Private Placement Programs (PPP)


Historical Background

The “United States Department of the Treasury” (US Treasury), fulfilling its
responsibilities under the Bretton Woods Agreements from the 1960’s, developed the financial instrument known as a Medium Term Note (MTN) by employing established European financing methods through which banks and financial institutions commonly finance long-term loans by selling Letters of Credit or Bank Notes of medium term to provide funding for loans. 

In the post-World War II era, the US Treasury and its affiliates adopted the
protocols of the finance syndicates led by major European bank holding companies
that would issue their Medium Term Notes guaranteed by a matching US Treasury
Guarantee.

The US Treasury and the “Federal Reserve System” (Federal Reserve) developed an
instrument that may be traded to create new credit and that credit would be used
in specific approved macroeconomic projects allowing such funds and credit to be
applied in geographical areas requiring credit and cash infusions to survive and
grow. While that understanding or intent remains true today, it is no longer always
a necessary requirement for involvement in such initiatives.

Credit is created when the US Treasury, or its European equivalent the European
Central Bank (ECB), can either make available to, or de facto authorize, those Bank
Instruments, at a discounted rate (Primary Market Issue), to approved and pre-qualified
Private Placement Depositors with qualifying funds on deposit, known here as
“Asset Providers”. Such contracts to purchase and sell these trading instruments are managed and/or approved by the US Treasury which are administered by prime US and European bank syndicates.

The US Treasury or the Federal Reserve may price these instruments at whatever
price is necessary to provide the needed new credit in the geographical location or
for the project(s) for which they have been approved. Not all Applicants or Projects are approved. Both the Applicant and the funds that will be used to purchase and sell the financial instruments must be screened according to US Patriot Act and Anti-Money Laundering Guidelines and their European equivalents.

The Asset Provider may be financing more than their own projects but all of the
projects must be submitted and subject to approval (although most projects do not
go through such a process.) When the earnings are generated they are deposited
in a Bank Project Account. Generally, there is just one Principal (or Asset Provider). That Principal is the owner of the Funds and the Principal is the Applicant to the “trade entity”, which must also have the approval to trade from the US Treasury or the Federal Reserve.


The Investment Opportunity

The entry qualification is a very low risk opportunity for an “investor” who can provide a cash deposit, Bank Guarantee (BG) or a Standby Letter of Credit (SBLC) that allows for the credit value for a minimum of Euro One Hundred Million (€100,000,000) for a participating level for Tier One Trading Programs.  This Bank Instrument (BI) allows the receiving bank to provide credit facilities and once monetized to a market cash value of the depository cash itself, under structured contract positions allows for the trading commitments to engage. The returns to the investor (“Asset Provider”) are all subjective based on market availability and program considerations, all of which are disclosed at the time of a compliance cleared client engagement.

How it Works


Once a new money qualified Investor or Client exists the Private placement traders operate against non-depleting, tradeable lines-of-credit or “blocked” cash accounts established on behalf of the Asset Provider/investor. The Trader's lines-of-credit (regardless of whether BIs or blocked cash is provided) are derived from prime banks that offer credit facilities. These credit-issuing banks, however, are governed by the current Basil II and Basel III and Basel IV Accords, which became effective in September, 2006, January 2010 and January 2018, respectively, which impose strict requirements on bank lending and borrowing. Most notably a bank’s credit lines must be "capitalized" by an acceptable form of collateral (of sufficient value) held "in the care, custody and control" of the credit issuing facility. The collateral is the BI itself. The controlling variable is whether or not the trade group's procedures satisfy the credit-issuing bank's "care, custody and control" standard for activating Credit Lines—the control test. 

We have a well-established relationships with a number of prime banks that function in this market of collateral monetization.

Additionally, successful trade programs, besides having unique access to
established bank lines-of-credit, require the expertise of qualified traders capable
of engaging in the purchase and sale of investment-grade bank debentures in the
wholesale market. Traders are generally licensed by European regulatory agencies
and trades proceed according to strict procedural and legal guidelines. Under present rules, traders cannot use their own assets to trade.
This trading operation is generally referred to as a "controlled", "managed",
“closed” bank debenture trading effort because the Supply Side of the financial
instruments and the Exit Buyer for the financial instruments have already been
pre-arranged and the price of the instruments already established. Hence, each
and every completed trade will result in a net gain (and never a net loss) to the
trader.


The crucial distinction for a qualified Investor/Client is that under a properly managed “buy-sell” transaction the investor does NOT transfer any funds to an intermediary trader nor are the funds required to be pledged or subjected to a lien.

Reasons for Superior Returns

There are three variables that work together to generate the high yields that
characterize PPP trades. The three variables are velocity, leverage and
compounding. The speed with which deals happen makes a massive difference to
the overall annual return.
The trading platform utilizes all three concepts within a unique financial
environment in a Top 25 bank to create an incredibly powerful vehicle that can
generate exceptional returns with no risk to the investment capital.

Structure of the Venture
There are Agreements to be executed that will provide that the Net Income will be shared on a basis between the Asset Provider and the Joint Venture Partner that will reflect each individual transaction but the primary beneficiary will be the Asset Provider. The Agreements will clearly define the protocols that will guarantee non-depletion of the BI and 100% transparency of each BI purchase and sale. Trade Agreements will also make sure that a designated percentage of funds are actively engaged in qualifying projects.

Risks and their Management


There should be no material risks to the BI given that the absolute priority is the
preservation of its value and that the BI remains under the control of the Investor
at all times; or is given provisions of Non-recourse guarantees that the BI is released or returned prior to its maturity. The principal risks will occur if procedures are not rigorously followed. The investor typically can withdraw within 30 banking day’s Notice. The Asset Provider is not required to make any upfront fee payments. 

​FOR MORE INFORMATION ON THE OPPORTUNITIES IN PLATFORM TRADING PROGRAMS PLEASE CONTACT ME AT 203-820-7725 OR rtcooke@avantiadvisors.com.   

SUBJECT TO MARKET AVAILABILITY PROGRAMS FROM 100 MILLION EUROS AND ABOVE AND/OR SMALLER CAPITAL TRADE PROGRAMS FROM AS LITTLE AS 1.5 MILLION EUROS.


Disclaimer: 

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