What makes good online platforms for trade finance?
Global buying power and a majority of the world’s customers are not just in the biggest markets. These days, cross border business is totally changing the landscape of trading, especially in trade finance. Trade finance is gaining momentum thus making it easier to conduct business across borders internationally.
The Current Landscape
In spite of leaps and bounds in technology related to trades, the condition of global economy still depends upon asset-based lenders and their approach to cross-border deals. Globally, trade growth saw a slump in 2015 due to a major drop in prices of commodities.
The International Monetary Fund has estimates that show global growth holding steady at 3.1% currently, is projected to grow to 3.4% in 2016 and then onwards to 3.6% in 2017.
The growth predicted thus is more gradual than previously thought and more so in the case of emerging markets and countries.
New products and platforms are continuing to crop up, and new technology providers are joining the crowd alongside established banks in facilitating and financing cross-border deals. Trade financing has seen a growth in new supplier networks, including Ariba, Tungsten, Taulia, and a bevy of other companies.
The Importance and Impact of Online Trading Platforms and Electronic Trading
If you have to understand the impact of online trading you will have to go through the implications electronic trading has on trade finance:
• Reduced cost of transactions — Process automation is which is referred to as Straight Through Processing (STP) is a huge factor involved in the evolution of trade finances. By bringing down the cost of transactions down to zero (almost, or very negligible). This has in turn led to lower costs for investors thus giving trade finance a huge boost since increased trading volumes will not translate to tangible rise in processing costs.
• Greater liquidity — geographic location has ceased to be a factor in trade finance allowing companies across the globe to trade, irrespective of location. This means greater liquidity thus boosting the efficiency of trade markets.
• Greater competition — A trader is able to purchase or trade futures on Globex, LIFFE or Eurex with just the click of a button. The trader will not need to use a broker or a trader. This means higher competition on a global scale.
• Increased transparency — it is extremely easy to determine the price of securities being traded thus making the process of trading extremely transparent.
• Tighter spreads — this refers to the bottom line or the profit that is made by the traders. Simply put it is the difference between the best buying and selling prices. Due to all the factors mentioned above such as increased liquidity, competition etc. the spread on securities that are traded have reduced.
Retail investors have the distinct advantage of overcoming crippling limitations such as logistics, coupled with the greatly reduced cost of transactions. Web-driven financial transactions ultimately win out due to these factors.
Here are two online trading platforms in India for investors to consider:
1) Angel Broking : This was established in 1987 and has quickly become the first and foremost in its domain to earn the respect of the market. It has built up a huge network of branches and also franchises. (900 cities and 8500 franchises). They also have great support for customer in the form personal interactions and notjust automated recordings. You can use their trading platform on any device of your choice(smartphones, desktops, tablets).
2) ShareKhan : Incorporated in February 2000, Sharekhan is India’s 2nd largest stock broker as per number of customers, providing brokerage services through its online trading website Sharekhan.com and 1950 Share shops which includes branches & Franchises in more than 575 cities across India. They are full service broker and provide various other services like asset management etc. You can find my detailed review for Sharekhan brokerage charges here. As of July 30th , BNP Paribas have purchased ShareKhan for Rs 2,200 crore. We don’t expect major changes due to the buyout.