Author(s)

Yang Wu

Affiliation(s)

HSBC Bank (China) Limited, Shanghai 200120, China.

Corresponding Author

Yang Wu

ABSTRACT

Cross-border trade finance, as a critical component of global supply chain financing, has been constrained by persistent pricing opacity, liquidity fragmentation, and structural information asymmetries that impede efficient price discovery for market participants. This paper presents a comprehensive bilateral pricing framework for trade finance asset transfers that explicitly incorporates bidirectional counterparty credit exposure (including CVA and DVA adjustments), term liquidity premiums (TLP), and cross-border settlement risk into a unified valuation architecture. Through empirical validation using trade finance securitization programs and cross-border payment systems, we demonstrate that bilateral pricing models substantially reduce pricing heterogeneity and enhance market liquidity relative to traditional unilateral approaches. Leveraging transaction-level data from Deutsche Bank's Trafin securitization series (USD 3.5B), Standard Chartered's tokenized asset initiatives, and the IMF's multilateral payment platform assessments, this paper provides quantitative evidence that a dynamic bilateral pricing framework achieves capital allocation efficiency improvements ranging from 23% to 165 basis points (bps) in cost optimization relative to conventional methodologies. We verify complete compatibility with Basel III counterparty credit risk (CCR) capital requirements and provide a systematic pricing methodology applicable to both traditional trade finance instruments (letters of credit, accounts receivable) and emerging tokenized asset platforms. The framework explicitly models the value contribution of exporter creditworthiness (DVA) that traditional unilateral pricing methodologies systematically ignore, while providing transparent decomposition of all pricing components to facilitate market efficiency and reduce information asymmetries in cross-border commercial transactions.

KEYWORDS

Trade finance; Bilateral pricing; Credit valuation adjustment; Liquidity premium; Cross-border transfers; Basel III; Counterparty credit risk

CITE THIS PAPER

Yang Wu. Pricing and liquidity of cross-border trade finance asset transfers based on bilateral pricing. Innovation and Technology Studies. 2026, 3(1): 1-14. DOI: https://doi.org/10.61784/its3020.

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