MONETIZATION AND PPA
Blocked Funds Procedure Steps
Monetization and Private Placement of Client Assets
Background Information:
Investors (Clients) and banks are reluctant about moving large sums of funds to another bank or out of the country in which the bank operates. The process steps outlined in this document is for the Client that wants to participate in private placements without having to move their funds out of their current bank. This process provides a method for the client to get “cash” funds through a pre-arranged, non-recourse line of credit (LOC) to participate in private placements. The loaned funds are repaid by the placement (trade) entity within about 2-weeks after trading starts. The Client’s funds are not “callable” by the lending party and the Client never pays back the loan. The bank account holder will be the Client and signs all contracts.
Introduction and Transaction Description:
The Provider has contracted with entities to provide a line of credit against a Client’s blocked cash bank account. The cash funds from the credit line are used in private placements (trading). The underwriting banks and trader will repay the loan after each trading cycle. The transaction steps include:
1. The Client submits a current proof of funds (POF) for the Client’s bank account or other bank instruments to be verified and confirmed by the monetizing entity. This is referred to below as the Client’s asset.
1.1. The POF can be a bank account statement, tear sheet or written POF letter signed by a bank officer.
1.2. Other bank instruments include bank guarantees (BG), standby letters of credit (SBLC), medium term notes (MTN), certificate of deposits (CD), other bank drafts or publically traded securities. The POF for these instruments can be tear sheets, screen shots, the actual Euroclear pages, etc, clearly showing ownership, ISIN / CUSIP registrations, etc.
2. Within 1-bank day of receiving the Client’s POF, the monetizing party will verify and confirm that the Client’s asset is appropriate for monetizing.
3. The Provider will notify the Client that the POF was accepted and requests the Client to submit a completed KYC package (Know Your Customer) as an individual or corporation client.
4. Upon receipt of the Client’s completed KYC package, the Provider will submit the package to the monetizing entity for compliance. Note: The funds must be clear, clean and legal.
5. The Trade Platform completes compliance on the package.
6. The Provider will confirm to the Client when the Client’s KYC package has been accepted and the terms and conditions for monetizing the Client’s asset and the loan-to-value (LTV) percent’s.
6.1. Cash Backed Bank Accounts and CDs: 85% to 92% LTV of face value
6.2. BG or SBLC issued by a major bank (cash backed): 85% to 92% LTV of face value
6.3. MTN issued by a major bank or securities (not cash backed): 70% to 85% LTV of face value
7. The Trade Platform uses the LTV percentages to activate their credit lines for private placement.
8. The Trade Platform organizes the private placement and presents trade terms (LTV, payout performance, duration, etc.), a trade contract and transaction code to the Client for review and acceptance.
9. The Client signs and returns the contract to the Trade Platform.
10. With the return of the trade contract, the Trade Platform submits the ‘administrative hold’ (block funds) on the Client’s asset used for the transaction.
11. The trade contract confirms the start of active trading (private placement).
12. The Client get distributions sent to their designated bank account based on the payout schedule in the trade contract.
13. At the end of active trading, the Trade Platform removes the ‘administrative hold’ on the Client’s asset.