Banker’s and Trade Acceptance:
In general, an acceptance is a promise to pay. The promise is made by the person or entity that will actually make the payment - the promissory - to the person or entity who will receive payment - the payee, or beneficiary.

The promise-to-pay document is called a draft. Payment of the draft will be made on a specified future date, so the draft is called a time draft. To seal the promise, the promissory signs the draft and stamps or writes the word "Accepted" above his signature and adds the date on which he will pay the amount written on the draft.

The draft has now been formally accepted by the promissory, and the commitment to pay the beneficiary on the due date has become a legal obligation.

If the acceptor is a bank, the acceptance is called a Banker's Acceptance.

A bank may accept a draft on behalf of either one of its customers or a note holder (payee). In either case, the promissory then becomes obligated to pay the bank the amount financed in full with interest on or before the maturity date, and the bank becomes the primary entity obligated to pay the amount due to the payee.
Banker's acceptances used in international trade fall under the regulations for a documentary credit.
For the most part, banker's acceptances are used in the trade of goods. An example would be when a German manufacturer needs to be paid by an American importer (or when an American manufacturer needs to be paid by an American retailer).

The retailer or importer's bank, under certain financial conditions between the bank and its customer, accepts to pay for the goods. Essentially, the bank is substituting its creditworthiness for that of its customer in order to assure the manufacturer that he will not be hung out to dry after shipping the goods. The acceptance is then sent to the manufacturer.

Accrued Interest:
Applies mainly to convertible securities. Interest that has accumulated between the most recent payment and the sale of a bond or other fixed-income security. At the time of sale, the buyer pays the seller the bond’s price plus “accrued interest,” calculated by multiplying the coupon rate by the fraction of the coupon period that has elapsed since the last payment. (If a bondholder receives $40 in coupon payments per bond semiannually and sells the bond one-quarter of the way into the coupon period, the buyer pays the seller $10 as the latter’s proportion of interest earned.) MORE..

And Interest:
A promise that a bond buyer will receive the interest that has accrued since the last coupon payment if he/she buys the indicated bond. This ordinarily increases the price by the amount of that interest.

Administrative Hold:
A term usually referred to by inexperienced brokers. It refers to the investor’s bank reserving funds in favor of another individual, without actually encumbering or moving the asset.

Asset Backed:
Refers to a note or Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument which is collateralized by hard assets, not liquid assets. This can be gems, gold, art, diamonds, or other rare valuables.

Assignment:
Transferring ownership, or rights to use the collateral, to another individual for a specific period of time. Some traders require this for placement investments.
Bank Comfort Letter” BCL
A letter written by a bank officer on behalf of a customer, attesting to the current balance and good standing of an account holder.
Bank Guarantee” BG
A Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument , guaranteeing a certain face value for an investor, while collecting an annual interest before expiring upon maturity.

Bank Instrument:
A debt instrument issued by banks to access immediate liquidity, providing an annual interest and face value for the purchaser. Bank Guarantee”>BG ’s and MTN’s are common examples.

Bank to Bank:
A phrased typically used by brokers, referring to the verification of assets from the investor’s bank officer, to the trader’s/seller’s bank officer.
Beneficiary
One who benefits. The beneficiary is the payee (the one who is paid the designated funds) on a CHECK, DRAFT, LETTER OF CREDIT, or other CREDIT INSTRUMENT.

Beneficiary:
The individual listed as the owner of a debt instrument, such as a medium term notes (MTN’s) or bank guarantees ( Bank Guarantee”>BG ’s).

Best Efforts:
This is a term used in any real placement contract. It states that the trader, or investment manager, will use their best efforts to achieve high profits. For example, a contract may say “profits will be achieved on a best efforts basis”.

Best Efforts Basis:
An agreement between an underwriter and an issuer in which the underwriter agrees to place as much of an offering with investors as possible, but is not responsible for any portion of the offering it fails to sell. For example, suppose an issuer makes a new issue of 100,000 shares. The issuer may make a best effort basis agreement with an underwriting firm for the underwriter to sell those shares to investors. If the underwriting firm only sells 90,000, however, it is not required to buy the remaining 10,000 from the issuer. This reduces the risk to the underwriter; to reduce the risk to the issuer, most best efforts are all-or-none offerings.

Bill of Exchange:
A bill of exchange is a kind of check or promissory note without interest. It is used primarily in international trade, and is a written order by one person to pay another a specific sum on a specific date sometime in the future. If the bill of exchange is drawn on a bank, it is called a bank draft. If it is drawn on another party, it is called a trade draft. Sometimes a bill of exchange will simply be called a draft, but whereas a draft is always negotiable (transferable by endorsement), this is not necessarily true of a bill of exchange.
As with all financial documents, the source, i.e. the drawer or issuer of the bill of exchange, must be carefully investigated. If it is a bank, then the bank must be contacted to verify the authenticity of the document, and the creditworthiness of the bank must be established through independent research. If the bill of exchange is drawn on a private party, then the risk depends on the creditworthiness of the drawer.

Blocked Funds:
A general phrase which refers to blocking liquid assets in favor of another person. This is most commonly achieved via swift -  SWIFT MT 760 Blocks your Funds in Favor of Another”>MT 760 , unless you are in the USA.

Bond:
A security representing the debt of the company or government issuing it. When a company or government issues a bond, it borrows money from the bondholders; it then uses the money to invest in its operations. In exchange, the bondholder receives the principal amount back on a maturity date stated in the indenture, which is the agreement governing a bond’s terms. In addition, the bondholder usually has the right to receive coupons or payments on the bond’s interest. Generally speaking, a bond is tradable though some, such as savings bonds, are not. The interest rates on Treasury securities are considered a benchmark for interest rates on other debt in the United States. The higher the interest rate on a bond is, the more risky it is likely to be.

There are several different kinds of bonds. The most basic division is the one between corporate bonds, which are issued by private companies, and government bonds such as Treasuries or municipal bonds. Other common types include callable bonds, which allow the issuer to repay the principal prior to maturity, depriving the bondholder of future coupons, and floating rate notes, which carry an interest rate that changes from time to time according to some benchmark. Along with cash and stocks, bonds are one of the basic types of assets.

Bond Buyer’s Index:
An index of yields for AA-rated and A-rated municipal bonds that is widely used by dealers to evaluate yields on new municipal bond issues. The Index is published in the Bond Buyer, a daily publication specializing in fixed-income securities. An index of yields on highly-rated municipal bonds. The Bond Buyer’s Index is published daily in the Bond Buyer, a daily advisory letter on debt securities. Investment advisers use the Bond Buyer’s municipal bond index to evaluate and track changes in new issues of municipal bonds.

Broker Chain:
Also known as a “daisy chain”, this frequently used term describes the “layers” of brokers that one must go through before they reach a trader. Unfortunately, there are usually several placement brokers involved in any deal.

Bullet Program:
Phrase created by inexperienced brokers that describes “short-term” placement programs, promising high returns in less than 30 days. For example: Cash blocked by trader of 500m and promising best efforts of 400% in 14 days in returns.

Buy and Sell Agreement:
An approach used by sole proprietorships, partnerships and closed corporations to divide the business share or interest of a proprietor, partner, or shareholder. The owner of the business interest being considered has to be disabled, deceased, retired or expressed interest in selling. The buy and sell agreement requires that the business share is sold according to a predetermined formula to the company or the remaining members of the business. Before the interest of a deceased partner can be sold to the company or remaining partners, the deceased's estate must agree to sell.

Buy and Sell Agreement:
In order to ensure the availability of funds in the event of a partner's death, most parties will purchase life insurance policies on the other partners. In the event of a death, the proceeds from the life insurance policy are used to purchase a portion of the deceased's business interest. It is important to note that when a sole proprietor dies, since he/she has no partners, a key employee is the buyer or successor.

Callable Bond:
A bond that may be redeemed before maturity. Call-ability allows the bond to be called at the discretion of the issuer within certain limits. When the bond is called, the bondholder receives the par value (or sometimes a bit more) and does not receive any more coupons. Callable bonds are issued to allow the issuers to hedge against interest rate risk. That is, if interest rates fall significantly, the issuer can call the bond and issue a new bond at a lower interest rate, reducing its liabilities. However, to protect the bondholder, most callable bonds also include call protection which prevents the bonds from being called for a certain period of time and thereby guarantees the current interest rate for that time.

Cash:
Legal tender or coins that can be used in exchange goods, debt, or services. Sometimes also including the value of assets that can be converted into cash immediately, as reported by a company. This usually includes bank accounts and marketable securities, such as government bonds and banker's acceptances.

Cash Account:
A regular brokerage account in which the customer is required by Regulation T to pay for securities within two days of when a purchase is made. This is the basic, plain vanilla account where you deposit cash to buy stocks, bonds, mutual funds, etc.

Cash Backed:
Assets which are backed by cash, making them far more appealing for banks and placement traders.

Cash Poor:
This refers to an individual that is “asset rich, but cash poor”. Though they may have millions in hard assets, they may have little to no liquidity to engage in various transactions.

Cease and Desist:
An order given by a government administrative agency or the courts to stop any suspicious or illegal activities. Falling under the Financial Institutions Regulator Act of 1978, a cease-and-desist order places an injunction on a company or person, prohibiting the activities that are deemed suspect.

For corporations or financial institutions, a cease-and-desist order may be issued to prevent risky banking practices or the sale of fraudulent securities. After notification is given, a hearing is usually called to determine whether any wrongdoing has occurred, or if the action may continue. Failure to comply with a cease-and-desist order is punishable by the courts.

Certificate of Deposit CD:
A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.

Certificate of Deposit CD:
A financial product offered by banks to account holders who agree to leave their funds on deposit for a pre-defined period. This allows investors to collect a higher annual interest, while securing their money in a low risk venture.

Cost Insurance and Freight CIF:
A trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination, and provide the buyer with the documents necessary to obtain the goods from the carrier.
Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery, payment, when the risk of loss shifts from the seller to the buyer and who pays the costs of freight and insurance. The most commonly known trade terms are Incoterms, published by the International Chamber of Commerce (ICC). These are often identical in form to domestic terms (such as the American Uniform Commercial Code), but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms. It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. Contact an international trade lawyer before using any trade term.

Circumvention:
Cutting out the people who introduced you to the opportunity or broker, with no intent to reward them if you are successful.
Client Information Sheet” CIS
One of the compliance documents typically required for placement programs. This document asks for basic information such as the contact details, and line of business the applicant is in.

Collateral:
An asset guaranteeing the line of credit the bank gives, which can be seized upon default from the loan terms. Bank instruments, cash, and Swift MT 760 Blocks your Funds in Favor of Another”>MT 760 ’s are some examples.

Collateralized Mortgage Obligation CMO:
A mortgage-backed, investment-grade bond that separates mortgage pools into different maturity classes. By creating a Collateralized Mortgage Obligation”>CMO , the bond issuer can collect immediate capital while the purchaser gets the bond at a discount from face value, and collects annual interest. Though these bonds are frequently found in the placement business, most of them are worthless since the financial crisis hit

Commission:
Payments which can be earned by introducing a service provided to a prospective client.

Commitment Holder:
An individual/institution who is contractually obligated to purchase a Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument at an agreed upon value. Without “prior commitment”, the seller of the Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument would never have purchased the note because their intent was trading for profit. This term is also similar to the phrase “exit buyer”.

Commodities:
A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.
Any good exchanged during commerce, which includes goods traded on a commodity exchange.

Compliance:
The process of completing due diligence on a new placement investor. At this time, the investor must complete the required documentation, usually referred to as the “compliance package”.

Corporate Bond:
Debt securities issued by a for-profit company instead of a government. Corporate bonds are a major way companies raise funds for their operations or for a specific project. The risk of a corporate bond for a bondholder depends on the creditworthiness of the issuing company. As with all bonds, corporate bonds have a maturity, at which time the principal is repaid to bondholders. They also usually have a stated coupon rate. Corporate bonds are taxable.

Corporate Resolution:
A compliance document which asks the client to formally state their relationship to the business entity they represent.

Correspondent Bank:
A co-respondent or correspondent bank is one that performs services for its respondent bank.
Such services may be in the form of loan participation if a loan exceeds the limit of the respondent bank's loan policy.

Overall, a correspondent bank is one that backs up the limitations of a smaller bank, a foreign bank, a merchant bank, or other financial institution that needs to 'farm out' certain procedures and services not available at the respondent bank.

Many community banks clear out-of-town checks through reserve accounts at a larger bank.

Coupon Payments:
Annual interest paid on a bond, usually in semi-annual tranches. Coupon payments are expressed as a percentage of the face value (par) of a bond. For example, if one holds a bond worth $100,000 at 5% interest, the bondholder will receive $5,000 in coupon payments per year (or, more strictly, $2,500 every six months) until the bond matures or he/she sells the bond.
            Currency:
A generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade.  Generally speaking, each country has its own currency. For example, Switzerland's official currency is the Swiss franc, and Japan's official currency is the yen. An exception would be the euro, which is used as the currency for several European countries. Investors often trade currency on the foreign exchange market, which is one of the most heavily traded markets in the world.

Cutting House:
Term referring to a bank which creates, issues, and backs discounted bank instruments. The instruments are “cut”, and sold to traders at discounts, who then sell them at a higher price to “exit buyers”.

Delivery versus Payment DVP:
A securities industry procedure in which the buyer’s payment for securities is due at the time of delivery. Security delivery and payment are simultaneous. Also known as delivery against payment, delivery against cash, or from the sell side.

Depository Trust Committee DTC:
A third party company which provides clearing and settlement services by immobilizing securities, and making “book-entry” changes to the ownership of assets. This medium is used in placement programs to transfer/assign assets to a trader, from an investor.

Disclosure:
In accordance with the Securities Act of 1933, any offer of securities must be accompanied by enough information for an investor to make an informed investment decision. It doesn't matter to the SEC what is being offered, just so long as adequate information is provided. Withholding information, or providing misinformation or disinformation is against the law and considered fraudulent.

Discount:
The idea that bank instruments can be purchased at a discount from face value, leaving the opportunity to profit from resale, or the difference between face.

Due Diligence:
Phrase referring to the process of qualifying people by verifying and investigating their background. This is used mutually by placement traders and investors.

Escrow:
A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled. Securities, funds and other assets can be held in escrow.
An escrow account can be used in the sale of a house, for example. If there are conditions to the sale, such as the passing of an inspection, the buyer and seller may agree to use escrow. In this case, the buyer of the property will deposit the payment amount for the house in an escrow account held by a third party. This assures the seller - in the process of allowing the house to be inspected - that the buyer is capable of making payment. Once all of the conditions to the sale are satisfied, the escrow transfers the payment to the seller, and title is transferred to the buyer.

Escrow Service:
An escrow service is a licensed and regulated company that collects, holds, and sends money, according to conditions specified by both the customer and service provider. Once the conditions of the customer are met, funds are immediately released to the service provider. Typically, in the placement business, escrow is used to pay upfront fees for “sketchy” services such as leased bank instruments, funding opportunities, and others.

Euribor:
Euribor stands for Euro Interbank Offered Rate.
These interest rates for the Euro are compiled by the European Banking Federation (FBE—Fédération Bancaire de l’Union Européenne) and are released at 11:00 AM Brussels time each business day.
Rates are quoted for one week and monthly maturities out to a year.
Euro-medium term note (Euro-MTN)
A non-underwritten Euronote issued directly to the market. Euro-MTNs are offered continuously rather than all at once as a bond issue is. Most Euro-MTN maturities are under five years.

Euro-Note:
A debt security with a maturity of less than a few years traded in the Euro-currency market. This means that the Euro note is denominated in a currency other than the one of the country in which it is traded.

Euro-Bond:
A bond issued in a currency other than the currency of the country or market in which it is issued. Usually, a eurobond is issued by an international syndicate and categorized according to the currency in which it is denominated. A eurodollar bond that is denominated in U.S. dollars and issued in Japan by an Australian company would be an example of a eurobond. The Australian company in this example could issue the eurodollar bond in any country other than the U.S. Eurobonds are attractive financing tools as they give issuers the flexibility to choose the country in which to offer their bond according to the country's regulatory constraints. They may also denominate their eurobond in their preferred currency. Eurobonds are attractive to investors as they have small par values and high liquidity.

Euroclear:
One of two principal clearing houses for securities traded in the Euromarket. Euroclear specializes in verifying information supplied by two brokers in a securities transaction and the settlement of securities. Euroclear is market owned and governed, and has previously acquired London Crest, Necigef Netherlands, Sicovam Paris and CIK Brussels. Euroclear is one the oldest settlement systems and was originally subsidized by Morgan Guaranty. Its computerized settlement and deposit system helps ensure the safe delivery and payment of Eurobonds. The other principal clearing house is Clearstream, formerly the Centrale de Livraison de Valeurs Mobilières (CEDEL).

Euroclear cont.
The world’s largest settlement system for securities transactions, covering bonds and equities, as well as bank instruments. This important and efficient medium allows transactions to be completed remotely, while ensuring safety for both the buyer and seller of the asset.

Exit Buyer:
A term used very frequently, referring to the “buyer in place” purchasing the Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument at a higher value from the current owner.

Face Value:
The value printed on the face of a security, insurance policy, or unit of currency.
An interest-bearing instrument will have a base face value at issuance, with the interest being the added-in value at maturity. The difference between the issuance value and maturity value is called the DISCOUNT or premium, or in the case of securities, the par value.

Fee Protection Agreement FPA:
An official document outlining all fees due to intermediaries upon the completion of transaction. This is critical for any placement broker to understand, and utilize.

Fishing:
When a “prospect” contacts a placement broker with little to no intent to move forward, but plenty of detailed questions in an effort to “fish” for information.

Fixed Interest Rate:
An interest rate that does not change over the life of a loan or other form of credit. If one borrows money at a fixed interest rate of 10%, then 10% is calculated over the principal balance each time the interest compounds. A fixed interest rate differs from a variable interest rate, which may change, at least within certain parameters. Most home mortgages in the United States have fixed interest rates. It is also called simply a fixed rate.

Free on Board FOB:
A trade term requiring the seller to deliver goods on board a vessel designated by the buyer. The seller fulfills its obligations to deliver when the goods have passed over the ship's rail. When used in trade terms, the word "free" means the seller has an obligation to deliver goods to a named place for transfer to a carrier.
Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery and payment, when the risk of loss shifts from the seller to the buyer, as well as who pays the costs of freight and insurance. The most commonly known trade terms are Incoterms, which are published by the International Chamber of Commerce. These are often identical in form to domestic terms, such as the American Uniform Commercial Code, but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms. It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. It is suggested that you contact an international trade lawyer before using any trade term.

Free and Clear:
Also known as “unencumbered”, it means there are no liens or current debt obligations associated with that particular asset.

Fresh Cut:
Phrase referring to a recently issued Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument that has had only one owner over the course of its existence. Usually, they are accessed at a steep discount from face.

Funding:
A shorter way to reference “project funding”, usually referred to by those with insufficient capital to fund their project through placement programs.

Gate-Keeper:
An individual who claims to be “direct” to a trader with a placement program.

General Obligation Bond GO:
A municipal debt obligation on which interest and principal are guaranteed by the full financial resources and taxing power of the issuer. This broad promise makes a general obligation bond of higher quality than issues secured by a particular project or a more limited guarantee. It also results in lower returns to bondholders. Also called full-faith-and-credit bond. See also Revenue Bond.

In the United States, a municipal bond in which the issuing locality pledges to use all revenues at its disposal to pay bondholders, including the raising of property taxes. Should a sufficient number of residents not pay their property taxes that it impacts revenue for bondholders, the terms of the bond legally require the municipality to raise property taxes to make up the shortfall. There are two basic types of general obligation bonds. A limited GO allows for the raising of property taxes up to a certain percentage, while an unlimited GO theoretically allows the municipality to levy taxes of up to 100% of a property’s value. Because an unlimited GO provides a great incentive to pay property tax on time, and because many states only allow such a bond to be issued following a vote on the matter, credit ratings agencies usually rate them higher. However, both types of GO are generally rated highly.

Guarantee:
This is a word that should NEVER be used in any investment niche, especially one as volatile as the placement market. Though it may not seem like a key term, it is for one VERY big reason. Any broker or trader that “guarantees” certain profit amounts is breaking the law, and will NEVER fulfill their claims.

Hypothecate:
The process of assigning a monetary value to an illiquid asset, and then extracting liquidity in the form of a loan, using the illiquid asset as collateral.

In-Ground Assets:
Land areas which have been appraised based upon geological assessments of the assets which lie beneath. Many in the placement business try to enter programs with land containing precious metals, energy materials, and more. Unfortunately, most have no luck due to the current worldwide liquidity crisis, and the high excavation costs to isolate the asset.

Intermediary:
Anyone involved in a placement transaction, either through introduction or compensation, who is NOT the trader or client.

International Trade Intermediaries:
Brokers for international bank instrument. They are the way a private seller can market and bring in buyers all over the world for the sell of thier bank instruments. They represent a valuable conduit for market information and marketing technology for the international neophyte.

Investment Grade:
Describing a bond with a medium or high rating. Bonds rated Baa3 by Moody’s or BBB- by S&P or Fitch. Investment-grade bonds are considered sufficiently low-risk that the law allows banks to invest in them. In addition to being low-risk, investment-grade bonds are low-return, greatly reducing the cost on the issuer. Most American Treasury and municipal bonds are investment-grade.

ISIN - International Securities Identification Number
A code that uniquely identifies a specific securities issue. The organization that allocates ISINs in any particular country is the country's respective National Numbering Agency (NNA) all internationally traded securities issuers are urged to use this numbering scheme, which is now the accepted standard by virtually all countries. The United States and Canada primarily use a similar scheme known as a CUSIP number.

Irrevocable Trust Receipt ITR:
A receipt confirming and detailing the deposit of specific assets into a trust. Though the ITR contains all details of the asset, banks typically will not assign a value to it since the asset is NOT deposited in a credible bank, but rather a trust.

Joint Venture JV:
The cooperation of two or more individuals or businesses--each agreeing to share profit, loss and control--in a specific enterprise. This is a good way for companies to partner without having to merge. JVs are typically taxed as a partnership.

Joker Broker:
Term used to describe inexperienced placement brokers who do nothing but waste your time.

Junk Bond:
A bond issued by a company or institution which has poor financial integrity, making the bond effectively worthless. Some examples which placement brokers may encounter are: Venezuelan bonds, Brazilian bonds, gold bearer bonds, certain corporate bonds, and many others.

Joint Venture Agreement:
An agreement between two entities outlining compensation, fees, and the obligations of both parties in relation to a specific business venture. This is the most common legal structure for placement programs.

Know your Client KYC:
In some cases, this form will substitute for the client information sheet. Just like the Client Information Sheet”>CIS , it requests contact details and other related information. Also, this phrase is used when referring to the “Know your Client” law, which many investment markets enforce. It states that you must know your client well, and unless deceived, you can incur certain liabilities for future problematic actions of the client.

Leasing:
An agreement in which one party gains a long-term rental agreement, and the other party receives a form of secured long-term debt.
The lessee gains a long-term contract for the use of an asset, and the lessor is assured of regular payments for a specified number of years.

Ledger to Ledger:
This phrase refers to a transfer between two accounts held by the same bank. For example, a trader may have an HSBC account, and send the profits to a client with a different HSBC account. This is far more efficient, and avoids possible problems associated with external transfers.
Letter of Authorization:
A compliance document required for all placement investors, allowing the trade group to verify the investor’s assets bank to bank. This is also known as the “Authorization to Verify”.

Line of Credit:
Though it may sound fancy, it’s just a bank loan. Usually in the placement world, this refers to the loan given to the trader right before trading starts.
LOI(Letter of Intent)
A letter provided by investors interested in a placement programs, defining their unsolicited interest to enter the investment transaction. This document can also be used for areas outside of placement, especially where solicitation laws apply.

Loan to Value LTV:
This is the loan value that a bank/lender will provide after evaluating an assets worth. Usually, this is used for hard/illiquid assets, and is stated in % in relation to the asset’s appraisal value (Loan/Appraisal Value = LTV %).

Managed Buy/Sell:
Another synonym for placement programs. It refers to the managed buying and selling of bank instruments by a placement trader.

Mandate:
Another term meaning someone is “direct” to an investment opportunity or client. Usually, this term is used by very inexperienced brokers.

Medium Term Note MTN:
An unconventional bond note with a maturity period usually between five and 10 years continually offered through various brokers, rather than issued all at once like other bonds. Unlike most bonds, which are bought and sold on exchanges, MTNs are normally purchased through an MTN brokerage, which operates on a best effort basis and is under no obligation to sell a certain amount on behalf of the issuer. Unlike corporate bonds, MTNs are almost always marketed to institutions and high net-worth individuals and have few or no small and medium investors. Beyond that, they functions much like corporate bonds: unsecured, non-callable, with fixed coupons and investment grade ratings. MTNs have become a favorite form of fund-raising for large corporations, government agencies, and sovereign states. This demand has led to more complex MTNs, with floating interest rates and maturity periods from nine months to 30 years or longer.

Medium-term note retail (MTNR)
Medium-term note designated for retail investors. For example, at Fannie Mae, it means that the bond is designated for individual investors that is underwritten through a dealer versus issuing through a program, like Investment Notes or Benchmark Notes.
An unsecured bond issued by a multinational corporation in order to finance its operations, with a maturity of between one and 10 years. Retail notes are issued at par for $1,000 per note; they pay a fixed interest rate for the first nine months or so, after which the coupon payments may vary. Retail notes invested in an IRA may be tax-deferred.

Missing in Action MIA:
A term that describes what happens to most placement brokers when they fail to live up to their promises. One day, they are blowing up your phones, the next day they are nowhere to be found.

MT 103:
This is an improved version of the original swift MT 100, which is similar to a wire transfer. Though it is a direct transfer, the MT 103 has a large number of options which describe conditions and instructions for how the payment should be made.

MT 760:
This swift message is used to block funds in favor of someone other than the investor, collateralizing the asset while allowing for loans against it.

MT 799:
This swift message is used between banks to communicate in written form, and is usually referred to as “pre-advice”. Typically, the Swift MT 799 is a Written Message Bank to Bank”>MT 799 will be needed directly before the Swift MT 760 Blocks your Funds in Favor of Another”>MT 760 Is issued.

Medium Term Note MTN:
A tradable and discountable debt instrument issued by banks, collecting an annual interest before expiring upon maturity with a specified face value.

Municipal Bond:
A bond issued by a local or state government. Municipal bonds are usually used to raise capital for improvements in infrastructure or other aspects of the municipality. For example, a city or school district may issue a bond to build a new school or a new playground. Municipal bonds are exempt from federal income taxes and sometimes from state and local taxes as well. Municipals usually pay lower coupons than corporate bonds, but because the yield is tax-free, the after-tax basis may be higher for a municipal bond. Risk varies with the municipality and the particular type of municipal bond.
NCND (Non-Circumvention, Non-Disclosure Agreement)
An agreement between two parties defining the boundaries and limitations of their relationship. Typically, this agreement is used by placement brokers to “protect” from future circumvention.

Negotiable Instrument:
A written order to pay, such as an ACCEPTANCE, CHECK, BILL OF EXCHANGE, or PROMISSORY NOTE.
Under Article 3 of the UNIFORM COMMERCIAL CODE, an instrument is negotiable if it is: (1) a written instrument signed by the endorser or maker; (2) an unconditional promise to pay a certain amount of money, either on demand or at a future date; and (3) payable to the holder or bearer.
A person who becomes a holder in due course of a negotiable instrument by delivery, or by delivery and endorsement, has an unrestricted claim to the instrument.

Non-Depletion Account:
A term used in placement contracts which guarantees the funds of the client will never be depleted by the trader.

Non-Solicitation:
A compliance document that protects the consultants by having the investor state they were not solicited.

Paper:
A synonym used by placement brokers referring to bank instruments such as bank guarantees or medium term notes.

Paymaster:
An individual elected by intermediaries who will accept all commission payments on a placement transaction, and then distribute them in accordance to the agreement between the parties. This can be an attorney, one of the brokers, or anyone else the intermediaries feel comfortable with.

Piggyback Program:
A newly created phrase referring to the concept of “pooling” investors to meet the minimum capital requirements of a placement program. For example, 10 investors with 10M would try to meet the 100M minimum which most placement traders require. Be VERY careful when pursuing this type of “program”, since most do not perform as promised.

Ping:
This term refers to a type of placement program which allows investors to leave funds in their account, while the trading bank verifies the full balance is still present on a daily or weekly basis. Supposedly, traders can access a loan against this “ping”/verification of funds and start trading on the clients behalf. Beware of these programs, as most never perform as promised.

Platform:
Another synonym for placement programs which refers to the corporate structure of the trade group.

Power of Attorney:
A document signed by the account holder which gives authority for someone to act on their behalf, as specified in the agreement.

Private Placement Memorandum PPM:
A formal description of an investment opportunity which is created to comply with various federal securities regulations. This outlines all details of the “placement” offered, as well the obligations of both parties involved.

Private Placement Program:
A investment program which trades discounted bank instruments (MTN/ Bank Guarantee”>BG ) for profit in the secondary market.

Program Manager:
An individual who claims to be “direct” to a trader with a placement program, accepting all applications and questions from prospective investors.

Promissory Note:
Basically, it’s an IOU given from one party to another, stating debt repayment obligations and terms. In all reality, it is really worth nothing to third parties.

Proof of Funds POF:
The process of allowing another individual to temporarily show your assets as their own, with the fee dependent upon the time it’s utilized. Also, this phrase can refer to a bank statement, or other financial document, proving the assets of a prospective investor.

Receive versus Payment RVP:
An instruction accompanying sell orders, stating that only cash will be accepted in exchange for delivery of the securities.

Ready, Willing and Able RWA:
Phrase used by placement brokers confirming the readiness of an investor to satisfy requirements, and more forward with an opportunity. This statement can also be made in the form of a document, which some programs may require.

Safe Keeping Receipt SKR:
A document created by a bank, on behalf of its customer, which specifies all details of an asset, and confirms its current existence on deposit.

Savings Bond:
The US government issues two types of savings bonds: Series EE and Series I.
You buy electronic Series EE bonds through a Treasury Direct account for face value and paper Series EE for half their face value. You earn a fixed rate of interest for the 30-year term of these bonds, and they are guaranteed to double in value in 20 years. Series EE bonds issued before May 2005 earn interest at variable rates set twice a year.
Series I bonds are sold at face value and earn a real rate of return that’s guaranteed to exceed the rate of inflation during the term of the bond. Existing Series HH bonds earn interest to maturity, but no new Series HH bonds are being issued.
The biggest difference between savings bonds and US Treasury issues is that there’s no secondary market for savings bonds since they cannot be traded among investors. You buy them in your own name or as a gift for someone else and redeem them by turning them back to the government, usually through a bank or other financial intermediary.

The interest on US savings bonds is exempt from state and local taxes and is federally tax deferred until the bonds are cashed in. At that point, the interest may be tax exempt if you use the bond proceeds to pay qualified higher education expenses, provided that your adjusted gross income (AGI) falls in the range set by federal guidelines and you meet the other conditions to qualify.

Stand By Letter of Credit SBLC:
A document issued as a guarantee of payment by a bank, on behalf of a client. This is used as “payment of last resort” if the client fails to fulfill a contractual commitment with a third party. In the placement world, this term is often associated with fraudulent companies that offer Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument leasing and/or project funding “opportunities”.

Seasoned:
Common term that refers to bank instruments, such as medium term notes (MTN’s) and bank guarantees ( Bank Guarantee”>BG ’s), which have been owned by several different beneficiaries over their existence.

Shopping:
When a representative/broker sends out an investor’s compliance package to several “program managers” at the same time. This is greatly frowned upon, and can ruin relationships with real traders.

Signatory:
An individual who legally represents the assets/services of another person, entity or themselves, by executing all contractual agreements and related obligations.

Single-Payment Bond:
A bond that does not make coupon payments but rather allows interest to accrue and pays the entire liability in full at maturity.

Slightly Seasoned:
A Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument which has been traded, having more than one owner over its lifespan before maturity. This is usually a Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument which is discounted moderately, sold at a value of 70-85% of face.
SWIFT MT 760 / MT 799
We have relationships with investors and companies which can provide leased proof of funds in many different forms. One available form is the SWIFT MT 760 and MT 799. Typically, people want the leased bank instrument or leased proof of funds blocked in their name, or the name of the trader they are using. They can accomplish this through the use of a SWIFT MT 760, and can use a MT 799 as well for basic bank to bank communications. This allows the client to lease collateral, which may be needed for various types of investments or loans which require sufficient funds.

SWIFT:
A system of communication between banks, allowing account holders to block, transfer, or assign assets as per their request. Examples are the swift MT 100, MT 103, Swift MT 760 Blocks your Funds in Favor of Another”>MT 760 , and Swift MT 799 is a Written Message Bank to Bank”>MT 799 .

Treasury Bill T-BILL:
A short-term debt obligation in the form of a interest accruing note, backed by the U.S. government with a maturity of less than one year.

Treasury Note T-NOTE:
A marketable U.S. government debt security containing a fixed annual interest, and a maturity between one and 10 years.

Treasure Strip T-STRIP:
This is a “zero coupon” bond issued by the U.S government whose yield is based upon the difference between the discounted price it is purchased at, and its face value at maturity (ex. 10M Note, buy at 85% of face, worth 100% at maturity).

Tabletop:
A term which refers to a face to face meeting between a buyer/investor, and a seller/trader.

Trade:
A basic economic concept that involves multiple parties participating in the voluntary negotiation and then the exchange of one's goods and services for desired goods and services that someone else possesses. The advent of money as a medium of exchange has allowed trade to be conducted in a manner that is much simpler and effective compared to earlier forms of trade, such as bartering. In financial markets, trading also can mean performing a transaction that involves the selling and purchasing of a security.
Trading is not a new phenomenon - we've been doing it for centuries! The trade that occurred among the most primitive humans has evolved considerably over time, and the word "trade" has come to include the complex trading that occurs on the floor of the New York Stock Exchange (NYSE). However, the basic elements of buying and selling in some form of a market haven't changed a bit, because ultimately, trade still involves giving one thing in exchange for another.
 

Trade Program:
A trade program is a program established by a financial institute, commercial organization, finance center, or trade center that facilitates the international exchange of goods and service.
The assistance provided by these organizations includes translations, assistance with trade documents, and TRADE FINANCING.   

Trader:
A person with a direct relationship to a bank that is issuing discounted bank instruments, which will later be sold to a pre-defined “exit buyer” at a higher value.

Trading Bank:
This is the bank where the trader receives the collateral, or assignment thereof, from the investor. Also, this bank provides the line of credit to the trader.
Unencumbered:
This means the referenced asset has no liens or debt obligations to any third party.

Unsecured Bond:
A debt security, issued by a government or large company, that is not secured by an asset or lien, but rather by the all issuer’s assets not otherwise secured. That is, an unsecured bond carries no collateral; in case of bankruptcy, the bondholder is considered a general creditor. Thus, the bondholder is paid out of funds that do not have a prior claim on them with a secured debt. Like most bonds, an unsecured bond can be traded. Some unsecured bonds, such Treasury securities, are considered risk-free. See also: Debenture.

When a bond isn’t backed by collateral or security of some kind, such as a mortgage, that can be used to repay the bondholders if the bond issuer defaults, the bond is described as unsecured.

However, most unsecured bonds pose limited risk of default, since the companies that issue them are usually financially sound. Unsecured bonds are also known as debentures.

USD:
In currencies, this is the abbreviation for the U.S. dollar.
The currency market, also known as the forex market, is the largest financial market in the world, with a daily average volume of over US$1 trillion.

Verification of Deposit VOP:
This is a signed document provided by a financial institution, verifying the current balance and history of an account holder. This is similar to a Bank Comfort Letter”>BCL , but the verbiage may be different.