Our intention is to help Users better understand the meaning and significance of various financial terms, processes and transactions that appear with all-too-frequent regularity on the Forum Board.

Release 73: Understanding Private Placement Programs - The SWIFT MT 760 (Part 1)

The MT 760 was once considered the "gold standard" for participation in high-yield trading opportunities. Those days are probably long gone.

Nowadays, the unwillingness of banks to issue the MT 760, the associated high bank charges, the constant delays, as well as issues surrounding the security of the client's funds - all have prompted most Provider Groups (including our own) to jettison the MT 760 in favour of other more "client-friendly" procedures.

Let's examine the SWIFT MT 760 more closely...

A SWIFT MT 760 is a guarantee issued by the sender bank upon instructions of its account holder in favour of a designated counter-party, normally, though, not necessarily, the trading party. It is, in essence, a bank-responsible guarantee that funds will be available when they are called upon - in other words, a guarantee of payment by the sender bank.

Importantly, the SWIFT is more than just an inter-bank message - it's a full-blown, cash-backed, non-negotiable bank instrument!

Of course, since banks never put their own money at risk, what happens is that the banks typically "block" the client's funds as a pre-condition to the issuance of the SWIFT. The client's funds are then held by the sender bank as security (collateral) for the issued MT 760.

In our business, of course, there is no magic or mystery as to what the Trader intends to do with the MT 760 - he plans to borrow against it: To draw a credit line against the SWIFT in order to undertake the (controlled) buying and selling of bank financial instruments.

Nothing surprising there, except should the Trader - whether due to incompetence or unscrupulous behavior - default on the credit line, the client, himself, would, ultimately, be responsible for repayment.

The lending bank, in short order, would call upon the "blocked funds" to repay the credit line. The sender bank would then seize the client's money to cover the bank obligation - with disastrous consequences for the client: The client's funds would be lost to him forever.

In Part 2, we will examine the various safeguards the client can employ to secure his funds when utilizing an MT 760...

Robert
lawscape@gmail.com

I work with a senior, high-ranking and credentialed Trader in Europe who is one of the largest commitment holders in the world. The Trader was formerly in government service where he held a highly sensitive position in a prominent U.S. federal agency for a number of years. Our trading group has outstanding capabilities, with its own transacting facilities in most of the major banks.

We have also pioneered an innovative, "client-friendly" Managed "Buy-Sell" Program for clients who wish to participate in a controlled, fully managed, "buy-sell" platform. The process is simple and straightforward: Clients needn't transfer their funds. The client's funds are never touched (funds verification only). No SWIFT MT 760's or MT 103's. No joint ventures. No asset management contracts. No powers of attorney. No joint-signature accounts. No 50-50 profit sharing agreements. No surprises.

We also offer business colleagues and friends a monthly "newsletter" setting out information and updates concerning our private placement opportunities. If you wish to receive our newsletter, just send us your email address and tell us a little about yourself - and we would be pleased to add you to our "mailing list".

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