PROCEDURES FOR A TYPICAL PRIVATE MEDIUM TERM NOTE (MTN) BUY/SELL PROGRAM

A Trader's Bank communicates with the Issuing Bank and Exit Buyer's Bank, procuring an agreement with the Issuing Bank Officer and with the Exit Buyer's Bank, that both are prepared to begin a contracted series of Transactions. The Exit Buyer's Bank forwards a Proof of Funds (POF) to the Trader's Bank in the amount of the first purchase of say $100M.  Note: When a POF is issued for the Exit Buyer and forwarded to Trader's Bank, there is a legal Funding Commitment to complete that Transaction, which can NOT be withdrawn while the transaction is in play. 

The Trader's Bank forwards to the Issuing Bank a POF in the name of the Trader and requests an MTN be issued, in the name of the Trader, along with an Invoice with a discounted price (a real simple example: $95M, payable in 8 Hours).

A copy of the instrument and invoice for $95M, are forwarded to the Trader's Bank where they verify signatures, MTN terms and compliance of the Purchase Contract.

Trader's Bank will then forward the copy of the MTN, with a Conditional Assignment of the MTN, to Exit Buyer's Bank, along with an Invoice at the Exit Buyer's Purchase Contract Price, ($100M for example purposes, payable in 4 hours).

The Exit Buyer's Bank authenticates signatures, verifies compliance with the Purchase Contract, and pays the $100M Invoice price to the Trader's Bank for credit to Trader's account, within the 4 hour limit.

The Trader's Bank pays the Issuing Bank's Invoice for $95M within the 8 hour limit, with instructions for the Original MTN to be sent to the Exit buyer's Bank by courier.

The Trader's Bank debits a Trader Bank Fee (ex: 1/4%) for their Services Rendered, then forwards the balance, $100M minus $95M minus 1/4 %, to the Trader, who pays the Trader's 'Associate/Investor' for their Service Rendered.

The Procedure used for this example, typically takes place 4 times each day of a 4 business day week, and repeats until the Trader's Purchase Contract is completed. Using this formula, the weekly payments to the 'Associate', would be equal to 38% of their POF amount. (5% per transaction x 4 per day = 20% x 4 days per week = 80% - 4% for Bank Fee = 76% divided by 2 = 38% = $38M per week)

Note: The Procedure described above is a very conventional one.  There are other MTN Trade Operations, of the same MTN basis but involving a resale of the MTNs by the 'Exit Buyer', which have a higher Rate of Return to the Trader involved, and therefore an even higher payment to the 'Associate' involved.

With the above process and controls for these MTN Buy/Sell Transactions, the only reason for an Operational failure, once began, would be for the Exit Buyer's Bank to default on completing a contracted purchase of the MTN, which would result in risk to their Bank Charter.

Should default take place, it would be simple for the Trader to make Payment, using the Trader’s Funds, to complete the purchase of the MTN, and to instantaneously sell it to another contracted Exit Buyer. This act by the Trader eliminates risk of loss by Buyers, Exit Buyers and 'Associate'.