Private placement trading programs usually involves trading with Financial Instruments (SBLC, BG, MTN, SKR, CD) or secure deposit accounts.
PPP refers specifically to private placement trading programs with a high return on the investment associated with humanitarian project funding programs as compared to capital enhancement programs.
These programs provide the traders with fresh funds that produce high profit margins.
This is known as the first tier. In the commercial world this would be called the B2B wholesale market. Now we all know that end users usually do not have access to the prices offered in the wholesale market, so they buy goods in the convenience store and not direct from the producer.
Most of the time these programs require the investors to use a portion of their earnings for projects of humanitarian, social, or economic development in nature to make sure that part of these Profits are put back into the economy.
Even after deducting the portion of earnings to be used for projects, the investor is still left with a very substantial profit for their own investments.
Performing PPP programs are difficult to find and are not always available. Only a very restricted number of high-level traders can get access to these type of programs.
Many capable investors have been looking around for PPPs for years and are unable to find a performing provider. Often they have wasted large sums of money by sending MT760’s to banks and so called traders that simply can not perform.
Genuine programs are without risk to the investor what so ever, as the credit line raised against the capital is underwritten by the trading group. The (Investor) therefore is involved for the purpose of Audit only, as it is by law that Financial institutions are not allowed to participate and therefore have to find a Private entity either a private person or company.
At no time are the investor’s or better-called Audit Fund Provider’s funds used for the trade.
The procedures to enter are simple and fairly standard, however the Audit Fund Provider will have to adhere to strict compliance and non-disclosure. Many claim to be next to traders, this is 99.99% not the case.
Traders are very busy people and have no time to sit down and have a chat. Therefore they have a structure in place where the first contact is with a compliance officer who will go through the submission papers and sort out the good from the nonsense.
Banks are not permitted to act as investors in private placement programs, but they are able to profit from them indirectly in various ways (firstly getting big commissions).
This fact permits some private entities like private investors, brokers and trading groups to take part in this lucrative business that otherwise would be a banking matter only.
The private assets coming from private investors are necessary to start the private placement program process. These private large cash funds are the mandatory requirement for the buy/sell transactions of banking debt instruments and, as a consequence, also the mandatory requirement for the programs through the Trading Groups. Brokers/intermediaries are necessary to introduce the investors to the Trading Groups that exist.
Because of this, each of the involved entities share the benefits of these private placement programs (commissions for banks/brokers and proceeds for Trading Groups and investors).
As a direct consequence of the environment where this business has to take place, a Non Solicitation regulation has to be strictly followed by all of the involved parties.
This element of private placement programs strongly influences the way the parties can deal with each other and the way they can make contact. This fact can sometimes be also the cause of the origin of scams (or attempts to do so) due to the fact that at an early stage it is often difficult for the investors to realize if they are really in contact with a viable source.
Another reason why so few experienced people talk about these trading programs is because just about every contract involving the use of these high-yield instruments contains very explicit non circumvention and nondisclosure clauses which forbids the contracting parties from discussing any aspect of the transaction for a period of years. So, it is very difficult to locate experienced contacts who are both knowledgeable and willing to discuss openly about this type of instrument and the profitability of the transactions in which they figure.
Private placement programs are a very highly private business, not advertised anywhere nor covered in the general press, and they are not open to anyone but the best connected and most wealthy people that can come forward with substantial cash funds for trading.
1. Few of the rules applicable to other businesses apply to private placement programs. You success has little to do with what you know and just about everything to do with whom you know.
2. It is a privilege to be invited to participate in a private placement program, not a right. Traders can easily maintain a constant supply of previous clients and new applicants because of the high yields and negligible risk. If the trader does not receive a complete compliance package, he will simply say....next!
3. Failure to disclose fully can disqualify the most earnest of applicants. And the traders have no obligation to explain to you or your client. You should never, ever underestimate what the traders know or can find out about the investor and the intermediaries' prior efforts to get into the business. They will know if the client has been shopped around.
4. Most of these private placement programs exist in order to finance humanitarian projects. Yes, they are lucrative to investors, but the purpose is not simply to generate more money for the already rich, but rather to encourage the re-circulation of idle money and place the funds where they can help the most. Clients with their own projects, and clients willing to support projects sponsored by the trading groups always move up in priority and get the better yields.
5. Remember to let your client know that they need to prove their qualifications to the trading groups running the private placement programs not the other way around. Compliance officers and traders will not go back and forth with intermediaries and/or clients until after they have received a complete compliance package consisting of a passport copy, CIS (client information sheet) and proof of funds (POF), which can be sanitized to protect sensitive info.
6. A personal interview is usually required with the principal even when the principal has given a POA (power of atorney) to a mandate. Traders must know with whom they are dealing. Many people do not get past the interview stage, because of unrealistic demands or attempts to negotiate terms that have already been fixed by regulators and banks. And from personal experience I can tell you that language barriers can be a big pitfall. As I write this, we have an intermediary in India with three clients who we have ready to go into trade as soon as the intermediary can find a qualified translator. The intermediary blew the first conference call and if he does not find a good translator, the trader will discard their files very quickly!
7. Only actual owners of the funds or account signatories are recognized by the trading bank or depository and considered principals.
8. Funds must be in a first-class bank and normally, must have a branch in an acceptable Western jurisdiction. Many traders want funds moved to the transaction bank (under the owner's control). It is always on a case by case basis.
9. Client and intermediaries for private placement programs should realize it is illegal to propose assets or submit documents that are fraudulent or forged. Illegal submissions are immediately reported to the authorities.
10. Funds (assets) must be screenable in, or confirmed by a top Western Bank. One must have clear legal title from the owner to submit an asset by way of assignment (i.e. bank-acknowledged power of attorney or a corporate resolution).
11. Real private placement program trading groups will not publish write-ups or quote specific yields, except in direct meetings with principals - otherwise, their privileges could be suspended. Neither do they float "contract" forms through intermediaries. Unfortunately, many intermediaries think they can run the process and this IS NOT the case. The job of the intermediary is to collect the full compliance package, submit it and then step back and let the compliance officer and trader run the show. To do otherwise will cause the client not to be accepted and may actually result in them being blacklisted and they will never get into a program, anywhere.
12. Genuine private placement programs do not ask for up-front fees. And the client's funds are rarely out of a principal's control - except with a valid undertaking from a major bank or approved equivalent.
13. Programs, yields and rules are in a constantly state of flux because they are influenced by market pressures, government regulations and other factors beyond the control of the particular private placement group. Investors must follow the traders' rules and expect to get the details of the offer upon presentation of the contract by the trader or discussions leading up to that point.
14. Private placement programs are highly confidential and "deniable", because of its obvious potential for disrupting other markets. Inappropriate demands, "shopping" an asset and other indiscretions can result in a client or intermediary being "flagged" as a problem and excluded, even without their knowledge. Once blacklisted, you are done in the private placement program field.
15. And yes, client profits are subject to tax accountability to government authorities and to society as a whole. Genuine traders will never aid, abet or be privy to any form of evasion. Proper tax management and legal avoidance by the client, on the other hand, are perfectly acceptable and are the responsibility of the client.
For an investor it is much simpler and usually more profitable to enter a program where the Trader with his Trading Group has already everything in place, such as the issuing banks, the exit buyers, the contracts ready for the arbitrage transaction, the line of credit with the trading banks and all of the necessary guarantees/safety for the investor, etc.) . This way, the investor needs only to agree with the contract proposed by the Trader forgetting about any other underlying problem.
Another advantage for the investor/client is that he can enter a private placement program with a substantially lower amount of money against the case to proceed by himself because he will take indirectly advantage of the line of credit of the Trading Group.
Normally, private placement programs are nothing more than a pre-arranged buy/sell transaction of discounted banking instruments using an arbitrage transaction.
If an investor had funds of say $100M to $500M, they could create their own trading program by creating for themselves the buy/sell transaction. That is not as simple as it sounds since he would have establish control of the whole process by making contact with the Provider banks for the bank instruments and at the same time for the exit buyers.
With all the FED restrictions they have to meet this is not a simple task, plus it is no easy feat to develop the strong necessary connections with the related parties in private placement programs (the issuing banks/providers for the bank instruments and the exit-buyers).
Some think that the investors in private placement programs are the end-buyers in the chains we spoke of before, but this is not the case. Financially strong companies who are looking for safe investments for the long term are the actual end-buyers.
The end-buyers are made up of insurance companies, trusts, pension funds, etc. They are not allowed to participate in-between as investors.
The investor in a Private Placement Program is just a cog in the over-all picture among many others. So, who are the other players that are involved in a PPP? Well, they include the trading groups as traders/commitment holders, top world banks who issue bank instruments, intermediaries/brokers and of course, the exit-buyers such as pension-funds/insurance, etc., who get the advantage to benefit from this private placement program trading.
This sometimes causes some discomfort for an investor because he/she usually does not see most of those involved in the process because they will deal with brokers, trading groups / traders and trading banks only. Different clients have varying levels of comfort regarding their financial security in this kind of trading.
Investors are "invited" to participate only after they have submitted a full compliance package which includes a POF (proof of funds), CIS (client information sheet), passport copy, a brief summary describing the request, i.e the dollar amount, is it PPP or another service they request, the name of the client's bank and is it cash or a bank instrument that he wants to put into trade? Also, in what country is the client and the bank located?
A lot of intermediaries/brokers and clients try to pester the trader or his representative with questions and want to go back and forth and get all of their ducks in a row before submitting their compliance package. Many have a rude awakening when they are told to go elsewhere. This often occurs with unsophisticated players who do not understand the protocol involved in private placement programs.
They just don't give out details until you can show you are a real client. They are too busy helping the many humble and responsible people who are waiting in line to get into good trades to deal with multiple questions and difficult personalities and bad attitudes. Once they review the compliance package and it has passed their due diligence, the client will be invited to participate and full details will be revealed at that time. This does not commit the client to anything because he has not signed a contract. After a conference call, it is up to the client to move forward or not.
Private Placement Programs usually get a very high yield when compared with the common yield reached with the better known traditional investments. The common man in the street cannot comprehend how one can obtain a high yield per week and feel it is only possible if you are a loan shark!
Way back in high school, I remember seeing a quote in the Reader's Digest by an unknown person that "ignorance is a voluntary misfortune" and I think that applies aptly with private placement programs.
Remember, you cannot compare apples to oranges. Compared to traditional ways of investment and trading (especially in the stock market), these higher yields seem incredibly high to the average man on the street (even to some bankers), but they do exist and are being performed everyday by those in the know and of course, with the funds to be invited into private placement programs.
RULES OF THE ROAD
Customary standards and practices that apply to normal, conventional business, investing and finance, apply to “trading/transaction-programs”. Personal business and financial success have virtually nothing to do with who you are and what you know, but almost everything to do with "WHAT YOU ARE AND WHOM YOU KNOW".
It is a "privilege" to be invited to participate in a Private Placement Transaction Program. It is in all cases not a Investors "right." to participate without invitation. These programs deliver unparalleled yields in combination with absolutely no program-related risk. The trading administrators and managers have a virtually endless supply of financially qualified applicants. All things considered, the trading administrators and their banks will favour the applicant who provides the best paperwork in a timely manner.
An applicant should never underestimate what the trading entities know about him. Failure to provide full disclosure will disqualify the disingenuous.
Generally, these programs exist to finance humanitarian projects, not to generate more money for the wealthy. Clients who have such projects usually receive preferred treatment and the highest yields.
Clients must first prove that they are qualified, not the other way around. Until the client is accepted by Compliance, the Traders, and Trading Banks, no placement can occur. The Due Diligence Convention and the Federal Banking Commission Circular of December 1998, concerning the prevention of money laundering, and Article 305 of the Swiss Criminal Code and the Money Laundering Regulations 2007 (UK) has introduced obligatory stringent compliance procedures, which lengthens the time required to receive clearance. Clients will always need to confirm their Assets, Funds, and Collaterals with Swift Confirmation MT760 after receipt of trading contract.
Face-to-face interviews with compliance officers and program management are occasionally required, but generally not necessary, only conference call between client and trading group, and clients may be required to enter a JV with the group to participate in the program.
Any arrogant or demanding personality will be guaranteed to be rejected and reported to the authorities and Trading community.
Once a contract is agreed during a meeting or conference call with the trader the signed copy must be returned within 48 – 72 hours or the contract will be cancelled.
By individual Investors, only the principal owner of funds is required as signatory, no lawyers, mandataries, etc.. Corporations must empower an Officer or Director as sole, exclusive signatory by using a Corporate Resolution.
Not only do the funds have to be on deposit in a top bank; it must also be in an acceptable Western (preferably) jurisdiction. If not, the funds must be moved to an acceptable jurisdiction, or else responsibly endorsed by an acceptable bank in an acceptable venue.
It is fraud to submit documents or financial instruments that are forged, altered or counterfeit. Such papers are promptly referred to the appropriate law enforcement agencies for immediate criminal prosecution and the client and his facilitators will be immediately “black Listed” .
The practices, procedures and rules are determined by the US Federal Regulatory Authorities, Western European Central Banks program management, licensed traders and trading banks. It is their decision whom to accept and whom to reject. Contract terms, yield, schedules, etc., are made to fit their needs and schedules and not the caprices or demands of the investors and/or intermediaries.
This marketplace is highly regulated and strictly confidential, and absolute confidentiality by the investor is a key element of virtually every contract. A CLIENT WHO BREAKS CONFIDENTIALITY WILL PRECIPITATE INSTANT CANCELLATION OF HIS CONTRACT , OFTEN WITH SEVERE LEGAL CONSEQUENCES.
Submission of the application documents to more than one management group at a time is termed "shopping." If an investor "shops" he can expect that this fact shall be quickly disseminated and known among the program management groups who maintain close communication, and he will then be accepted by none – and rejected by all as "blacklisted".
Licensed traders and trading banks do not accept applications direct from clients but rely on a select group of brokers and compliance organisations to thoroughly vet each and every client before accepting or inviting them to participate to avoid any fraudulent or criminal applications.
We are often asked “Are you authorised to act for the trader”, that is not how the system works. Licensed Traders, trading banks and management groups do not authorise anyone to act on their behalf, but work with and rely on a select group of brokers and compliance organisations they can trust to introduce only genuine clients that are able to perform and meet their strict criterion.
To start the process there are standard paperwork required for application. Further, the requirements for 2012 have been stepped up by revision of the rules of due diligence required for clients, including a personal phone contact with the principal applicant and very stringent verification and explanation of Proof, Source and History of Funds.
Upon acceptance of the application for processing we must be in direct contact with the applicant.
Document List is as follows: these forms must NOT be altered – all forms and questions must be completed in detail
1. Client Information Form – Corporate and Individual
2. Letter of Request for Information & Non-Solicitation
3. Letter of Intent
4. Authorization to Verify Funds
5. Origin and History of Funds (NOTE: this MUST be fully DETAILED)
6. Resolution of Board of Directors
7. Letter of Confirmation
8. Affidavit of Non-Submittal to Others
9. Exclusivity Letter
10. Comfort Bank Letter by BG’s Cash Backed
11. Proof of Funds (NOTE: we need a current TEAR SHEET or ACCOUNT STATEMENT issued by the bank as well as the POF letter NO OLDER THAN 5 DAYS)
12. Copy of Principal’s Passport
Email for more information to: firstname.lastname@example.org
Contact Nitin Mane: 7350968380