DRAFT Improving the SMEs Access to Trade Finance
in the OIC Member States
37
tied to domestic procurement and exports, Market Window financing (at least from
EDC of Canada) is tied to domestic procurement and exports. Moreover, such programs
may often be priced on commercial terms even if the parameters of the financing may
be more attractive than standard OECD Arrangement terms (e.g., no 15% cash payment
requirement or tenor restrictions).”
Source: US Exim Bank ECA Competitiveness Report 2012
1.6.4. Hedge Funds, Platforms and Other Providers and Sources
Numerous other potential sources of trade and supply chain finance can be identified in the
global marketplace. Some are technology-based, platform type providers that offer a basis on
which trade financing and liquidity can be brought to the market by banks, or platforms where
importers and exporters can engage directly in the buying and selling of trade-related
receivables, thus accessing financing in non-traditional ways, and perhaps at competitive cost.
Several UK and US-based hedge funds demonstrated interest, particularly pre-crisis, in
providing liquidity in support of high-margin trade flows involving Africa, and there are efforts
underway to design and deploy various forms of capital pools in support of trade activity,
including around commodity trade.
It is worth noting that emerging models of e-commerce and electronic trade are paying more
attention to the need for and opportunity in providing financing. While such online
marketplaces initially focused on facilitating a transaction and enabling simple payment,
advanced approaches now consider various forms of financing, including the use of letters of
credit, and support for trade on open account terms, to be core elements of their overall value
proposition.
One example of such a model is China-based One Touch (APTFF, Beijing, 2013), which is an
affiliate of online marketplace Alibaba.com. This Chinese company has perceived a need to
complement its global trading platform with broader capabilities aimed at facilitating more
efficient conduct of trade, including the ability to provide trade financing support for
customers.
Figure 13: Global Concentration of Finance Activity
Source: Turning the Crisis to Advantage in Structured Finance, McKinsey 2010