ING Group has partnered with Tradeteq to distribute its commodity trade finance exposures to non-bank institutional investors.
Tradeteq operates the trade finance industry’s first electronic trading platform, which allows banks to package their exposures into standardised, investable notes for non-bank institutional investors.
It facilitated a transaction between ING and Federated Hermes, a large American institutional investor, on 4 February 2020.
Federated Hermes was an early investor in trade finance assets; its role as a counterparty in the trade highlights its intention to diversify its portfolio and generate yield on behalf of clients.
Trade finance has a lower risk profile compared to other financial markets. It is based on tangible flows of goods and services, making it less susceptible to bouts of volatility, while default rates for trade finance products are lower. This presents a compelling investment opportunity for institutional investors seeking stable, long-terms yields. The Tradeteq platform now makes this asset class accessible to institutional investors.
ING leads several other bank and non-bank institutions, which have joined Tradeteq’s platform and begun trading in recent and coming months. It offers an end-to-end solution covering three essential components: portfolio management and trading automation; risk analytics that provide greater transparency; and securitisation-as-a-service. These components ensure trade finance assets receive accurate risk scores, allow investors to access and transact these instruments in an efficient and standardised form.