New business platform Trade Finance Market (TFM) has launched, enabling investors to tap into an asset class worth $12 trillion every year and earn higher returns by funding shipments of physical goods, whilst also helping exporters sell their receivables quickly and easily.
Trade finance is the mechanism by which exporters and importers settle their conflicting interests by ensuring exporters receive payment for goods quickly while also extending credit to importers. TFM aids the trading process by buying exporter invoices on behalf of investors, which lets exporters receive their money faster when they ship their goods.
The TFM platform is quick and easy to use. The exporter simply uploads the documentation of the goods they plan to ship and requests a finance rate. Investors then take a percentage of the trade, and can rest assured knowing that their yields will return quickly – no more than 120 days in TFM’s asset class. A key difference between TFM and other platforms is that that pricing is not auction based, providing transparency for all parties.
London School of Economics alumnus and TFM Executive Director, R. Uttamchandani, explains that the platform was born out of his own frustrations when importing and exporting goods.
“The retreat of banks due to market factors - Basel III, compliance costs and fines (Dodd Frank) - means that traditional players are currently unable to finance international trade, which causes unnecessary obstacles for exporters and slows growth. TFM is filling this gap in the marketplace by uniting trade, finance and technology in a way that has never been done before to maximise returns for investors, and provide competitive financing for exporters.”
Unlike trade finance competitors such as banks and factoring companies, TFM offers several advantages to exporters, including a lower cost of finance, quick access and better terms.
By also providing investors in mature markets high yield/short term opportunities in emerging market trade as well as risk protection, entities such as pension funds can increase their returns, diversify their portfolio and manage risk at the same time.
The platform makes it easy for investors to access trade finance deals by taking extra measures to ensure there is as little risk as possible through comprehensive credit assessment and De Risking As A Service procedures, including underwriting all transactions through an A+ rated credit insurer with a global presence.
“We do our due diligence to ensure that we live up to our mission to provide high standards of security while also delivering an alternative, efficient, and simpler avenue for trade finance.”
TFM has been operating in beta and has built up a strong origination capability with a client list across Asia and Africa.