FAQ
No. Due to the amount of inquiries we receive. The Bank Instrument must be issued from a A+ rated Bank in a rated Jurisdiction. But if the instrument is already issued then YES you have to send a copy of instrument and full CIS-KYC of the owner of instrument.
No. You should move your account to an A Rated or AA Rated bank.
No. Only brokers and rep’s give that kind of information to the potential clients and they are often not realistic. It is against the law to quote actual returns from a trading platform or to provide written or verbal amounts outside of the actual contract. That is why the term “historical returns” are quoted.
No. The client is not under any obligation to accept the terms or the ROI’s that will be provided in the verbiage of the trade contract.
There are occasional programs available for LTN’s, please contact us for availability. The bonds would need to be on Euroclear and sometimes the trader will pay the costs involved.
The most important thing is REALITY! NO ASSIGNEES, OR BENEFICIAL OWNERS, etc. FULL KYC, including tax receipts, and full set of bond documents are required.
Note: We do not accept historical bonds.
Yes. We have Monetizers for Bank Instruments either Leased or Purchased. The LTV depends on the rating of the issuing Bank 35-50% for Leased Instruments, Up to 80% for owned Instruments. Again these numbers are not final, the LTV will depend on the rating of issuing bank and nature of bank instrument too.
No. The KYC Package must be the one supplied by us. All KYC Documents must be with current date. Packages more than 3 days old will be rejected. Client has to provide the copy of passport first.
Depends on the program you are entering and if a bullet is available, in a lot of cases yes but not always.
If a bullet is available you would be notified after passing compliance.
Yes, almost all programs are weekly payouts, unless stated differently in contract.
Yes, The admin hold/block will in favor of the trader for the term of the trade when it is released unencumbered and without liens back in favor of account holder.
Some of our Traders accept those and Yes, providing you can produce an up to date bank statement and have access to the funds and they are not in a sub account.
No, the funds must be free and unencumbered.
Yes, but must be cash backed and from an A rated or AA rated bank.
Bank must be a minimum B+ rating in a rated Jurisdiction, with the ability to issue either an MT760, 799, 542 or an admin hold or block.
No, The contract is strictly confidential between the client and trade group and can only be issued after client has passed compliance.
There is a set procedure to follow:
1.) Submit a KYC (Know Your Client) package, complete with a copy of your passport and either a Bank Statement, or a copy of the Bank Instrument.
2.) The compliance department will complete due diligence on yourself and the funds or Bank Instrument which takes between 5-7 working days depending on how busy they are.
3.) If you pass compliance a contract will be issued.
4.) If required there will be a call between between yourself and the compliance department to answer any questions you may have.
5.) You sign and return the contract.
6.) You contact your bank to either issue the required swift or put the admin hold block in place. This can take between 2-5 days depending on the Bank.
7.) Once the swift or block is in place the trade would start usually within 72 hours.
The funds or Bank Instrument is blocked in favor of the trader. The trader uses the asset to draw a credit line from his bank to trigger the trade. At the end of the trade term the block is released unencumbered bank to the asset owner.
No, the Funds or Instrument are only used by the trader to draw a credit line and are left unencumbered.
No. As mentioned in the previous Q/A every trade has a net positive return. Typically the minimum spread is 10% or more. So for every $100MM trade of bank notes the Private Investment Program will make 10% or more. It is not possible for the trader or investor to lose. It is not possible for the trader to make less. Every trade has a known net positive return before the trade is made. Traders will make these trades hourly and daily, so over a month period the 50% to 100%plus return is assured for the investors. The traders make double those numbers, however they split the profits with the investor. The exact information will be mentioned in the contract once you get it from trader.
Private Investment Programs only trade prime bank notes by arbitrage. What arbitrage means is that the buy and sell contracts have to be “in hand” before the trade of the discounted banknotes take place. This is the safest way to trade because the deal is done before the deal takes place. This is all done by the trader for the Private Investment Programs. Since in the Private Investment Program traders only buy notes when they have a buyer at a higher price every trade has a net positive gain due to the “controlled trading” practices. There is zero risk to the Program traders, and zero risk to the bank, and zero risk to the investor
LTN Frequently Asked Questions
About LTN Purchase Program that is Available and on How to Work with MG Capital Group Inc. on LTNs
About LTN Purchase Program that is available and on how to work with us on LTNs
Why does this purchase program require copies of physical bond documents when bond information is available by black screens?
The LTN Program wants to make sure that the bond owner can provide them because (1) they will be the basis for the “Safekeeping Receipt” at the transaction bank and (2) they will need to be conveyed along with the physical bond to the buyer at closing. Once the transaction starts moving forward and the Program Facilitator is investing their money in up-front costs, they want the transaction to close as quickly as possible and to not be delayed by bond owners having to go out and obtain updated documents at that late date.
Why are STN documents with stamped dates between 2017-2020 required?
As of January 2017, Tesouro Nacional and Banco Central do Brasil (BCB) put in place a new bond authentication process. As of that date the transaction bank can verify the ownership, documents and the authenticity of a bond utilizing a secure bank to bank online portal. This new authentication method no longer requires SWIFT communications with BCB and reduces the time and expense associated with verification and due-diligence. Bonds documents actualized prior to 2017 do not have the codes issued to utilize the new verification system.
Why will a current Transport document be required before closing?
This is a requirement of the transaction bank. A current and valid transport certificate is required by the bank when they receive the instruments and associated documents so that they can accept bonds and issue a safekeeping receipts with full banking responsibility. The transport will also be required by the buyer when the instrument is conveyed at the time of closing. Both parties must be confident that there will be no legal complications with Brazilian authorities.
Why will a current GRU and receipt be required before closing?
A current and valid proof that all taxes due on the LTN is required by the bank when they receive the instruments and associated documents so that they can accept bonds and issue a safekeeping receipt with full banking responsibility.
Why won’t the purchase program compromise on their list of “required” documents?
This LTN purchase program is designed to convert a worthless LTN bond into a cash-backed Global Note that is recognized by the market as having value. This involves cash-backing by a reputable bank and creating an instrument that can be traded on the secondary market. To accomplish these objectives, the program facilitator must meet stringent banking requirements for each of these tasks. The requirements for updated documents come from the transaction banks, not from the Program Facilitator.
After fully meeting submission requirements, are any of the program procedures negotiable?
It is possible that some procedures may be modified, however, any proposed exceptions or deviations from the standard procedures outlined in the Prospectus would need to be submitted in writing and be reviewed and approved by at least the Program Facilitator and the transaction bank and perhaps also by the Buyer and by Euroclear attorneys. It will be difficult to change the standard procedures that have been negotiated with and approved by the attorneys of several entities.
Why is the program prospectus so long and detailed?
The international banking community and banking regulators require full disclosure of every aspect of the program for sophisticated investors and their attorneys to review. The document is prepared by lawyers and must be approved (1) by a reputable financial services firm (Deloitte Touché), (2) the transaction bank, (3) the potential buyers, and (4) the Euroclear exchange attorneys. All relevant information must be included in this document, including every conceivable potential risk.
Since my bonds are already located in a reputable storage facility in Europe, why do my bonds have to be put into safe-keeping in the transaction bank?
The transaction bank must secure the bond in their facility to issue a Safekeeping Receipt with full banking responsibility and then to load the bonds onto the Euroclear exchange. This cannot be done if they do not have control of the instrument and supporting documentation. Furthermore, the transaction bank must be able to convey bonds to buyers at closing. Again, they cannot convey the bonds if they are being held by another institution
How long does the LTN purchase process take?
There are several purchase process factors for which there are no definitive allocations of time, such as: (1) prioritization of a specific bond in the queue, (2) speed of processing bonds in the queue [see note below], (3) identification of a specific buyer for a bond, (4) bond owner return of executed sales and purchase agreement (SPA), (5) bond owner delivery of bonds to be transacted. It is only after the SPA is executed and the bonds are delivered to the transaction bank that reasonable timing predictions can be made for the conclusion of the transaction: approximately 20 banking days.
[NOTE] Queue processing speed is also affected by the: buying appetite and financial capacity of institutional buyers, financial capacity of transaction banks, number of transaction banks, and timing of adding additional transaction banks.
After I submit my bond portfolio to MG Capital, how many bank days will it take . . . *
* For program review and registration of my submission?
It should take MG Capital no longer than five to seven working days to review bond packages. When we determine that a package is complete, SRM then attempts to register the bond owner with the Program Facilitator. If there are no registration conflicts, the bonds are placed into the existing bond portfolio queue.
* To get to the top of the queue?
At the time of submission, each bond will be registered at the bottom of the queue and will be selected as the bonds above it are sold. While the portfolio queue is growing, the Program Facilitator also has a growing list of transaction banks and, as more transaction banks are engaged, the capacity to close more bonds at the same time will increase.
* To receive my prospectus?
We are unable to predict this this because issuance of the prospectus will depend on the completion of all the following: (1) In-take officer compliance approval, (2) Program Facilitator acceptance and registration, (3) Bond prioritization in the queue, (4) Selection of a buyer, and (5) Issuance and delivery of a Registered Prospectus. In addition, the timing of this task is dependent on the number of bonds in the queue at the time of submission.
After I sign and return my prospectus agreements, how long will it take to receive a Sale and Purchase Agreement (SPA)?
Once a bond is selected by a buyer, an SPA can be issued in about 5 banking days. After the bond owner accepts the terms and signs and returns the SPA, the transaction process will move rather quickly.
After I execute the Sale and Purchase Agreement . . . *
* How fast will I learn the location of the transaction bank?
The location of the transaction bank is revealed in the SPA.
* How quickly do I need to deliver my bonds to the transaction bank?
Immediately or within a few days. Once the SPA is written, bond delivery must be completed without delay and within a reasonable amount of time. Extended delay might cause the offer to be delayed or even cancelled.
* How long will it take to get a closing date scheduled?
Closing dates are not scheduled until (1) bonds are delivered to the closing bank, (2) a safe keeping receipt is issued, (3) the bond is backed with a cash value, and (4) loaded onto Euroclear. If all goes well this process can be accomplished in 15-20 banking days.
* How long will it take to close?
On the scheduled day, closing will only take a few hours at the transaction bank.
* How long will it take to receive my sales proceeds?
Settlement of sale proceeds is expected in 3 banking days.
How large is the bond portfolio queue?
The queue of registered LTN packages is sizeable and growing steadily as additional portfolios are submitted and accepted. SRM's portfolio queue totaled 100 packages by end of September, 2020. The more highly prioritized and desired H-series bond portfolios make up less than half of the total number of registered bond portfolios.
Who are the buyers?
The Buyers are large financial institutions and international corporations, but the actual identity of these Buyers is confidential.
How many options are there for transaction banks?
Currently, there are two transaction banks approved with additional banks to come online soon.
Why is the transaction closing restricted to so few banks?
Bank attorneys must review and approve the prospectus and they must register with BCB to access the secured portal through which bonds are authenticated on a bank-to-bank basis.
Can the bond owner choose where his sales proceeds are delivered?
The bond owner’s sale proceeds will be quickly delivered to a secure account established in the bond owner’s name by the Program Facilitator. After the funds arrive in that “smart fund” account, the bond owner can move them to any location at their own discretion.
Why does the closing need to be in Europe?
The closing takes place at an approved and compliant transaction bank. Since Europe is where most of the critical operations of the Program Facilitator take place, all transaction banks are expected to be in Europe.
Can the seller select the county, city, and bank where the closing will take place?
No
Does the bond seller need to be present at closing?
No
Can the bond seller be present at closing if he wants to be present?
Yes
Will the program facilitators offer any trade opportunities to me after closing?
Possibly.
Will MG Capital offer any cash-trade opportunities to me after closing?
Yes. Shortly after the date when bond owners receive their sale proceeds, MG Capital will request the bond owners to consider at least one or two different private cash-trade programs.
What is MG Capital LTN processing model?
How is MG Capital connected to the available LTN purchase program?
What is the compensation arrangement for consultants?
What PSA percentages does MG Capital feel is appropriate for consultants who provide services required for a successful transaction?
What does MG Capital believe about the relative value of the contribution made by program-side consultants compared to client-side consultants?
How many members are involved on the MG Capital LTN Team?
The MG Capital LTN team is made up of 4 parties whose primary functions are in the areas of administration, banking/paymasters, Portuguese communication and marketing.
What range of PSA percentages are requested by the MG Capital LTN team?
Will the PSA document that MG Capital creates request the bond owner to provide compensation for both program-side consultants and client-side consultants?
How will the requested total PSA % amount be determined?
How will MG Capital split PSA compensation with working client-side consultants?
How will MG Capital arrange for the payment of compensation to client-side consultants through its paymaster account?
Will MG Capital provide some protection for consultant compensation?
Will the LTN purchase program ensure the payment of PSA compensation to consultants?
What if the bond owner is not willing to compensate either the program-side or the client-side consultants?
What is the difference between a Working Consultant and a Referral Partner?
Why does MG Capital require a completed and signed Bond Package Summary & Genealogy?
What is the Introducing Consultant designation?
How does MG Capital handle duplicate introductions of the same bond owner?