"Your Financial Relationship
MATCHING - WITH CHALLENGING BUY/SELL RETURNS
is a simple business model which can be applied to any product/commodity by organizing the original purchase of the commodity
by a "re-seller" and the forward sale to an end purchaser done in tandem with each other.
When the purchase of any commodity is made there are factors that apply as to the ownership and Proof of Product,
which means the following in the case of most PHYSICAL commodities oil, grain, metals, diamonds, and many other PHYSICAL property
commodities. In most cases the following applies as Proof of Product:
Certificate of Ownership from commodity Producer to confirm the Allocation and the Ownership
b) Registration from Governmental Authority to confirm the Allocation of Ownership and for them to issue the
Permit for Export
c) Producer's or Seller's Authority to Sell
d) Confirmation from a transport company, to confirm the delivery schedule and that
the transport of the Product to the loading port is secured.
Lifting Schedule, confirmed by loading port / terminal
Export Declaration of customs
In order to attain "OWNERSHIP"
the reseller often uses a partnership arrangement to "show" funds of his partner with cash funds. Sometimes
these "show of funds" are provided through only an institutional bank relationship and sometimes other sources such
as pension funds, unions or private funds; of course all these funds are held within the banking system so the institutional
banks are always involved in all transactions. In any case the reseller agent achieves the commodity "ownership"
under a JV arrangement with a cash fund holder.
note: The bank plays an important role facilitating all money confirmation and transfer arrangements either
for themselves as an involved "partner" or as a facilitation service for the other participants who hold their participating
funds in banks.
The ownership achieved, the reseller agent can now
move forward to Proof of Product to arrange the sale of the commodity to a purchaser. (NOTE: There may be more than one reseller
involved in some transactions before it reaches the end user - each usually contributes a service or sometimes an upgrade
to the product/commodity until completion of the sale). The purchaser provides a bank letter of credit or other financial
instrument from their bank so when the product is delivered payment is secured and released to the seller (or reseller agent)
when all conditions of sale are met. The profit difference between purchase to the final sale is then shared between
the parties according to their JV participation agreement with each participant having provided a service, whether that service
was providing the "financing" or otherwise.
The degree of profit is determined by:
- a.) the difference between the purchase
price and the sell price - commonly called the spread, and,
- b.) the time element that exists
from point of purchase to the final delivery to the end buyer of the commodity
the commodity bought and sold under a succesful matched trade from producer to end buyer
- d.) the amount of funds placed
forward to accomplish the buy/sell in the trade match dealing was accepted by the producer and their bank
Each JV participant has a vested interest to see a transaction close as quickly as possible. If your
JV participation was providing the funds to show in the transaction then the number of times your funds can be shown over
and over again in a multiple of transactions determines the returns for each JV participant.
review a few examples of buy/sell involving different commodities and evaluate the differring time frames from the beginning
of the transaction to closing. Then follow through the anticipated profitable gain on the part of each of the JV participants.
It should be noted that introduction to the persons or corporate that represent your possible PRIVATE
involvement in these types of opportunities as a participant, is crucial - you must be introduced to these opportunities by
those in the know in order to participate and profit from them under a JV participation arrangement - Trust Management Services
Inc. is knowledgeable and capable to make these introductions and receive a pre-arranged portion of the JV participation arrangement
profits for their participation in these ventures.
Example #1 - Oil and Petroleum products
The sequence of events that take place from exploration to production then on to distribution and refining,
to finished products is a long term investment, but as most commodities there is a consumable element that has many opportunities
to profit at each stage of product deliveries.
Let's start with the crude oil and realize that similar
circumstances are applicable in all petroleum related productivity. Once crude oil is available, the reseller makes the purchase
and forward sells to the refinery. The time element for JV participants, especially the Funds holder participant, is crucial.
Funds holder participant must be prepared to see the funds tied up probably for weeks and possibly months until delivery to
the refinery is made. Scheduling, shipping risks, insurance issues and many other factors come into play and may increase
the risk, However, the Letter of Credit remains the safety of the buy/sell that funds will not be lost, but realization
to profit may vary under different elements and circumstances including the time element. Always in a business dealing a buyer,
seller and possibly a private funds participant, investment banker, or sometimes just the business' banker seek a fast
turn around time for the use of their funds to maximize their profit.
BE AWARE: These opportunities
for private funds participation on commodities may be set for a one spot buy/sell or have the funds standing for a longer
term contract - as the long term contract stands the risk factors of consideration are minimized. However, a refinery has
a preset for deliveries of their intake crude and exit refined product because they can not start and stop, they must have
a steadily purchasing client making a JV participation opportunity difficult to secure for a longer period of time because
they already have sales secured. The same issues apply either on crude oil supply or on refined product sales for the private
participant, similar issues of risk and delays to see the return in the JV exist, but when found and sought outto be real
can be lucrative.
the same investment opportunities take place, however the delivery of product/commodity is much simpler as the diamonds can
be carried in one's person under security measure yet the time for a transaction to close is much less - hence more turnover
for more profit.
takes ownership as previously explained, the diamonds are brought to a "table top" meeting through the person or
much simpler security measures, the assessment of value is performed on the product, the money exchanged for product is delivered
on the spot, and the transaction closes. The time element is much less, number of transactions using the same participant
funds more frequently occurs, so number of times to payout profit is much more frequent resulting in a better return to the
JV partiipants overall. Improved cash flows make it very lucrative, but it should be understood that the diamond mines to
not open to produce without knowing they have buyers in place to purchase. This being the case, to seek out a placement
for JV participants with funds n the industry has its challenges as well.
Example #3 - Electronically Traded Commodities
When applied to an electronic securities
product, also a commodity, such as Medium Term Notes (MTNs) or mortgages, instead of a physical commodity, additional benefits
result, including certainty of profit commitments from all banks involved in the transaction, speed of transactions to close,
and protection of capital via a secured and specified custodial security account that maintains participant funds at
a initial level of deposit within the account.
Below is a summary of how finacial paper buy/sell matched trading works and how a licensed trade group partner, to
whom the funds participant is introduced for the business JV participation relationship, creates profits from client participation
funds. The basic premise is to create a margin of profit, at an average 5% to 20% per transaction, in the buying and
selling of a product. The advantage of finacial paper trading over physical commodity trading is:
a.) It is easier to match both buy and sell
trade in tandem with full commitments by all banks involved (issuing, trade, exit) in the transaction PRIOR to executing the
b.) The above commitments from all banks ensures that there is no trade risk in being unable
to sell a product that is purchased.
c.) The electronic nature of the transactions, allows the transaction to be conducted via a custodial transactional account. With capital under a non-depletion status in the account, the risk to capital
is removed, as this is guaranteed by the bank holding the funds itself.
d.)There is no delay in physical shipment, as it is not a physical
product. This allows a greater number of transactions to complete within shorter time periods, and possibly more that
one per day when organized appropriately. It is this speed of transaction which magnifies the margins to amounts
which cannot be possible with physical product transactions.
The licensed trade group to whom we make introduction with is a holder of "paper"
under contract with numerous issuing banks and has long standing relationships with the issuing banks having been involved
in this field for three decades. In addition, exit relationships for the purchasing are already established making it
easy to organize sale and buy agreements to be executed simultaneously. As such, they are in a position to utilize their
relationships, financial paper commitments and exits with both their monies and additional monies from participating
JV clients. Where clients place their funds foward a new Business Venture is created with new matched
trading agreements dividing the profits with the new client as a JV participant.
The client is recognized as a business partner associate and the
dealings are transparent at each stage of the buy/sell trade process, including disclosure the profit margins being
made via the buy/sell contracts. This is all to establish and develop a long term relationships between the licensed trade
group and the participating business partners within the JV.
brief summary of the application procedure for new participants that wish to become a JV partner, this does NOT guarantee
that the other party is interested in a JV, like any business association - each side must want to work with the other.
To have the other partner determine if they wish for a working business partnership or relationship these are the summary
of the beginnings of procedures of application:
a.) There must be a Request - client must ALWAYS be the account holder and signatory and appropriate documentation is requested
b.) Confirmation of Funds - they are confirmed,
compliance completed and accepted as genuine, then contact is initiated to move forward.
Once acceptance of the request is granted by any industry group of choice, then Private JV trade agreements are issued to the signatory
and account holder ONLY. Please do not ask for private contract or trade group details to be released to any third party or
client representatives/intermediaries, as this is against the trade group's in house attorney's strict instructions - this
is a PRIVATE introduction of a business JV arrangement.
There are some items necessary to establish the JV Participation
beginning with the usual bank "Know Your Client" information requirements to create a usable protected capital scenario
for transactions through a custodial account with provision for non-depletion of capital funds deposited at the designated
trade group recommended bank; Preparation of Sale
and Buy contracts; Issuing bank compliance confirms
funds are held in JV trade bank; Execution of daily
transactions by providing trade bank back office with buy/sell Euroclear tickets to organize banking commitments for each
transaction. Then the pay out profits as agreed weekly,
bi-weekly or monthly or as underlined in the JV business agreement - this is common to designate profits to project funding
if those criteria are approved.
DETAIL - on the application documentation purchased from our shopping cart
a.) Trade Request
Client requests to be taken to a matched buy/sell trading opportunity by providing initial documentation
a.) Letter of Request from the Client w/ copy of Passport
b.) A tear sheet of the account statement
indicating cash funds available
c.) Letter of authorization to verify the funds - bank to bank
d.) List of project(s)
to be funded with maximum anticipated cost estimate
e.) Client Information statement providing compliance disclosure to "Know Your Client" to address the appropriate banking and finance regulations
f.) Full color copy of signatory/account
Letter of Attestation
If the account holder client is a Corporation
then the trade group will additionally require the following:
a.) Corporate Resolution naming the authorized signatory
b.) Certificate of Incorporation
c.) Passport copies of primary Directors
and Shareholders of the Corporation
NOTE: The draft form of
these documents aforementioned are available from our "Shopping Cart " identified as Trade
Matching request Application documents.
b.) Funds Confirmation
Before accepting or honoring a new client
request as genuine, the trade group must check that both the funds/asset are recognized by the client custodial banker holding
the funds/asset. There is no exception
to this requirement, regardless of the title or position of the new client. The trade group's reputation with their issuing
banks and exits are more important than any single transaction or new client; and they will not jeopardize these relationships.
The initial procedure for checking the funds/asset
is very simple and does not require any SWIFT or other such mechanism.
The simple requirements are:
1.) One email from the custodial banker confirming funds are within the bank and fully owned by the client
2.) The source of the email is checked through the trade group
One phone call to custodial banker confirming they sent the email (no other questions)
4.) With certain banks, or branches of reputable banks, where a concern exists that may raise red flags; then on some occasions the trade group sends one
of their licensed private bankers to the client
bank itself to confirm the funds in person with the custodial
banker - this is rarely required.
The client participating funds for financial commodity transactions under a JV commodity participation relationship should
be set as One Million Euros minimum or equivalent in United States Dollars. This minimum may be lowered at the discretion
of the particular trade group under specific acceptable circumstances, in some cases the trade group will accept less however,
this is determined depending the circumstances. PLEASE ASK, there are other options available, one example of which is discussed
Where the client is
bringing forward an asset, the credit line value of the asset would be a percentage of the face value (if the asset is a bank
instrument) and the credit line amount can only be determined after discussions with the trade group's trade banks that would
provide the credit line depending on how they value the asset offered as collateral security. The trade group ONLY discusses
the amounts after fully confirming that the asset is genuine and owned by the client.
Other assets of varied commodities such as diamonds, gold, oil
reserves, and/or varied commodity supply contracts may also be structured that they could be held as security for a
loan or credit line value - either through a client's own bank relationships or with assistance from the trade group
and their banking relationships.
the potential JV business partner client does not have the 100M Euro, the trade group may be able to initiate
and arrange buy/sell matched commodity trading transactions for clients with a much lower minimum. The account would
be placed through the assistance of the trade group bank with the client; this account would work under a client custodial
account structure with funds deposited under non-depletion clause, thus providing comfort to the client that their capital
is guaranteed. The trade group through their trade relastionships are suited for the buy/sell matched trade activities.
The structure is very similar to the trade
group buy/sell matched electronic trading, with the difference being in quantity of transactions that can be conducted
per time scale, as additional real world delays of shipping and verifying needs to be taken into account. Other than the physical
delays, the investment capital is again confirmed as protected by the bank itself to the participating client and returns
are commonly substantial under this JV arrangement.
Once the client
request is confirmed as a genuine request, the file is identified as LIVE and the trade group will provide every resource
to make the JV business trade relationship a successful one.
that the trade group will utilize to create usable protected capital for trade must be agreed with the client in principle,
this the reason for the JV business reltionship - each party has a contribution to make for the success of the business at
At this point, if another associate trade group besides Trust Management
Services Inc. themselves is identified, the trade group provides their private trading JV business contract to the participating
account holder directly, with their full corporate details. Prior to this Trust Management Services Inc.
will require a JV participation agreement arrangement in place, this is usually completed when the first request documents
are first received. The trade group does not honor requests for copies of their private JV contract(s)
to be released to any third party, including representatives or intermediaries to the account holder – this is
against strict policy enforced by the in house attorney for the trade group preparing and issuing the agreements.
The trading group JV contract is a very simple document stating that the trade group
will utilize the participant's funds in their buy/sell matched trading activities for a set agreed term, dividing
their profits equally or as negotiated.
The in house attorney for the trade group
is able to negotiate and organize any required amendments to the trade JV contract, but they like to keep the contract as
straight forward and simple as possible so focus is given on the business JV trading activity itself.
Please note that the trading entity group(s) have different incorporated entities in Europe,
Hong Kong or the USA.
d.) Create Usable Protected Capital for Trade
The structure of this stage varies from client to client, as each client has their own unique funding position
and level of matched trading experience, together with their new JV relationship with the trade group.
Matched trading itself can only be executed with cash funds. Where
an asset is proposed by the client, then additional steps need to be taken to monetize the asset into usable cash funds.
Requests to utilize "administrative hold"
against cash only, reveals a lack of understanding of the funding process. A trade bank will not release a credit line
to the trade group secured against an "administrative hold" of the funds, as this is not a viable security.
Any client making such a request is in fact trying to protect their capital without moving their funds out from their bank
and/or without creating a lien on their funds by way of blocked funds MT760. The trade group's first investment option
described below achieves all of these goals for all the investment clients in a way that is both efficient and secure.
Where the client comes with cash funds from the beginning,
an account structure still is needed to be agreed upon to ensure that the cash funds are both:
Funds in an participating client's own account will fail compliance by the issuing bank when signing off on
the financial paper buy contract, as the participation client is not the holder of product under contract, as is the trade
group. The cash funds therefore have to be invested into a structure which allows both;
Several potential strategies and funds/assets scenarios
can exist to allow creating usable capital for trading. Please note that under all of the following identified scenarios,
the client remains as owner of the funds.
MORE INFORMATION AFTER RECEIPT
OF THE APPLICATION DOCUMENTATION IS AVAILABLE ON THIS TOPIC
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Mangement Services Inc. Calgary, Alberta, Canada