Q & A Lending Agreement

Why the Lending Agreement must be signed and stamped also by the Account Holder?
The Account Holder must knows all the terms and conditions of the Lending Agreement about the allowed use of the Bank Instrument. The Instrument is sent unconditionally by MT760, while terms and conditions are contained in the Lending Agreement. Moreover, the Account Holder signing the Lending Agreement allows the Lender to contact the Receiving Bank to carry out the Due Diligence.

What is the Lending Manager?
The Lending manager is a third party involved in the search, request and placing the Call Option. It is a special unit of the Lender only for technical purpose. It has its own trading department that will negotiate call options on behalf of the Lender.

Electronic Signature is accepted?
Yes, it is stated that all the parties accept electronic signature as

It is possible to stop transaction even if the Lending Agreement is signed?
Yes, it is important to do so before the Call Option is placed, otherwise it is not possible to recover the funds paid for Call Option purchasing.

It is possible to change the chosen instrument in the Lending Agreement?
Yes, but only before the Call Option. After Call Option is placed, it is not possible.


Q & A Call Option

Why is a Call Option needed?
A Call Option is required to be placed to secure the right for the lender to buy the security at a fixed price within 20 days. The Lender does not own the bank instrument at that stage. So placing a Call Option is needed in order to reserve the right to purchase the chosen bank instrument at certain date and at a certain price, giving in this way the certainty to the Borrower about the availability of the bank instrument.

It is possible extend the Call Option?
Yes, there is a fee to extend 30-days more the Call Option, as per Lending Agreement.

Which operations must be performed within the Call Option expiry date?
Within the Call Option expiry date following operations must be performed: The Borrower must prepare the conditional payment for the service fees and give time to the Lender to carry out the Due Diligence with a positive and satisfactory reply from the Receiving Bank.


Q & A Conditional Payments

Promissory Note is a Conditional Payment?
No. Promissory Note is not conditional due its nature. But the Lender allows the customers to issue Promissory Note with maturity at 180 days so if bank instrument is not received it is possible to delete it. But the Promissory Note will have to be endorsed by the receiving bank to be acceptable.

SWIFT MT700 must be confirmed?
Yes, a SWIFT MT700 must be confirmed.

ICPO or Promissory Note must be endorsed by the bank?
Yes, it must be an acceptable bank for the Lender. ICPO and Promissory Note must be endorsed with Bank's Stamp and signature of two bank officers to engage the bank to guarantee the payment in full bank responsibility.


Q & A Due Diligence

How the Due Diligence is carried out?
The Compliance Officer of the Lender will send a Due Diligence through certified email to the Designated Receiving Bank. The Designated Receiving Bank must reply to the queries contained in the Due Diligence one by one.

It is possible to negotiate the Verbiage of the Due Diligence?
Absolutely not. Due Diligence is carried out in full compliance to the international banking rules and it contains queries about the Lending Agreement that are known to the Borrower and Account Holder

What's happen if the Bank will not reply or will reply negatively to the Due Diligence?
If the designated Receiving Bank replies in negative way or do not reply to the Due Diligence email, Due Diligence will be considered negative and Transaction closed. If there is time before Call Option expiry date, the Lender can allow the Borrower to try to change the receiving bank.


Q & A Pre-Advice

Why Pre-Advice by certified email or by Swift have high fees?
Because the Lender, at this point of the Transaction, do not own the Bank Instrument, then he must purchase a performance bond to cover the Pre-Advice.

Which bank will issue the Pre-Advice?
Pre-Advice by SWIFT will be issued by an Advising Bank. It is not possible issue said Pre-Advice from the bank who will assign the instrument because the Lender does not own the instrument at this point of the Transaction.

Is the Verbiage of the Pre-Advice negotiable?
No it is not. It must be sent in compliance with international laws, because the Lender do not own the Instruments at the moment of issuing the Pre-Advice.


Q& A MT760 Assignment

Where can I see the Verbiage of MT760?
You can see the Verbiage for assignment of Bond/MTN, BG or SBLC in the section “Attachments”.
Can I submit a custom Verbiage?
Yes you can. The Lender's Compliance Office will revise it and will accept it, reject it or will accept with modifications.

Which is the Law under the MT760 is issued?
The instrument will be issued in accordance to the Law of the Country of the issuing bank.

There are conditions in the Verbiage?
No. The MT760 is sent without condition.

In which name is sent the MT 760?
Beneficiary of the MT 760 will be the Borrower or, in case, the Account Holder.


Q & A Application

What is the Application Process?
Step 1: The borrower submits his Application and the Client Information Sheet and requests an offer in the form of a personalized Global Master Security Lending and Borrowing Agreement (GMSLBA) to lease an instrument. Upon a most complete application an offer in the format of a personalized Global Master Security Lending and Borrowing Agreement (GMSLBA) will be issued and sent to the Applicant.
Step 2: The borrower presents the draft of the Global Master Security Lending and Borrowing Agreement to his bank and negotiates acceptance of the securities borrowing transaction and the payment method.
Step 3: Once the borrower has the agreement of his receiving bank, the client submits his Letter of Intent. (Suggested LOI verbiage will be a part of the personalized GMSLBA)
Sep 4: The final and fully completed original copy of the Global Master Security Lending and Borrowing Agreement (GMSLBA) will be issued and sent for signature, together with an invoice for the expenses due to cover the Call Option fees.

It is possible to request just a tranche of a bank instrument?
Yes, it is possible. Minimum tranche is Euro 15 M.

When can I have confirmation about availability of the requested Instrument?
When you apply for an Instrument, the Lender before issuing the Lending Agreement will check if requested tranche is still available in the Markets, then he will issue the Lending Agreement. Please note that full confirmation can given only after the Call Option has been placed and the Lender has been given the right to purchase the chosen Instrument within (20 days) the maturity date of the Call Option itself.

How is commission secured?
The FPA (Fee Protection Agreement) is a contract between the Broker and the Borrower to let the Broker to secure the payment of his commission. The Broker can request the Lender to collect the Broker Fee together with the Service Fee if the broker fees are not exceeding 2% in total. In such case it will be written in the Lending Agreement that the Service Fees are X%, formed by X% as Service Fee and X% Broker Fee.

If I want receive a BG/SBLC, why I should choose an MTN, Bond, an Europaper, or a Commercial Paper?
The selected highly rated Certificates of Debt (listed and rated Security) will be the underlying security which backs up the issuing of a BG or SBLC.

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