategies will simply perpetuate the
More than this, supply chains are post-financial crisis perception that
increasingly more complex and banks are part of the problem.
digitised. There are no precise
measures for the size of this market Rather, banks and trade finance
meaning that neither the regulators professionals need to understand
nor the banks know the risks. the fact that the best place to hide
a stolen car is in a car park; the
In the end, the issue for the best place to hide fraud, crime, or
compliance function within banks sanctions avoidance is in legitimate, if
is to manage what is not known at vague trade. By introducing systems
present and mitigate the risks that to understand global trade flows and
are inherent in future trade as it the predictive power of flows in dual
becomes more complex. However, use goods as well as in commodities
this is more complex than simply not elsewhere specified, there is a
avoiding smaller riskier deals in greater likelihood that they will also
countries which are known to have address the core AML challenge: what
higher levels of fraud, crime, or they don’t know.
terrorism. Risk mitigation is also
more than a good insurance policy to

3.3 DLT, Blockchain and
International Trade -
Where are we at
today?
Carter Hoffman
Assistant Editor, Trade Finance Global
Distributed ledger technology, ecosystem can essentially be Europe. In March 2019, we.trade and
colloquially termed blockchain, sectioned into a series of eight major Hong Kong based eTrade Connect
gained significant attention in 2017, consortia and networks that are completed a successful PoC to
paralleling the hype surrounding the taking strides in various areas of the connect platforms.
cryptocurrencies that are facilitated space. These consortia and platforms
by the technology. Inspired by this operate in four fundamental sub- The Marco Polo consortium consists
hype, many innovative initiatives have categories: Open account trade, of over 20 banks comprising a global
sought out to capture the functional commodities, shipping and freight, reach. The fundamental aim of the
essence of DLT and apply it to a and Letters of credit and e-bills of network is to facilitate trade and
wide assortment of industries and lading. working capital finance solutions. This
domains. namely includes receivable finance,
Open Account Trade factoring, and payment commitment
One such industry particularly ripe with and without financing. Open
for the disruptive potential of DLT is we.trade Innovation DAC is a joint- APIs and legacy system compatibility
trade finance, which predominantly venture company owned by 12 allow banks to easily integrate to
remains bogged down by legacy European banks. Together with IBM, their corporate clients with their ERP
technology systems heavily we.trade has developed a digital systems. This helps to limit internal
supplemented with paper-based trade platform to simplify the trade disruption and eases communication
processes. finance processes by digitalizing the with enterprise clients. The first
management, tracking, and security transaction on Marco Polo was
In the years since, organizations of domestic and international trade conducted in March 2019.
of all different size and scope have transactions. we.trade is the first
come together to investigate the blockchain- based trade platform for
technology. Today’s DLT-trade banks and their commercial clients in

Commodities CargoX is an independent supplier Kong Monetary Authority. Launched
of an on-chain bill of lading (B/L). in September 2018, the consortium
Komgo is a live commodity trade Additionally, they have created a aims to build better trust among
finance digitization tool. Through Blockchain Document Transaction trade participants, improve efficiency,
the Komgo network all participants System (BDTS) open source protocol reduce risks, and facilitate trade
can transact off the same secure to tokenize, encrypt, and transfer counterparties to obtain financing
software. This simplifies and secures the B/L along with any additional by digitising trade documents and
the process and brings a level of documents required for trade automating trade finance processes.
scalability that was previously not processes. Furthermore, the system Since its launch, eTrade connect
possible. The main features of Komgo API is enabled for integrations and is has grown to 12 banks and signed a
include several digital trade finance inter-operable with other blockchains, memorandum of understanding with
related products allowing players meaning it can be integrated into the European we.trade consortium,
to submit digital trade data and other ERP systems to supplement potentially strengthening the trade
documents to financing institutions their functionality. corridor between Asia and Europe.
and apply for credit directly on the
platform. The first transaction on the TradeLens, formed in August Voltron is a coalition of over 50 banks
Komgo platform was announced in 2018 and jointly owned by IBM and corporates delivering a platform
December 2018. and Maersk, is a trade platform for to create, exchange, approve, and
containerized shipping, connecting issue L/Cs. The platform, accessible
Vakt is a blockchain based post- the entire supply chain ecosystem. to customers of member banks, will
trade platform. As a post trade The current TradeLens ecosystem enable banks to provide faster service
platform, it connects key parties to consists of carriers, ports, terminal levels, financing decisions, and lower
trades allowing them to handle every operators, and freight forwarders. The rates to their customers. In addition
step between the initiating trade platform is designed to facilitate end to Voltron created documents, trade
and final settlement. This includes to end supply chain shipping and documents produced on external
deal recap, logistics, and invoicing. documentation, which involves many networks can also be digitally
Partnering with Komgo’s commodity diverse parties. Each transaction sent, verified, and processed in
trade financing network, Vakt will and event, however, is recorded with Voltron. Launched in October 2018,
concentrate on the raw material privacy at the forefront, restricting this globally reaching consortium
transaction, allowing for deals to be visibility to authorized parties. completed its first transaction in April
processed through the platform. 2019.
Since launching in 2018, it has grown Letters of credit and e-bills of
to 12 major shareholders. lading
Shipping and Freight eTrade Connect is an Asia-Pacific

consortium managed by the Hong
Challenges to Overcome
Standardization with each other. This cuts into the publication of a joint report from R3,
potential value of each network since Shearman & Sterling LLP, & BAFT,
A major frustration that currently the value of a blockchain network is many nations, including the USA,
exists for the industry is that trade directly, even perhaps exponentially, lack legal prose recognizing digital
finance is not standardized – the related to the number of entities negotiable instruments in lieu of their
rules and the terminology vary from that participate in it. Overcoming written counterparts. This creates a
bank to bank. An undisputed ideal the challenge of standardization will major challenge for blockchain work
for the industry would be to have a simultaneously be able to drive value in the space since such efforts are
single standard that all stakeholders and enable competition, facilitating inherently focused around facilitating
subscribe to. The currently employed the push for continued progress. trade in an exclusively digital
consortia model for DLT adoption, environment. The use of “Rulebooks”,
which necessitates standardization Legal Challenges suggested in this report and currently
among the participants, is a step employed by many consortia,
towards this utopian echelon, Many organizations point to the overcomes this challenge in the
however if there are numerous legal challenges that currently exist short term, but long term legislation
consortia then there are different with regards to blockchain use in the changes must come. Only by working
standards. This multiplicity of trade space. However, realistically, to overcome the legal challenges
standards, as well as the fact that, the industry is not even at a point to trade digitization on a broader
in the current state, the underlying yet where it should be talking about level, can the industry truly grow and
technologies of many of the different the legal hurdles for blockchain. realize its full potential.
consortia are not interoperable, What really needs to be looked at
means that banks joining one is the legal requirements for trade
consortium and banks joining digitization as a whole, where
another consortium cannot interact blockchain plays a role. As of the 2018

Current State of the Market
Commodities
Open Account
Trade - Bank Payment
Undertaking (BPU)
Open Account
Trade – Receivables, Payables
& Payment Commitment

Shipping and
Freight
Letters of Credit and

e-Bills of Lading

4
Insurance,
Securitisation,
Risk and Legal -
Updates from the
Experts

4.1 Factoring Laws - An
FCI Update
Mr. Ulrich Brink Peter Mulroy

Attorney at Law, Bette Westenberger Brink Secretary General, FCI
Factoring Laws and Their Impact on Factoring & Receivables Finance Industry
For years FCI has been on the civil code contains some language of publishing judicial decisions, this
forefront of supporting efforts to help relating to assignment language in sometimes creates uncertainties in
build sustainable legal and regulatory support of factoring. But in emerging relation to interpretation of contracts
environments to support the countries, most do not possess and hence increases perceived risks
growth of factoring and receivables proper contract law, and hence and/or stifles creativity of business
finance. We also have supported do not have language to support practices. Unfortunately, many
the creation of sound policy and proper assignment of accounts emerging countries do not yet have
good regulatory framework for the and protection of the rights of third proper assignment laws and as
healthy development of factoring. parties to legally execute factoring such there is a lack of confidence
But we also want to ensure that the transactions. Parties have to rely on embedded in investors minds, who
increase in regulations impacting the general assignment provisions are concerned about redress in
the industry do not have unintended when drafting contracts. Due to courts and attempts to recoveries
consequences. the lack of understanding of the 1) from their rights as owners of the
Some countries have either adopted product in developing environments debts, resulting in a disregard for this
a specific code on factoring or their 2) developed case law and 3) tradition valuable asset class.

FCI Model Law on Factoring
FCI continues to support the was used as a backdrop for on Factoring for African countries
development of proper assignment the formation of the FML. The which also largely conforms to the
laws, protections of rights of third convention was put into force in 2001, Convention. We can learn from the
parties, and the promotion of good however it wasn’t until this year, on Afreximbank initiative that this text
governance, to create a sensible legal January 2, 2019, that the US Senate is a sound basis for further evolution.
and regulatory framework to support gave its consent for the ratification of International good practices in
the development of a healthy legal Convention. It will take five countries factoring can also be found in the
infrastructure for the industry. As to allow the convention to become a FCI General Rules of International
such, FCI (initially developed by the formal treaty, but with the adoption Factoring (GRIF), available on the
IFG Legal Committee) created a draft by the United States, it is anticipated FCI website (www.fci.nl). The GRIF
Model Law on Factoring (FML), which this will now occur in the coming has been constantly updated and
has been used in certain countries years ahead. FCI has promoted interpreted by the Legal Committee
to the benefit of local economies. and supported the adoption of the of FCI.
The FML was invoked and guided Convention by governments around
by the UNCITRAL’s Convention on the world.
the Assignment of Receivables in Based on the FML, Afreximbank
International Trade. The Convention created the Afreximbank Model Law
UNCITRAL Model Law on Secured Transactions
Around the same time, FCI and Some countries have started to on countries after ratification, and
IFG were active in creating in the reform secured transaction laws. This subject to deviations only to the
UNCITRAL Working Groups a Model is also evidenced by the World Bank’s extent allowed by the convention
Law on Secured Transactions (2016) suggestion to launch a formal Model itself, a Model Law is a suggestion for
(UNML).The Convention sets forth Factoring Law under the auspices the harmonization of domestic law.
modern uniform rules governing the of the UNIROIT, the International We understand that the UNIDROIT,
assignment of receivables for use in Institute for the Unification of Private in a preliminary meeting on the
international financing transactions. Law who’s projects include drafting 8th May, 2019 in Rome agreed to
Meanwhile, we see a strong demand of international conventions and move forward with the formation
by countries for model laws that have production of model laws . Other and adoption of the Model Law on
a narrower scope than the UNML. than a convention which is binding Factoring.
The Future of Receivables Finance
Why is this important. Well most are deemed “emerging” with the inroads to help develop factoring in
developed countries have adequate exception of the U.S. If you look at all corners of the world. This is why
laws protecting investors in factoring. expected population growth and the question of supporting a FML is
However, most of the largest estimates by 2060, over 40 years from of paramount important to FCI, our
countries in terms of population are now, all of these countries except members and stakeholders.
either considered low, lower and for the US and India have proper
middle income as defined by the factoring laws in place to protect
World Bank (Tier 1-3, representing investors. However, in most of these
countries with per capita income markets, factoring is just getting
of less than US$12K). As you can started. They represent our industry’s
see below, most of these countries future, and FCI is making numerous

MOST POPULOUS COUNTRIES, BN
0 1 2
INDIA
CHINA
NIGERIA
UNITED STATES
PAKISTAN
INDONESIA
CONGO
BRAZIL
ETHIOPIA
BANGLADESH
TANZANIA
MEXICO
2060
F ORE CAST
Sources: UN; The Economist
*Historic Estimates made Visualization by Aron Strandberg
Using Modern Borders Twitter: @aronstrandberg

Differences between Factoring Model Law vs
UNCITRAL Model Law on Secured Transactions
A factoring law is substantial as various established ways to secure narrow scope, the lack of substantive
for the development of a safe credit are involved and might need to rules and the failure of the authors
environment, creating trust in be reformed to at least find a conflict-of-law rule
the handling of transactions. An for priorities among competing
assignment of a receivable is effective Any Model Law on Secured claimants. Receivable finance
notwithstanding any agreement Transaction, whatever its scope is, industry nowadays offers various
between the initial or any subsequent must deal with interfaces to other kinds of credit facilities, among them
assignor and the debtor or any laws when implemented by national factoring, supply chain finance or
subsequent assignee limiting in any legislators. The number and type of reverse factoring, and others – all
way the assignor’s right to assign its such interfaces depend on the scope based on outright assignments of
receivables. of the ML and certainly a ML with a receivables (with the exception of
smaller scope will have other conflicts some domestic legislation based on
We understand that there are serious with existing laws of that jurisdiction. pledges or subrogation). Hence, such
objections to single out receivable But conflicts are sure to arise and are a FML should be all encompassing
finance from a model law on secured to be solved by restricting either the under the heading of Factoring /
transactions covering also other scope of the ML, or the existing laws. Receivables Finance.
collateral. It has been widely accepted
to include outright assignments used FCI, in following the ideas of the UN
in factoring in a secured transactions Assignment Convention and the
regime to allow the same rules UNML, has certain expectations for
to govern priority conflicts. Model a Model Factoring Law. First of all,
laws (ML) relating to only a limited we would like the scope expanded
class of assets might endanger that to all kinds of receivable finance. We
approach. On the other hand, it may note that the limited success of the
be difficult to convince legislators to Ottawa Convention on International
fully implement the UNML in one go Factoring was caused by a somewhat

Conclusion
There are many considerations as well outside of a ML that investors must consider. Questions should be raised to
determine whether:
1. A functioning and unbiased court system exists to facilitate collection of receivables,
a. Availability of civil courts.

b. Sufficient capacity for short procedures Predictability of court decisions.
c. Clear rules in substantive law including legislation and prior court decisions.
2. Clear procedural rules safeguarding the parties’ rights while disallowing delays caused by the judge or
by the parties.
3. Short procedures for clearing disputes,
a. Including the availability of technical experts advising on the disputed quality of the goods or services,
b. Including rules for the court and the parties to request relevant documents,
c. Special procedures for undisputed claims to ensure speedy collection.
d. Many payment delays are not caused by genuine disputes but are based on the inability of the debtor
to meet its payment obligation. For that reason, fake disputes may be brought forward to profit from
the delay in procedures. For undisputed cases it is useful to have a special procedure bypassing
litigation and allowing the creditor speedy collection.
4. Availability of Appeals courts for important cases.
5. Availability of court officers (or other officers) to execute verdicts by seizures, attachments or other types of
execution.
Questions should also determine whether or not a prudential regulation system should extend to receivable financiers,
and to which extent they should be subject to banking supervision, is also a question outside the Model Law itself.
These issues must be solved by the legislator, taking into account the structure of the business in the relevant country.
But in summary, FCI welcomes the idea of the formation of a Factoring Model Law. FCI is willing to assist UNIDROIT
in its work, as it is in FCI’s interest to promote the FML. If there were ever a moment in time to support and push for a
worldwide factoring law it is now. We appreciate the support of the World Bank/IFC, the UNCITRAL and UNIDROIT to
help us achieve this dream.
The author thanks Mr. Ulrich Brink, Attorney at Law, Bette Westenberger Brink, Germany for his contributions to this
article. This article is a condensed version of a longer article that has been published on the FCI website. If you are
interested to learn more details, have a look at our website www.fci.nl.

4.2 Trade Receivables
Securitisation in
2019
Charles Nahum
Independent Managing Director, Finacity
Trade Finance Global caught up with Charles Nahum at Finacity, looking at the state of the
trade receivables securitisation markets in 2019
Alternative Funding audit firms, in which we purchase more stringent capital requirement
directly an asset tranche representing and reporting regulations, may
The most striking recent change the variability of loss. This approach again widen the pricing gap
in the receivables securitisation improves the level of liquidity and between unsecured debt and that of
market is the entry of non-bank reduces cost, when compared to the receivables securitisations.
funding sources, specifically large more traditional off-balance sheet
fund managers, offering financing methods of applying credit insurance
at competitive rates. They achieve and/or the sale of the most junior
this through leverage by selling the tranche. Technology
senior notes on to banks and insurers,
while retaining the junior, more Cost of Funds We continue to see opportunities
risky and higher yield portion. These to fund increasingly complex
fund managers, keen to develop Receivables securitisation funding transactions with technology
direct corporate relationships, are costs have been steady, close to facilitating the process. At Finacity,
able to operate quickly without the the low levels experienced before the combination of our advanced
constraints of capital requirement the Great Recession. This levelling systems and newly developed
legislation, stringent KYC procedures, in low pricing is aligned with that analysis and reporting tools, allows
and the bureaucracy of bank of funding alternatives, including us to implement transactions that
compliance and credit approval. unsecured debt, primarily driven otherwise would not be possible.
by the abundance of liquidity and Technology will continue to play a
Off-Balance Sheet relative market stability. However, we key role in receivables securitisation.
anticipate that a possible surge in the Cross-functional and integrated
Off-balance sheet treatment has insolvency of weaker companies and developments, like ‘Blockchain’, may
become a client requirement, its snowball effect, may create some change radically how we securitise
increasingly. In response, Finacity distress in unsecured credit markets. receivables in the future, but we have
offers a cost efficient solution, This, together with the additional yet to see this effectively evolve and
supported by the leading global costs on banks to enforce recent materialise.

Business Sectors granularity of the receivables portfolio opportunities among the leading
and liquidity demands of a capital commodity players operating in Sub-
Two business sectors warrant a intensive cyclical business has seen Saharan Africa.
mention; commodities trading and this type of financing continue to
container shipping. grow in the sector.
With the growth in scale of the
leading global commodity trading Geographic Landscape
companies, we are seeing an
increasing number of them turning The abundance of inexpensive
to receivables securitisation as a liquidity available in the financially
basis for fulfilling their working developed markets, including North
capital needs. Their scale and more America and Western Europe, has
solid equity base is allowing these made the pains of embarking on
players to replace their traditional a receivables securitisation less
modus operandi, of systematically appealing to companies with a
discounting letters of credit, by a stronger credit. In these markets,
credit insurance and receivables the key drivers for securitisation are
securitisation model, providing proving to be the opportunity for
increased liquidity and reduced efficient off-balance sheet treatment
pricing. and, for weaker companies, a way
In recent years, the leading container of obtaining committed funding.
shipping companies have learnt However, opportunities appear rife
the strategic value in successfully in geographic pockets around the
implementing freight receivables globe, such as Latin America, Mexico
securitisations. The global in particular, Southern Europe and
enforceability of maritime law, ability parts of Asia. Also, while we are not
to fund against unbilled receivables, yet seeing the deals, we anticipate
4.3 Legal and
Regulatory Themes
in 2019
Geoffrey Wynne
Partner and Head of the Trade and Export Finance, Sullivan
If you are based in the UK, then increasingly used for political ends. financed. The amount is well over $1
much of the legal and regulatory This can be accepted if all regulatory trillion.
discussions are around Brexit and bodies moved at the same time and
what might change depending on in the same way. But recently there Many financial institutions find
exit or no exit and on what terms. has been a difference of opinion compliance so costly and over
Regulators have been, when they between regulators for example, with burdensome that they choose
can or see the need, producing how to deal with Iran. The US has derisking (giving up relationships)
regulations and papers particularly taken a stronger line than the EU. and not to on-board new
around sanctions (for example the The EU has adopted anti-compliance relationships. This limits the available
Venezuela (Sanctions) (EU Exit) regulations seeking to prevent EU parties to contract with. In addition,
Regulations 2019) and maintaining institutions from following the US concerns about financing goods
them. The Office of Financial measures. The EU is tougher on which might be “dual use” limit what
Sanctions Implementation (OFSI) chemical weapons than the US. Any can be financed. Some of the most
has essentially provided that existing party with a presence in the US might innocuous commodities, such as
licences will be replaced by the same well want to follow the US in all this. sugar and fertiliser, can be dangerous
ones post any Brexit. That is, in many (and criminalised) in the hands of the
ways, a pointer to which issues are Trade wars are having an adverse wrong parties.
being focused on in 2019. effect on the movement of goods and
what can be delivered where. In the UK there continues to be
Sanctions, laws, and regulations Anti-money laundering is moving action against breaches of financial
relating to issues involving anti- swiftly from the 4th Directive, to sanctions with the Policing and Crime
money laundering, financial crime the 5th Directive and on to the Act 2017 coming into force. Fines can
and bribery, and corruption keep 6th Directive. Each time more be up to £1 million for any breach.
compliance teams in banks and other responsibility is being placed on
financial institutions fully occupied or, financial institutions. That means it Basel III’s next iteration (called
rather, preoccupied. remains difficult in many institutions by some Basel IV) continues to
to grow a trade finance practice. preoccupy financial institutions and
Sanctions are a moving target and are This leaves a huge trade gap to be increasingly, the insurance market.

It could adversely affect trade and increased requirement for capital to banks to bridge the gap of short
credit insurance if enacted in its support those assets. payment times to suppliers and
present form. There are lobby groups longer payment terms to buyers.
trying to obtain changes. The issue of Sometimes regulations which on The Directive could make this more
risk weighting of trade finance assets their face appear to be helpful can difficult. Furthermore, extending
continues to be a problem. However, have unintended consequences. payment terms has been criticised
on the insurance front there is some One example is the General Data by some Rating Agencies which
good news: the Prudential Regulatory Protection Regulation (GDPR) which want such extensions reclassified as
Authority (PRA) has reviewed its is an EU-wide regulation and is also bank debt rather than trade. This
position on the timeliness of claims followed in many other countries. It has potentially adverse effects on
under credit risk insurance policies is designed to protect personal data the balance sheet of buyers and the
and other guarantees in the use in particular. However, restricting the whole market of buying trade debt. It
of credit risk mitigation under the dissemination of some of this data seems misconceived in many cases.
Capital Requirements Regulation could accidentally stop institutions
(CRR) regime. This has removed from being able to exchange The Fintech space which has so many
many of the concerns for banks in information that might otherwise uses in helping with aspects of the
using insurance policies as a credit prevent money laundering or above and the speed with which
risk mitigant. financial crime. trade transactions can be transacted
is waiting to see what regulations
The new accounting standard IFRS 9 Another example is the Late Payment might do. There is a concern that too
needs some absorbing and as to how Directive and how it is implemented. tight regulations will set the market
banks will treat assets on their books This is designed to assist suppliers back. By contrast under-regulated
and whether they are banking assets in being paid on time. It forces activities have their own dangers.
or trading assets. This will have an buyers to pay early and not to delay
effect on valuation and potentially the payment. However, the market of 2019 is proving to be a mixture of
use of credit risk mitigants. Adverse receivables financing often called trying to do business, and wait and
determinations could mean an ‘supply chain’ is designed to allow see in the regulatory sphere.

4.4 Trade Opportunities
and Risk Mitigation
Richard Bishop
Director – Financial & Political Risks, Parker Norfolk
Global uncertainty, trade wars, for territorial concerns, the nature of part. TCI and PRI insurers commonly
Brexit, and economic volatility. Any the counterparties involved, through offer indemnities of up to 90% of
company considering becoming an a lack of available capacity, or even the limit required leaving 10% of the
exporter could be forgiven for having if the size of transaction is too small. risk retained by the policyholder but
to think long and hard about whether Given the market’s highly selective sometimes it plays better to take a
the aggravation and hassle involved nature, how do you go about making higher retention. Many banks and
are really worth it. However, once your risk as attractive to insurers as major traders, who regularly use
the opportunities are understood, possible? the insurance market to mitigate
there are many compelling reasons their own risk exposures, have long
to engage in international trade, Whilst insurance for export understood that a greater retention
and to work with trusted partners transactions can be purchased to demonstrates that they are working
and advisors to exploit these cover the default risk associated with in partnership with their insurers
opportunities whilst others hold back. payments due from contracting rather than being just buyers. Whilst
parties (Trade Credit Insurance “TCI” insurers understand that small
Successful trade requires many ) and for a multitude of politically commercial organisations do not
things but essential to any motivated exposures that could have the same financial resources
transaction is working with lead to a transaction failing leaving available to them that a bank or large
specialised and experienced legal, the exporter significantly out of trader might, expecting insurers to
banking, and insurance professionals pocket (Political Risk Insurance take the majority of the financial
to assist in the management and “PRI”), there is a scarcity of capacity pain of a transaction going wrong
mitigation of the risks involved and available for transactions in multitude is necessarily in that organisation’s
to keep the cost of doing so to an of overseas markets, so, when it best interests. Regular buyers of TCI
economically acceptable level. comes to transactions in these or PRI understand that sometimes
more challenging locations, it will it is necessary to demonstrate their
It is a common misconception that be only the very best structured and confidence in a transaction by opting
insurers will provide cover for any risk managed that obtain economically to take much greater retentions
so long as the price is right. However, viable insurance solutions. of the risk that might generally be
only the best risks attract support. expected. This can be especially true
Risks are regularly declined for a An organisation’s approach to risk for new buyers of insurance. The
multitude of reasons, whether it is retention plays a vitally important insurance market, rightly or wrongly,

gives great credence to recognised impact on insurers’ appetites. Even mitigant and make trade a profitable
buyers with proven track records. experienced buyers of insurance can and sustainable business opportunity.
New buyers have to work hard to run into issues when dealing with A good insurance broker helps too!
demonstrate their credentials. overseas markets that are less than
stable and for the inexperienced,
Another area for any buyer to these markets can prove even more
address is the structure of their challenging. Many developing
transaction. Working closely with economies do not have the same
lawyers and financiers that have respect for the payment of debts
experience of trade is essential or for recognising legal title to
and gives confidence to insurers. commodities or other material goods
Making transactions overly complex as in more developed economies. So,
will always make an insurer take ensuring property is stored in secure
a cautious approach and a lack locations, is monitored regularly by
of experience will only heighten a trusted and experienced agent or
concerns. Ensuring that insurers representative and is transported
understand that the structure is not through trusted ports and depots
designed to absolve the insured party are all essential risk mitigants as is
from its responsibilities to manage ensuring that counterparty payments
and control the risk it wants to share are guaranteed by well established
with them is essential. Utilising risk and financially secure banks. Too
participation structures, commonly often these parties are chosen on
seen in Islamic Finance for example, cost with little thought given to their
can be a useful way to demonstrate acceptability to insurers.
this to an insurer’s satisfaction.
Whilst many parties bring discipline
Having the right approach to risk and structure to the management
retention and transaction structure and mitigation of risk in a transaction,
are not the only issues as there it is the actions taken by insurance
are many other factors that can buyers that can be the true risk

TFG Partner
Conferences
TFG partners with the world’s leading international trade and finance conferences around the world. For more
information, exclusive TFG partner discounts and details on how you can get involved with these conferences,
visit tradefinanceglobal.com/conferences.
Date Conference Provider Location
5th June 2019 UK Trade & Export Finance Forum UKEF London, UK
Ho Chi Minh City,

9th - 14th June 2019 FCI 51st Annual Meeting FCI
Vietnam
ICC United
20th June 2019 ICC Annual General Meeting London, UK
Kingdom
26th June 2019 Future of Trade & Export The Telegraph London, UK
ExCred Singapore: Insuring Trade * Investment in

2nd July 2019 Excred Singapore
Asia Pacific
7th August 2019 SCF Forum Americas SCF Forum Los Angeles, USA
3rd - 4th September 2019 GTR Asia GTR Singapore
UK Islamic Finance Week and European Islamic Islamic Finance

4th September 2019 London, UK
Fintech Huddle News
46th ITFA International Trade and Forfaiting
4th - 6th September 2019 ITFA Budapest, Hungary
Conference
Excred Commodities: Insuring Commodity and
12th September 2019 Excred London, UK
Project Finance
14th October 2019 GTR Europe GTR Paris, France
ICC United
15th October 2019 ICC Incoterms 2020 Launch London, UK
Kingdom
16th October 2019 Supply Chain Finance Summit BCR Singapore
6th - 7th November 2019 World Trade Symposium Finastra New York
ICC United
14th November 2019 ICC Trade & Supply Chain Finance London, UK
Kingdom
Amsterdam,
28th November 2019 SCF Forum Europe SCF Forum
The Netherlands

ABOUT TRADE FINANCE
GLOBAL
The voice of trade
With the shifting geopolitical and economic climate, as well as uncertainty on the future of global trade, businesses
need strategic guidance on growth and trading overseas.
TFG produces a wealth of educational videos and guides for businesses on topics around trade, and shares industry
knowledge through its role as strategic media partners for trade conference providers around the world.
Attracting around 100k monthly readers, our online publications (the Trade Portal) have a global audience in 185
countries. Our newly launched specialist content hubs provide free guides, thought leadership articles and features
on almost every aspect of trade. Our most recent venture, ‘Brexit Business’ is a guide for UK enterprises navigating the
complexity around Brexit.
As advocates on trade and shipping education, TFG also hosts and funds the Accelerate Scholarship, a grant to help
students realise their full potential in a career in trade.
Best Finance Broker, UK
AT THE FOREFRONT OF GLOBAL TRADE

Trade Finance Global (TFG) assists companies with raising debt finance, working with banks, funds and alternative
lenders to fill the trade finance gap. While we are able to access many traditional forms of finance, TFG specialise in
alternative and complex funding solutions related to international trade.
TFG focuses on raising finance lines to assist growth, by allowing companies to purchase and sell product in higher
volumes. This is achieved through structuring trade, stock, receivables and invoice finance facilities.
If you are a trading company interested in further finance facilities or a liquidity provider interested in becoming a
funding partner of TFG, then please contact the Trade Team on trade.team@tradefinanceglobal.com.
Strategic Partners
Member Associations

Contact
Magazine and Advertising

talks@tradefinanceglobal.com
Editorial and Publishing

media@tradefinanceglobal.com
Trade Team
trade.team@tradefinanceglobal.com
Enquiries
info@tradefinanceglobal.com
Telephone
+44 (0) 20 3865 3705
Website
www.tradefinanceglobal.com

www.tradefinanceglobal.com

Trade Finance Talks Issue 2

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Issue 2

The Trade Gap:

Tackling Male Dominance in Trade Finance,

Fighting Financial Crime:

Stenn’s Dr Kerstin Braun on Tackling the $1.5tn

Bank of America Merrill Lynch’s Best Practices for

Trade Finance in Africa: Mind the Technology Gap

Trade Receivables Securitisation and

Basel III’s Next Iteration,

Design and Layout

© Trade Finance Talks is owned and produced by TFG Finance

Although Trade Finance Talks has made every effort to ensure

2 Trade Finance Talks

Trade Finance Talks 3

12 1.4 Non Bank Perspective: Stenn International, 8

2 Global Markets Update

22 2.3 Mainland Europe - Best Practices for 10

32 2.6.2. Eye On: Exporting - Opportunities, Challenges

4 Insurance, Securitisation, Risk and Legal -

52 4.3 Legal and Regulatory Themes in 2019

54 4.4 Trade Opportunities and Risk Mitigation

4 Trade Finance Talks

Will Hunnam Dr Rebecca Harding

Steven Beck Carter Hoffman

Geoffrey De Mowbray Mr. Ulrich Brink

Carl Stephen Patrick Hunter Geoffrey Wynne

Jacco de Jong Richard Bishop

Trade Finance Talks 5

6 Trade Finance Talks

8 Trade Finance Talks

Trade Finance Talks 9

Christoph Gugelmann André Casterman

10 Trade Finance Talks

Trade Finance Talks 11

Dr Kerstin Caroline Braun

12 Trade Finance Talks

Trade Finance Talks 13

Trade Finance Global speaks to international

Trade Finance Talks 15

Review on African Trade and Receivables Market

16 Trade Finance Talks

Trade Finance Talks 17

18 Trade Finance Talks

SMEs are often the backbone of

With this in mind, we at Orbitt

Digital solutions have a key

Trade Finance Talks 19

20 Trade Finance Talks

Trade Finance Talks 21

22 Trade Finance Talks

Trade Finance Talks 23

Dr. Rebecca Harding

24 Trade Finance Talks

So whether you agree with the means

Trade Finance Talks 25

Tapping into Emerging Australasian Trade Finance Trends

26 Trade Finance Talks

Trade Finance Talks 27

MARCUS DOLMAN GEOFFREY DE MOWBRAY

In the face of unprecedented levels There have been a number of new

28 Trade Finance Talks

UKEF’s mantra that “no viable UK

Richard Simon Lewis