The Strategy

The Trade in General

This trade is highly profitable because the notes are initially sold at a discount to face value, and the market value of the notes constantly increases until they reach maturity. They are also subjected to extremely strict rules and the control mechanisms of the Federal Reserve Bank (“the FED”). The margin requirements and the use of the profits are also regulated.

Regulations restrict how banks, insurance companies and other entities can participate in the trading strategy. Only the specifically regulated and certified trading platforms can trade this way.

The private investors come into play here. Once the trading platforms have exhausted their advances, banking supervision allows private investors to participate in the program. The special instruments are increased by using this method. Thus, the economy is encouraged by the profits of the investors on one hand and the projects that are financed on the other hand.

These investments have been in demand every day for years and are conducted under strict conditions by the Federal Reserve Bank of the United States (FED) and the ICC (International Chamber of Commerce in Paris, France).

Profit Generation

How does the Trade Generate Profits?

Due to international regulations and conventions, banks that issue stocks must not sell such valuable papers to other banks or other institutional investors. This is only allowed in the secondary market, with the appropriate ISIN or WKN number, upon the valued papers have acquired the securities property after the investment.

Therefore, the funds of the private Investor undertake the intermediary role as an intermediary, through a trading company in the primary market, but in reality there is no such role. In order to make the valuable paper sufficient, proof of the value purchase price is nessecary. Private investment fund is the necessary link between banks and final buyers who issue bonds of value. In general, such a process will be done in less than a day, which means that investment fund can be used as evidence of fund that is needed several times a day. The targeted earnings between purchase and sale is called Fall Out. It is divided among the participants.

Who Invests

Investor Types

Due to high quality and return, the main buyers are banks, insurance companies and pension funds, as well as trusts, foundations, companies, etc. The largest sectors are american and japanese pension funds.

However, due to economic reasons, many banks, insurance companies and pension funds cannot be purchased directly from issuer banks of the primary market.

The reason is that if they can buy these documents directly, they will not see any reason to provide credit to the economy. Banks, insurance companies and pension funds are dependent on the secondary market, where prices are much higher and yields are very low.

Risk

  • a) The agreement between the program and the associated bank expressly stipulates that, under no circumstances, the bank should not pay the credit limit, but only pay the proceeds from traded bank instruments (MTN). Therefore, the sale must be completed and paid before commissions are paid.
  • b) A commercial transaction allows the investor to cancel the sales contract in the event that it has not been resold or paid for any reason.
  • c) Even if the purchase price changes in a negative way (for example, with the price increase of the FED (Federal Reserve Bank), which is considered as a force majeure), the program does not cause any further loss in the sales contract with its end user, thanks to the Evergreen Clause, which allows it to increase its price to the same extent.

In this way, the system is protected from process loss. As a result, the program bank gives the program a credit limit without the right to apply to investor’s capital at its bank. Thus, the investor’s capital in the account remains irrecoverable.

Investor Control

The investor always has the right to use his/her own capital. It may be contrary to the investment contract, but the only sanction is not to make profit payments.

To ensure that the capital is always kept in the account, the controls will be done at regular intervals by checking the direct investor’s account in accordance all applicable regulations.

Profitability

Potential Transaction Profitability

It is clear that the key to profitability is to have the necessary resources and to buy at a comparable level from the issuing bank in order to obtain the maximum discount. It is also important to have the resources and contracts to negotiate the most lucrative instruments in the secondary market.

These links are protected very strictly by traders involved in the trading of these tools, which are regularly and commercially available.

As a result, the real secret of successful participation is to create and develop strong business relationships with insiders, customers, bankers, lawyers, leading brokers and other professionals who can combine their skills.

IS THE PROGRAM SUITABLE TO THE INTERNATIONAL BUSINESS PRACTICES?

All these programs follow the specific guidelines set by the International Chamber of Commerce. These arrangements are generally known as ICC 400/500. The ICC is the approval authority of the world’s largest Central Bank in Paris / France. It has existed for 100 years and performs strict controls globally in banks’ procedures.

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