Trade finance is not easy because it involves so many banks and other parties world-wide, and the conditions, availability and prices change moment by moment. The need for an online platform for funding and hedging trade finance has been obvious for many years, but Mitigram - the only online platform for funding and hedging trade risk was only set up three years ago. It brings together corporates and banks online via a browser on the Internet.
Originally developed in cooperation with large Nordics exporters, amongst the most advanced treasury operations, Mitigram has already processed $14bn worth of trade finance.
To provide the speed, security and control that is needed in todays digital world, Mitigram’s platform is hosted in a secure, redundant server and infrastructure environment, using industry standard protective measures (ISO 27001) to ensure confidentially and 24/7 availability.
Source & Copyright©2018 - Mitigram
Mitigram’s network already links some 90 top counterparties globally, with aggregate corporate turnover exceeding $300bn. This includes leading multination corporations, amongst the world’s largest traders in commodities and most of the world’s largest banks, pricing risk in over 100 markets and on 500 local issuing banks. Any bank in the world (whether registered or not yet registered) can be reached through the platform through an email integrated solution.
The way it works
Mitigram provides comprehensive automated quotation workflows, codified audit trail, analytics on asset pricing and activity data for the following trade finance instruments:
1. Import LC
2. Export LC
4. Import SBLC
5. Export SBLC
6. Avalised Drafts
First the corporate issues a Request For Quote (i.e. called a “Mitigram”) which is sent (in real-time) to all its banks in a structured automated form, as shown below:
Source & Copyright©2018 - Mitigram
Mitigrams are received by all counterparties instantly. Communication is private, corporates choose which banks to invite, they see all banks quotations, but banks only see their own responses.
Mitigram provides detailed data analyses which are used by both corporates and banks to review markets pricing, credit spreads and performance globally, for the first time available in the trade finance space as a result of standardization,.
Using the Mitigram platform corporates can stop relying on unstructured email-based communication with their banks individually and centralise their trade finance management, which saves both time and money.
Aside from better operational efficiency, compliance and control, there is also an impressive impact on prices that corporates have to pay for their trade finance. Mitigram have found that by asking multiple banks to quote, rather than just the lead bank, prices are lower, as graph below shows.
(X-axis: = no. of banks invited to quote.)
Source & Copyright©2018 – Mitigram.
However, Mitigram have also observed that many times it is not the lowest price that is chosen by the corporate, as trade is still based on relationship banking. But the insight that this delivers helps better drive a corporate’s strategic engagement with its banks across its global operations, as it gives a centralized view of all transactions.
The Mitigram platform is undergoing significant development at present and several new features are planned over the coming months, including the ability to receive notifications through a mobile app, to contact new banks outside a corporate original FI network, and for banks, to manage correspondent banks communication and distribute risk in secondary markets.
CTMfile take: Mitigram is much more than an auction platform. It is a full trade finance relationship management service, that really delivers.
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