FAQ

IS IT OK IF I SEND A COPY OF MY BANK INSTRUMENT FOR YOUR VERIFICATION?

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.

IF A BANK IS A DIGITAL ONLINE BANK, DOES IT QUALIFY FOR MONETIZING AND TRADING?

No. You should move your account to an A Rated or AA Rated bank.

​CAN YOU TELL ME WHAT THE RETURNS WILL BE?

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.

WHEN YOU RECEIVE THE TRADE CONTRACT ARE YOU UNDER OBLIGATION TO AGREE TO IT?

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.

DO YOU ACCEPT LTN’S OR BONDS FOR MONETIZING AND TRADE?

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.

​CAN I MONETIZE WITHOUT TRADING FOR 40 WEEKS?

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.

CAN I USE A GENERIC KYC PACKAGE?

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.

​DO YOU PROVIDE A BULLET THEN A 40-WEEK TRADE?

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.

DO YOU PROVIDE WEEKLY PAYOUTS?

​Yes, almost all programs are weekly payouts, unless stated differently in contract.

​CAN I RECEIVE AN ADMIN HOLD TO BLOCK OUR FUNDS?

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.

DO YOU ACCEPT HERITAGE FUNDS FOR TRADING?

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.

​CAN YOU TRADE BLOCKED FUNDS?

​No, the funds must be free and unencumbered.

CAN YOU ACCEPT A MT-760 FOR TRADE?

​Yes, but must be cash backed and from an A rated or AA rated bank.

​WHICH IS AN ACCEPTABLE 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.

CAN I SEE A DRAFT COPY OF THE CONTRACT BEFORE I SUBMIT MY DOCUMENTS?

​No, The contract is strictly confidential between the client and trade group and can only be issued after client has passed compliance.

WHAT IS THE PROCEDURE, HOW LONG DOES IT TAKE?

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.

HOW DOES THE ADMIN HOLD OR BLOCK WORK?

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.

IS THERE ANY RISK INVOLVED?

No, the Funds or Instrument are only used by the trader to draw a credit line and are left unencumbered.

​IS IT POSSIBLE FOR THE PRIVATE INVESTMENT PROGRAM TO LOSE OR HAVE A POOR RETURN?

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.

HOW CAN THE RETURNS BE AS ATTRACTIVE AS REPRESENTED?

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

Submit LTN Enquiry
LTN Frequently Asked Questions

About LTN Purchase Program that is available and on how to work with us on LTNs

SUBMISSION PACKAGE

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. 

PROCEDURES

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

TIMING

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.


TRANSACTION

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.

CLOSING

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

TRADE OPPORTUNITIES

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. 

HOW TO WORK WITH MG CAPITAL ON LTNS

What is MG Capital LTN processing model?


MG Capital will work primarily with the consultant who introduced the LTN bond owner to us. We do not wish to engage more than one consultant in the process to ensure the requirements are clearly understood and any questions are relayed through the Introducing Consultant. All other consultants must be willing to step aside and allow MG Capital to work with the Introducing Consultant and/or directly with the bond owner or their legal representative.

How is MG Capital connected to the available LTN purchase program?


MG Capital does not have a relationship with the principals of this purchase program, but we do have a ten-year relationship with an LTN associate who is managing the portfolio queue for the purchase program that is available. Since 2013, this associate has been primary access point to LTN programs. Over the past several years, MG Capital and our well-connected associate have worked together closely and just recently we have adopted a new LTN business model that permits our associate to focus his energies on providing intake services for LTN programs while MG Capital functions as the marketing arm and as the in-take desk for our associate. We are in daily contact, coordinating incoming files, discussing priorities and refining our LTN in-take system.

What is the compensation arrangement for consultants?


The official commission being paid by this purchase program will be much smaller than originally expected and it is already 100% taken. Now it is necessary for both MG Capital (representing the program-side consultants on the MG Capital LTN Team) and for any other consultants between MG Capital and the bond owner (client-side consultants) to arrange for compensation from the bond owner. This can be done jointly through an agreement known as a Profit-Share Agreement (PSA).

What PSA percentages does MG Capital feel is appropriate for consultants who provide services required for a successful transaction? 


MG Capital believes the LTN world already is full of too many examples of greed and over-reaching by intermediaries. We have commonly seen examples of intermediaries asking for high percentage levels of compensation ranging from 20-50% of bond owners’ sale/trade proceeds. We feel that such compensation levels border on the obscene and take unfair advantage of bond owners for no apparent reason other than the greed of intermediaries. MG Capital believes that the total PSA compensation requested from a bond owner, for both program-side and client-side consultants, is reasonable if it stays within the range of 5-15% of bond owner proceeds. MG Capital also believes that the higher percentage levels in this range should only be requested if a large number of consultants are "actively" engaged/working on behalf of the bond owner. 

What does MG Capital believe about the relative value of the contribution made by program-side consultants compared to client-side consultants?


Not surprisingly, and simply put, MG Capital believes that the major contribution is being made by the program-side consultants. In traditional financial transactions it is understood that, since it takes both a buyer and a seller, the facilitator bringing each respective side is making an “equal” contribution to the business effort. MG Capital does not believe this approach is relevant to LTN transactions. Anyone who has been involved with LTNs knows how “easy” it is to find an LTN owner who has been looking for years for a program solution and how “hard” it is to find an LTN program that works. Therefore, MG Capital believes that the party who brings the program to the table is the party who is making the bigger contribution—and that that party should be rewarded accordingly.

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?


Depending on the circumstances of each potential transaction, MG Capital will request PSA compensation percentages ranging from 5-10% for the services provided by its team of 4 program-side members. SRM submits a bond owner's LTN package directly to the program in-take desk. We know how valuable this service is.

Will the PSA document that MG Capital creates request the bond owner to provide compensation for both program-side consultants and client-side consultants?


Yes. All client-side consultants will be signatories to the section of the PSA that indicates the commission amounts due to each consultant. Client-side consultants always have the option to have their own compensation agreement directly with the bond owner, however, if they make a separate compensation arrangement with the bond owner they will not be eligible to participate in any part of the compensation flowing from MG Capital's PSA.

How will the requested total PSA % amount be determined?


The total PSA % amount will be based on the total number of consultants involved in a transaction, including MG Capital’s program-side team of 4 plus the total number of all “working” client-side consultants. The total PSA % amount typically ranges from 5-15%, with 15% being the maximum PSA amount requested. MG Capital believes that consultant compensation should be modest and that a very high portion of transaction proceeds should stay with the bond owner.

How will MG Capital split PSA compensation with working client-side consultants?


After allocating the first 2% of the total PSA percentage to itself for providing the LTN program, MG Capital will then divide the remaining PSA percentage amount by the total number of consultants and allocate that percentage amount to each “working” client-side consultant on an equal basis.
 
How will MG Capital arrange for the payment of compensation to client-side consultants through its paymaster account?


MG Capital will prepare, or cause its paymaster to prepare, sub-fee agreements for all consultants based on the fee split percentages specified in a fee-sharing agreement referenced in the PSA. Consultants who wish to directly effect payment to a referral partner or to further divide their portion of the fees among their affiliates, are responsible for either (1) coordinating an additional sub-fee agreement with MG Capital's paymaster or for (2) designating to MG Capital's paymaster that their allotted fee portion should be paid to their designated sub-paymaster and then filing their own sub-fee agreements with their paymaster.
 
Will MG Capital provide some protection for consultant compensation? 


Yes, but only a little. MG Capital will not make a formal submission of the bond owner’s bond portfolio to the LTN purchase program until the bond owner has signed and notarized the PSA. Having said this, MG Capital has no responsibility for payment of consultant compensation and cannot guarantee the payment of this compensation. Payment of PSA compensation is solely the bond owner’s responsibility and non-payment would be a legal matter between the bond owner and all consultants.

Will the LTN purchase program ensure the payment of PSA compensation to consultants?


No. PSAs with the bond owner are private agreements between consultants and bond owners. The purchase program will (1) pay the agreed upon sale proceeds to the bond owner, (2) pay out the small official commission (which is already 100% taken) and (3) have nothing to do with bond owner compensation to consultants through PSAs. 

What if the bond owner is not willing to compensate either the program-side or the client-side consultants?


In this case, consultants requesting PSA compensation should politely help the bond owner understand that we will not work without compensation and that, if he does not wish to provide our compensation, then we will discontinue the program introduction efforts that we were prepared to make on his behalf.

What is the difference between a Working Consultant and a Referral Partner?


Working Consultants have performed recognizable work in the advancement of an LTN package. One should not expect to be considered a working consultant simply by having a business, employee, affiliate, family or friendship relationship with a consultant who performed the “work.” Working consultants are paid under the structure outlined in the PSA. Referral Partners are parties who provided to a working consultant a name, email address or phone number of a party who might assist in completing a transaction. Referral Partners are compensated by the working consultant to whom they provided their referral. 

Why does MG Capital require a completed and signed Bond Package Summary & Genealogy?


The Bond Package Summary document helps provide MG Capital with information needed to prepare a Profit Share Agreement (PSA) for the Bond Owner to sign. For the available LTN Purchase Program, compensation to MG Capital and all client-side consultants who have not arranged a separate fee agreement with the bond owner is dependent on this PSA. Consequently, MG Capital requires a PSA signed by the Bond Owner before submitting an LTN package to this Purchase Program.

What is the Introducing Consultant designation?


The Introducing Consultant is the consultant who provides the first fully-compliant package to MG Capital for a bond owner which has then been submitted to and registered with the Program Facilitator. After the designation of Introducing Consultant has been granted to a consultant, any additional bonds that bond owner wishes to submit to this purchase program must be done through the services of the designated Introducing Consultant. The Introducing Consultant designation includes all consultants listed on the PSA that is issued when a bond owner is first introduced to the program. All subsequent submissions from that bond owner to that program must reflect the same consultant genealogy.

How does MG Capital handle duplicate introductions of the same bond owner?


MG Capital will begin by working with the first consultant who attempts to introduce a specific bond owner. This potential introduction is initiated by MG Capital’s receipt of a bond owner’s LTN package. If package documents are missing or need to be updated, the original introducing consultant will be given 30 calendar days in which to provide the documents that are missing or outdated so the package meets all submission requirements. During this package-completion time, if another consultant attempts to introduce that same bond owner, that second attempted introduction will not be recognized until the package-completion period is finished. If a second introduction occurs after the 30-calendar-day package-completion time, the first consultant will be notified of the second introduction and will be given 7 calendar days to submit the missing or outdated documents. If the first consultant does not produce a fully compliant LTN package during the 30-calendar-day or 7-calendar-day package-completion period, then the consultant who first presents MG Capital with a fully compliant LTN package from that bond owner will be recognized as the introducer of that bond owner. The designation as the introducer of a bond owner applies to all bonds that may be subsequently transacted by that bond owner through MG Capital. Any additional bonds will only be accepted if submitted through the recognized introducer for that bond owner.