1. June 2001
TRADE FINANCE
TRADE FINANCE June 2001
Cover story: Trade Finance Awards for Excellence 2001
Winner Highly commended
Best trade documentation bank HSBC Citibank
Best private insurer AIG Zurich
Best factor Medio Factoring FactoFrance Heller
Best countertrade financier WestLB ING
Best export credit agency US Ex-Im Coface
Best trade finance law firm Denton Wilde Sapte Allen & Overy
Best structured trade bank Citibank SG
Best commodity bank Fortis Bank BNP Paribas
Best newcomer to trade LTP Trade n/a
Best short-term finance bank Citibank BNP Paribas
Best export finance arranger Citibank SG
Best structured commodity bank WestLB ING Bank/SG
Best primary forfaiting Institution WestLB Forfaiting Standard Bank London

2. Cover story: Trade Finance Awards for Excellence 2001
BEST NEWCOMER TO TRADE FINANCE
Winner:LTP Trade
Moving up with style
June 2001 TRADE FINANCE
ity and transparency to explode trade finance as a globally
recognized asset class.”
Strong words, and not only heartfelt but also met with a
determination to succeed using the best tools at hand. Says
La Ferla; “We come from the financial services industry
and therefore our approach is to take advantage of the
superior technology that is now available and to use it as a
means to achieve our business objectives, but not simply
building technology solutions simply for their own sake.
We want to become the leading channel for trade finance
dealing services, a primary vendor of comprehensive, inde-pendent
trade finance information and to be the main pro-moter
of a dominant independent settlement and custody
service built on our experience gained to date.”
Bringing in any new product can be a hard task. Starting
a whole new trade finance company with new ways of
doing things is that much harder still. It is almost 18
months on since LTP Trade established itself and unlike
many new companies, LTP managed to turn in a profit
from the provision of its services in 2000. From the origi-nal
three of La Ferla, James Parsons and Richard Tull, the
company now employs 22 people across offices in four
locations: London, Singapore, Seoul and Moscow.
Remarking on the market acceptance, La Ferla notes: “Ini-tially
our model was highly sponsored by the smaller finan-cial
institutions that specialize in originating and investing
in trade finance. Today global banks and less specialized
institutions are joining every month. We had 295 user
members at the end of last year; we now have more than
480 today.”
And, true to style, La Ferla is determined to expand the
trade finance investor base. He remarks: “To foster liquid-ity
we are expanding the asset class beyond the bank
investor market. There is a demand among institutional
investors for investment opportunities of the type offered
by trade finance. We have created an environment that
enables them to invest in the asset class and we have
achieved results already with institutional investor pur-chases
using these facilities.”
La Ferla is convinced that the company has taken a
sound route maintaining independence. He states: “To
expand the asset class beyond the banking market research
and valuation services are necessary. To be credible you
need to be independent and market neutral, in other words
not a proprietary operation.” And on the company’s asso-ciation
with State Street, he declares: “They are great.
They saw the opportunity and they share our vision.
Thanks to them LTP Trade now has the first fully func-tioning
third party settlement and custody service for trade
finance assets.”
As far as competition is concerned, La Ferla is unper-turbed,
stating: “Others have been following our example
and are developing similar models. We welcome them as a
confirmation of our vision. Ultimately the trade finance
market is big enough for several players.” And for him and
others, the proof is already there. States La Ferla: “We do
not stop breaking new ground: In August last year we did
the first ever auction of trade paper, and in June this year
we did the first ever electronic auction of a participation
agreement.” (See page 10.) JB
In a new award this year we have introduced the category
‘Best Newcomer to Trade’. This has largely been spurred
by the development of boutique trade financiers and trade
service operations, on-line trading platforms for trade paper
and e-commerce platforms. What has been difficult to
assess is the actual business being done within some of these
new operators, with many being wrapped up in pilot pro-jects
or still feeing their way through the trade maze. For
many it is early days yet. For some, considerable progress
has been made. And the nom-inated
winner this year, is the
UK-headquartered LTP
Trade, a dealing platform,
information and services
provider for the trade finance
market.
Started by former Deutsche
Bank executives, LTP Trade,
since its start-up in early 2000
(Trade Finance, February 2000,
p4; and March 2000, p5) has
turned in an impressive perfor-mance.
On its dealing platform
alone, the total volume of
trade finance business offered
to date through the LTP-trade.
net dealing platform has
exceeded $100 million. This is
the centrepiece of the com-pany’s
product range. As at 6
June over 480 trade finance
officers from 92 different
banks, financial institutions
and branches across 22 coun-tries
have signed up as mem-bers
and are now using the dealing and information plat-form.
The company also says that since the beginning of
2001 95% of offerings on LTPtrade.net have been success-fully
sold at pricing equal to or better than the seller’s
reserve. An impressive performance.
The founders of LTP Trade have set out to tackle some
of the issues which they believe are constricting trade and
the development of trade services on a global basis.
Through its services, LTP is aiming to deliver increased
efficiency, cost-effective processing, liquidity and trans-parency.
LTP works together with State Street, which pro-vides
central settlement services and safekeeping systems.
This association allows both buyers and sellers to transact
via a trusted third party, each taking settlement risk on
State Street and not one another.
Says Luigi la Ferla, chief executive officer at LTP Trade:
“Trade finance is the last financial product that has not
evolved in line with the other markets: it is fragmented
without standard documentation and still settles on a phys-ical
delivery of the stock.” And the potential lack of liquid-ity
in the sector is something which needs to be dealt with
before it gets to a serious state, he believes. Adds La Ferla:
“Today, trade finance is difficult to access both by the users
as well as by investors. In this respect it has engaged in a
self-destruction mode. We are committed to bring liquid-
Luigi la Ferla, chief
executive officer at
LTP Trade