CGP Banking & Finance
Trade Instruments
BG : Bank Guarantee
SBLC : Standby Letter Of Credit
CD : Cash Deposit MT103
DLC : Documentary Letters of Credit
PME : Paymaster / Escrow Services
and more...
To succeed in today’s global marketplace and win sales against foreign competitors, traders must offer their customers attractive sales terms supported by the appropriate payment methods.
Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer.
As shown in figure 1, there are five primary methods of payment for international transactions. During or before contract negotiations, you should consider which method in the figure is mutually desirable for you and your customer.
Letters of Credit
Letters of Credit (LCs) are among the most secure instruments for international traders.
An LC is a commitment by a bank on behalf of the buyer, ensuring payment to the exporter if all terms and conditions in the LC are met through the submission of required documents.
The buyer initiates the LC by paying their bank for this service. LCs are valuable when credit information about a foreign buyer is scarce, but the exporter trusts the buyer’s foreign bank’s creditworthiness.
LCs also safeguard the buyer, as payment is not required until the goods are shipped as agreed. Discover more about Letters of Credit.
Documentary Collections
Documentary Collections (D/C) involve the exporter entrusting their bank to collect payment for a sale, sending necessary documents to the importer’s bank with instructions to release them upon payment.
Funds are then transferred from the importer to the exporter via the banks involved, against the documents. D/Cs use a draft requiring payment either upon sight (Document Against Payment) or at a specified future date (Document Against Acceptance).
While banks facilitate D/Cs for their clients, they offer limited recourse if payment is not made and involve fewer verification processes compared to LCs. Generally, D/Cs are more cost-effective than LCs.
CGP Investment Instruments
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Futures
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Options
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Exchange-Traded Funds (ETFs)
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Stocks (Equities)
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Medium Term Notes (MTNs)
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Real Estate Investment Trusts (REITs)
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Savings Accounts and Money Market Funds
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Private Equity and Venture Capital
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Physical Gold
Investment Programs
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MTN - (Medium Term Notes): See below of page
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Bonds: Bonds are debt securities issued by corporations, governments, or municipalities to raise capital. They typically have longer maturities than MTNs, ranging from short-term (less than one year) to long-term (over 30 years). Bonds pay periodic interest (coupon payments) and return the principal at maturity.
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Stocks (Equities): Stocks represent ownership in a company. Investors buy shares of stock, which entitle them to a portion of the company's profits (dividends) and voting rights in shareholder meetings. Stocks can offer capital appreciation as the company's value grows.
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Mutual Funds: Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. They are managed by professional portfolio managers and offer investors the benefit of diversification and professional management.
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Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds but trade on stock exchanges like individual stocks. They typically track an index, commodity, or basket of assets and offer liquidity and diversification benefits to investors.
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Real Estate Investment Trusts (REITs): REITs are companies that own, operate, or finance income-producing real estate. Investors can buy shares in publicly traded REITs, which provide regular income through dividends and potential capital appreciation.
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Certificates of Deposit (CDs): CDs are time deposits offered by banks with fixed terms (e.g., 6 months, 1 year) and fixed interest rates. They are considered low-risk investments and offer guaranteed returns if held to maturity.
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Commodities: Investors can invest directly in commodities like gold, silver, oil, or agricultural products through futures contracts, exchange-traded funds (ETFs), or physical ownership. Commodities can serve as a hedge against inflation and geopolitical risks.
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Options and Futures: These are derivatives that give investors the right (options) or obligation (futures) to buy or sell an underlying asset (such as stocks or commodities) at a predetermined price within a specified timeframe. They are used for hedging, speculation, and portfolio diversification.
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Savings Accounts and Money Market Funds: These are low-risk, liquid investment options that provide modest returns. Savings accounts are offered by banks and credit unions, while money market funds invest in short-term, high-quality debt securities.
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Private Equity and Venture Capital: These involve investing directly in private companies (private equity) or startups (venture capital) in exchange for equity ownership. These investments are typically illiquid and involve higher risks but can offer high potential returns.
Each investment instrument has its own risk-return profile, liquidity characteristics, and suitability for different investment objectives. Diversifying across various asset classes can help manage risk and optimize returns based on an investor's financial goals and risk tolerance.
MTN (Medium Term Notes) & PPP (Private Placement Program)
BY INVITATION ONLY
MINIMUM INVESTMENT $100M
CGP Is able to consult and provide access to European Cutting Houses on a case by case basis. Professional Investment Service*
Most buyers of newly issued Medium Term Notes (MTNs) purchase them directly from bank desks. However, a lesser-known fact is that these MTNs are first acquired by bank desks from entities known as "Cutting Houses." There are six or seven Cutting Houses licensed by governments and the IMF, acting as wholesalers supplying MTNs to top banks.
A Cutting House trader issues an MTN and sells it to US bank desks with about a 20% markup and European bank desks with a 30% markup. These bank desks then sell MTNs to their clients. By purchasing MTNs directly from a Cutting House, buyers can avoid the 20-30% markup.
*The Cutting House does not solicit; agents must request MTNs through the intake officer.
Private Placement Programs (PPPs) are investment opportunities typically offered to high-net-worth individuals, institutional investors, or corporations. These programs involve trading financial instruments, such as bank guarantees, medium term notes (MTNs), or other structured financial products, with the goal of generating high returns.
Key points to include:
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Nature of PPPs: PPPs are structured as private investment opportunities where participants enter into agreements with financial intermediaries or trading platforms to access exclusive trading platforms.
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Investment Instruments: PPPs often involve the trading of financial instruments such as bank guarantees (BGs), standby letters of credit (SBLCs), or medium term notes (MTNs). These instruments are used to leverage funds and participate in trading activities that promise high returns.
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Participation Criteria: Participation in PPPs typically requires substantial capital, often starting at millions of dollars. Investors must meet certain net worth and accreditation requirements to qualify.
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Returns and Risks: PPPs claim to offer high returns on investment, often in the form of weekly or monthly returns. However, they also carry significant risks due to the complexity of financial instruments involved and the unregulated nature of some programs.
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Legal and Regulatory Considerations: PPPs operate in a regulatory grey area and may involve legal complexities. Investors should conduct thorough due diligence and seek independent financial and legal advice before participating.
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Due Diligence: It's crucial for potential investors to thoroughly vet the background, reputation, and track record of any entity offering PPP opportunities. This includes understanding the legitimacy of the trading platform or intermediary and verifying the authenticity of the financial instruments involved.
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Accessibility: PPPs are often marketed through private networks and require direct contact with brokers or intermediaries. Access to these programs is typically through invitation or referral.
*Financial advice warning
The information on the Capital Gateway Partners Pty Ltd (CGP) website is intended to be general information only and is not financial product advice. The information has been prepared without taking into account your objectives, financial situation, or needs. Before acting on any such information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation, and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) and Fund Target Market Determination (TMD) before making a decision about whether to buy or continue to hold a financial product. All PDSs or offer documents and TMDs are available free of charge on the CGP website, by contacting your financial adviser, or calling the CGP Investor Services team on 1300 005559. Unless expressly stated, the information on the CGP website is provided by the issuer of the applicable financial product.
If you acquire one of our products or services, we will receive fees and other benefits. These are generally set out in the PDS for the product or in an individual contract for services. This remuneration may include contribution fees, withdrawal fees, management fees, and performance fees applicable to the particular product or service.
Our staff, including Directors, are paid a salary and may be entitled to receive bonuses and non-monetary benefits. In addition, directors may also receive director fees. These salary, fee, and bonus payments are paid by us and are not an additional cost to you. You may receive advice about our products from your financial adviser. We do not provide your financial adviser with any remuneration or other benefit when you invest in the products we issue. The amount that is paid by you to your financial adviser when they provide advice to you or arrange for you to invest in our products is agreed by you and your financial adviser and is an amount that you pay, not us.
Please also refer to the Financial Services Guide on the CGP website. The FSG is an important document that is designed to help you decide whether to use the financial services offered by CGP.
For important information regarding the investment managers of the Funds, please refer to the relevant investment manager website which you are able to access via the CGP website.
Withdrawal of Products
The financial products issued by CGP and listed on the CGP website may be withdrawn or varied at any time and without notice. Further, the information on the CGP website relating to any withdrawn financial product may also be withdrawn or varied without notice.
Capital and return not guaranteed
Neither CGP nor any of its related bodies corporate, nor any investment manager or custodian, guarantees the repayment of your capital or the performance of your investment or any particular taxation consequences of investing.
All investments are subject to risks, including possible delays in repayment and loss of capital and income. The significant risks for a financial product are outlined in the relevant PDS or other offer document for that financial product.
Forward looking statements
The material on the CGP website may contain forward-looking statements which are not based solely on historical facts but are based on current expectations about future events and results. Words such as "anticipate", "believe", "expect", "project", "forecast", "estimate", "outlook", "likely", "intend", "should", "could", "may", "target", "plan" and other similar expressions typically denote forward-looking statements. Such forward-looking statements are based on views held only at the date of publication of the material and are not guarantees of future performance or events. These forward-looking statements are subject to inherent risks, uncertainties, and other factors outside the control of CGP. Accordingly, actual results may differ materially from those expressed or implied in such statements.
CGP does not undertake to update any forward-looking statements to reflect events or new information following the publication of forward-looking statements on the CGP website. CGP gives no representation or warranty (express or implied) as to the completeness or reliability of any forward-looking statements. Such forward-looking statements should not be considered as advice or a recommendation in relation to holding, purchasing, or selling a financial product and do not take into account your particular investment objectives, financial situation, or needs, and you should not place undue reliance on these forward-looking statements.
Hypotheticals, illustrations, and examples
Hypothetical situations, illustrations, and examples on the CGP website are provided for illustrative purposes only, and you should not rely on such hypothetical situations, illustrations, or examples when making investment decisions. Due to your individual circumstances, your returns may differ from those provided in any hypothetical situations, illustrations, and examples used.
Past performance
Past performance information is not a reliable indicator of future performance. Any reference to past performance on the CGP website is intended to be for general illustrative purposes only and should not be relied upon.