Cayman Emerging Manager Platform SPC – USD Trade Flow Fund SP is a business entity registered at Global Legal Entity Identifier Foundation (GLEIF), with entity identifier is 549300OFKBQOSVSZ3493. The registration start date is March 13, 2018.  In February 2020 we launched our second fund to cover EURO Trade Investments,  the Cayman Emerging Manager Platform SPC – EURO Trade Flow Fund SP.

Our non-credit approach to enabling physical commodity import/export transactions, which is unique in the trade finance hedge fund world, swaps pure credit risk faced by investors in other trade finance funds for real-world insurable physical risks. The fund does this by simultaneously entering in to a purchase contract for the commodity from the supplier at a fixed price (on behalf of the end buyer) and an onward sales contract to the end buyer at a fixed price, the Fund is not exposed to price risk per se, only if the end buyer were to default by not paying the full value of the cargo upon delivery could the Fund be potentially exposed to the commodity asset price falling. This statistically low risk event is mitigated by the risk management methodology employed by the Fund, which looks very similar to the approach used by modern day financial market clearing houses.

The function of trade financing is an essential tool to the workings of the global economy; it is a key enabler in international trade and globalization. Around 80% of global trade transactions require a form of financing.
Insufficient financing and working capital pressures could bring about missed growth opportunities for businesses that could eventually stagnate an economy. This is particularly true for small and medium sized enterprises (SMEs) who face the greatest challenges in accessing the benefits of trade financing.

The World Trade Organization (WTO) notes that Around 60% of trade finance requests from small businesses are rejected by banks and as high as 74% according to the Asia Development Bank in 2017. The Rejection is reported often on the basis that the transactions are too small (below US$15m) to support the Banks capital allocation and KYC/AML costs.

In its annual global survey report published in 2018, the International Chamber of Commerce (ICC) highlighted regulatory issues as one of the top concerns among its respondents comprising of 251 banks in 91 countries.

The introduction of Basel II and III has seen major global banks move away from their trade financing businesses. The Basel Accords, which were developed as a response to the 2008 financial crisis, have heightened banking regulation, especially as it relates to capital requirements.

On top of regulatory pressure, banks are also facing competition over pricing in traditional trade financing contracts which has prompted them to abandon deals that may be unprofitable and the banks have subsequently reigned in exposure to this space.

This is where TradeFlow Capital has developed its unique non-credit, non-lending, asset backed approach to cost effectively support the under-banked shippers, suppliers, buyers and intermediaries in the Bulk Commodity space using its superior risk management methodology which transforms unrated transactions in to AA+ equivalent managed transactions.

Trade Flow Fund’s offer a business solution to the under-banked SME business community, and a strong RAROC investment opportunity for investors looking for all the diversification benefits of the Trade Finance Asset Class and in addition the further benefits of diversification away from pure Private Credit strategies.

We enable shipments investment requirements and Inventory warehouse investment requirements of SME firms on a Global Basis.