At the Loan Market Association’s 17th Annual Conference, we had a great panel on” Trade and Commodities Finance” where Shobhit Singh Head of Trade Finance – Metals & Minerals at Trafigura, Sean Edwards, Head of Legal EMA at SMBC Group and chairman of ITFA, Rebecca Shepherd, Senior Associate at Clifford chance, and Nils Behling, Co-founder and COO of Tradeteq explored the future of trade finance, focusing on the growing role of digitisation as digital platforms and electronic documentation become more prevalent in the industry.
In this Q&A, we’re highlighting some of the most pressing questions raised during the panel discussion. We extend our gratitude to the panellists for generously sharing their insights and extensive expertise.
The panel discussion covered crucial topics such as the enforceability of digital documents, the security risks surrounding electronic bills of lading (eBLs), and shifts in trade finance models driven by new technologies. Here’s a summary of the panellists’ responses to these key issues.
Q1. Have you had any experience regarding the enforceability of digital documents?
Shobhit Singh, explained that they have been working on adding eBLs as secured collateral documents under syndicated facilities. To ensure enforceability, they have obtained legal opinions from external legal counsel, particularly under English law.
Similarly, Sean Edwards, highlighted that while digital documents are still relatively new, there haven’t been significant enforcement issues in practice. He stated that much of focus has been on securing legal opinions to ensure the reliability of systems domestically (as required by the UNCITRAL Model Law on Electronic Transferable Records (MLETR) and the UK’s Electronic Trade Documents Act) and validating that electronic documents governed by a law which recognises them will still be enforceable in countries where such laws do not yet exist, for example, between China (no law yet in place) and Singapore ( where a version of MLETR is in place).
Q2. Have you experienced any misuse of digital bills of lading (eBLs)?
Shobhit Singh shared that with eBLs control is more stringent than with physical bills of lading, as only one party holds possession at any given time. Singh pointed out importance of creating secure and reliable platforms to enable the widespread adoption of eBls.
Q3. Are more trade finance platforms pivoting from supply chain program origination to a white-label model?
Nils Behling, emphasised that Supply Chain Finance (SCF) remains a critical revenue source for both banks and non-bank lenders. Behling noted that globalisation, regulatory changes, and the growing need for companies to optimise working capital have driven demand for SCF. However, he stated that traditional players are facing stiff competition from more innovative SCF models. To keep up, many are investing in advanced technology, particularly artificial intelligence, which Behling believes will be a major driver of future growth in SCF solutions.
Conclusion
Trade finance is undergoing a digital transformation, with electronic documents and advanced platforms poised to improve efficiency and transparency. Challenges like enforceability and the potential for misuse must be addressed, but with secure systems and the right legal frameworks in place, digitisation will continue to reshape the industry, offering new opportunities for growth and innovation in the years ahead. If you’d like to discuss these developments in more detail with our experts, please feel free to reach out to [email protected]
