Collateral Services
COLLATERAL SERVICES
As your paymaster service provider, we stand by your side during the full corporate action life cycle on any trades you pass through us. You can rely on our expertise and track record:
Collateral Paymaster Management Services we offer:
- Bank statements
- Bank Comfort Letters send via Swift or via secured email
- Pre Advices via Swift 199/799
- Blocked funds via Swift 799/760
- Bank Guarantees (“BG’s”)
- Stand By Letter of Credits (“ SBLC”)
Want to know more about our services?
It’s common for an escrow deposit to be required in situations where Proof of Funds products, such as SBLCs (Standby Letters of Credit), BGs (Bank Guarantees), and DLCs (Documentary Letters of Credit), are involved, especially when dealing with professional clients. The purpose of requiring an escrow deposit is to add an extra layer of security and assurance in the transaction process.
In situations where you have delivered the requested Proof of Funds products, such as SBLCs, BGs, or DLCs, and the receiving bank or its beneficiary party at the receiving bank fails to perform as agreed, the use of an escrow deposit serves as a protective mechanism.
Westernclear, functioning as an International Trade Network Access (ITNA), offers a wide range of value-added corporate action services. These services encompass activities such as cross-referencing information from multiple sources, disseminating preliminary information, and providing simplified and comprehensive explanations for intricate events. These value-added services aim to enhance transparency and assist clients in navigating complex corporate actions and trade-related activities with greater clarity and confidence.
SBLC/BG FACTSHEET:
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It's true that most banks are willing to issue Standby Letters of Credit (SBLCs) or Bank Guarantees (BGs) to their customers under certain conditions. This is typically done when customers have sufficient liquidity (cash) in their bank accounts or an available balance in their credit lines (if they are already using a credit line from the bank). This direct issuance between a client and their bank is considered a "Primary Market" transaction.
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SBLCs (Standby Letters of Credit) and BGs (Bank Guarantees) can indeed be categorized based on whether they are asset/cash-backed and their status as "Fresh Cut" or "Seasoned.
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The issuance of SBLCs (Standby Letters of Credit) and BGs (Bank Guarantees) typically involves a specific "term" or validity period. Overall, the term and extension of SBLCs and BGs are flexible and subject to negotiation between the parties involved. Extensions beyond the initial term are possible, but they depend on the provider's discretion and the terms agreed upon by both the beneficiary and the provider.
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Providers of SBLC/BG generally are a part of the “Secondary Market” transactions. SBLC/BG Providers are high net worth corporations or individuals who hold bank accounts at the issuing bank that contain significant cash sums (assets). SBLC/BG Provider would often be a collateral management firm, a hedge fund, or private equity company. SBLC/BG Provider instructs its issuing bank to secure and encumber cash in his own account and authorizes the bank to "cut" (an industry terms meaning to create a financial instrument such as SBLC/BG ). Effectively, the SBLC/BG is “leased” or “sold” to the Beneficiary as a form of investment since the Provider receives a return on his commitment. SBLC/BG is issued under ICC/URDG 758 (UPC 600) protocol and is readily accepted by almost all International as well as Private Banks.
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The issuance of an SBLC/BG typically involves a process where the instrument is transmitted from the issuing bank of the provider to the beneficiary's bank account at the receiving bank through inter-bank channels using the SWIFT platform. This process ensures secure and standardized communication between the involved parties and facilitates the delivery and confirmation of the SBLC/BG for various financial and trade transactions.
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The Collateral Transfer Agreement (CTA) is indeed a crucial document that governs the issuance of the SBLC/BG and outlines the specific terms and conditions of the transaction. Overall, the Collateral Transfer Agreement plays a pivotal role in structuring and documenting SBLC/BG transactions, ensuring that they are conducted in accordance with the agreed-upon terms and conditions and providing a legal framework for the use of the financial instrument for various financial and trade purposes.
