Welcome to Commodity Education and Training

We, at The Joker Brokers, have a combined experience of over 50 years in the grey market, off-ledger business. We thought that it is important to be educational, informative, and helpful to those that really would like to know about this business. If you are serious about this business it would be very important to be educational and informative.

We are going to discuss serious matters, for people seriously interested in international trade and higher finance.

As a member of our community you will receive periodic emails specific to those interests explored at our blog or The Joker Brokers, and this will include real trade procedures and documentation, compliance issues, fraud, scams, and everything relating to international business/finance from the point of view of those that have closed.

We have associates that are International Lawyers, corporate traders, brokers, export/import experts, intermediaries, even trained Bankers. All of these people find this list, the services, and products offered at The Joker Brokers to be very useful. If you want to learn more about international trading, commodities, import and export, and the whole realm of this business you will benefit from our membership. In fact, we are so sure that if you do not benefit from our membership then we will be more than happy to have you discuss with one of our associates (closers) what it really takes to make a close.


Friday, December 31, 2010

Medium Term Notes

Medium Term Notes

Medium term notes were created to fulfill a need. There were long term and short term bonds. The industry within the United States change based on the Auto industry with respect to medium term notes. However, medium term notes were crucial to corporations and banks to issue with their flexibility of the note.

General Motors, the auto company, created the MTN market in the early 1970s as an extension of the commercial paper market, in lieu of the bank European MTN’s or European Medium Term Notes or EMTN’s. To improve their asset-liability management, the auto finance companies needed to issue debt with a maturity that matched that of their auto loans, 5 years, to dealers and consumers. However, underwriting costs made bond offerings with short maturities not worth the time, and maturities on commercial paper cannot exceed 270 days, for MTN’s in the US Market. Therefore, the auto finance companies began to sell MTNs directly to investors, and what began as the investing boom of MTN’s.

In the early seventies, the growth of the market was hindered by illiquidity in the secondary market and by securities regulations requiring approval by SEC of any changes to a registered public offering. With the increased costs of issuance, which hindered borrowers because they HAD to obtain approval by the SEC each and every time they posted their offerings on the screen. To avoid this regulatory hurdle, some corporations sold MTNs in the private placement, secondary, market. This is the market that brokers are trying to “get paid” or do a deal. However, over 99 percent of the deals are bogus!


What is a Medium Term Note?

A medium term note, (MTN) is a debt instrument or note that usually matures in 5–10 years, but the term may be less than one year or as long as 30 years. Medium term notes can be issued with a fixed or floating coupon, with the fixed coupon being in more demand. A floating rate medium term notes can be as simple as paying the holder a coupon linked to Eurobir, Euroclear, with certain basis points. Some of the medium term notes can be “structured” notes linked to treasuries or other indices. When in demand in Europe, they are called “EMTN” or Euro Medium Term Notes and commonly called MTN’s, Medium Term Notes, in the United States. Many of the banks in Europe will refer to them as “Bank Debentures.”

Also, MTNs can be issued with a fixed maturity date, which makes them “non-callable”, or can be issued with triggers where the notes can be redeemed early based on certain parameters. MTNs are most commonly issued as senior, unsecured debt of investment grade credit rated entities which have fixed rates.
For more information please visit: The Joker Brokers

Tuesday, December 21, 2010

The Performance Bond Trap

An intermediary Seller should never give a performance bond on small deals.  For example, lets say the shipment of goods is for 50, 000 dollars and there is a PB, or performance bond of 2 percent.  We are going to show you why this is a trap.
 
A performance bond is appropriate for the supplier, in some cases, because a bond physically attaches to the supply of goods, but you as an intermediary sells the title.  A performance bond is a surety against the fail of performance in a transaction.
 
Performance Bonds are not common today.  The Performance Guarantee is more common in today's world of bulk commodities, but what is interesting they are not used for small deals of say, 50 thousand or even 100 thousand dollars.
 
Where a performance bond is called for, the more appropriate instrument for you, as the intermediary, is the Performance Guarantee.
 
How does the PB, performance guarantee stand up to the Stand by Letter of Credit.  The Standby was invented for the purpose of the Performance Guarantee and the PB should only be used where the size of the deal dictates the necessity to use it.  For example, a 2 percent performance bond on a 100,000 dollar transaction is just plain stupid.  On a 2, 3, or 5 million dollar deal this may make more sense.  However, you still have to protect yourself.
 
In the world of commodities and the endless deals which go on never even require a PB or PG.  There are large bulk commodity deals which may require them often, but in most cases they will end up being the optional "non-deal breakers" where a buyer may want, but does not need.
 
You as the intermediary, trader, can negotiate around the PB or  PG, and if necessary give a performance guarantee only under the MOST STRICT circumstances.  You and the intermediary/trader has to realize the correct protocol of dealing with performance guarantees. 
 
If you have a buyer requesting such specific terms, there is an excellent chance they might be "trapping" you, and not only in a case where they have the advantage, but where fraud comes into play.  Please be advised that the terms are not proof of fraud, there are the signs of a skeptical buyer which can easily take your money.  We will explain more below.
 
If a seller makes up the terms described above in the first place the he/she shouldn't be trading without more information where they are deliberately making a trap?  What we stated above is a trap.  He is why.
 
A buyer who is trustworthy, but may not be, and the buyer's creditworthiness and credit rating is meaningless in this industry.  You must get through you head, that you have no idea of the buyer's disposition in the deal of great past performance.  This is not indicative of future results.  What that means are buyers with great reputation have done some incredulous things.
 
A performance bond is absolutely nothing to trigger a buyer where a buyer needs no proof of the claims requiring the bond payment to trigger the transaction.  Most PB's are written to be payable upon first written demand.  This is crazy, but the buyer can take a piece of paper and hand it to his banker, and get paid on the PB even though you are compliant through out the transaction.  What the buyer did is write the fact you were not compliant to his/her banker.
 
This is where you get really screwed.  If you put up to the buyer a 50 thousand dollar performance bond, 45 days before your buyer even gets around to putting up the letter of credit, (where the buyer promises to Telex a portion of the funds equal to the transaction), but ONLY after you put up the performance bond you are now in a trap.  Why?  The buyer decides not to Telex the funds?  Here is the trap.  You as the intermediary/trader believes they cannot draw on the bond?  This is not true.  The buyer will take on the bond and you are in the trap.
 
You will not be able to do anything about it.  You can opt to not believe anything we are saying, but believe us, many newby traders have be defrauded this way.  Every Broker or person trading believe Performance Bonds are secure.  They are not!
 
All your buyer has to do is demand the performance bond under the pretense of "breach of contract."  Once that happens the buyer can walk with the performance bond of 50,000 dollars and you will never hear from him again.  You may asking yourself, how can this happen?  So easily, especially in today's world of commodities?  The answer, you do not have to "actually" be in breach of contract for a bank to allow the buyer to collect on the performance bond.
 
This person in this deal is a real example, just got scammed for 50,000 dollars.  That is a real expensive way to learn about this business and the world of bulk commodities.

For more information please visit http://www.thejokerbrokers.com

Monday, December 20, 2010

High Verses Low Risk Trading

All trading is not created equal.  There is trading where the client is at more inherent risk than other types of trading.  As we, at The Joker Brokers have insisted to learn everything you can about this, and any type of business, your chance of success increases dramatically. 

When I was first in this business I didn't even know what a medium term note was let alone knowing if I had a real program or not.  Then comes other instruments to learn about, like Bank Guarantees, Standby Letters of Credit, Currency trading, all the Swift Messages (MT-760, MT-799), and the list can go on and on.  With the advent of the internet anyone can learn about any parts of the business for free.  There is one HUGE problem?  And the problem is most of the information on the internet or postings on message boards is just plain WRONG!  Some of you may be reading this with astute knowledge of what I have mentioned above, but did you know there is High Risk and Low Risk trading in the arena of private programs?  I know this because I was involved in High Risk Trading myself being ignorant of other types of trading.

What is the difference?  The difference is very simple.  All of the processes of trading are very simple.  High risk trading works with debt creation and the low risk trading does not.  Debt creation is creating a credit line for the client and therefore putting the client into debt.  If I have 500 million dollars in my bank and the trader creates a 500 million dollar credit line for me I have 500 million dollars of cash assets and 500 million dollars of debt.  If 500 million dollars is my whole net worth the trader just made my net worth ZERO!  As many of the message boards will say the debt is the responsibility of the trader; it is not.  The debt now is the responsibility of the Client and ONCE the debt is created the client is stuck in the program until the debt has diminished to Zero.  If you have professional traders that know what they are doing the client will eventually overcome the debt, however, this is high risk, stressful for the client, and sometimes the trading does not go as planned.  Everything has to be orchestrated from beginning to end with the buying and selling of Medium Term Notes.

Low risk trading is based on the fractional reserve unique banking element and at no time does the client take on any debt.  The client's funds are compounded with continual growth of the cash.  As mention above, they are numerous ways to created a trading program, either with manage buy/sells, trading of paper, etc, but all of them will put the client into debt.  Any exclusive bank program within the unique banking element is not creating debt for the client, is not putting the client at a high inherent risk, and will only create wealth for the client.

Wednesday, December 8, 2010

Treasury Strip Program?

Through network membership at The Joker Brokers, we have been asked about the treasury strip program.  This is nothing more than people trying to present a fake program and if you look at the facts closely you will see why this is a fake program.

Treasury strips are regulated instruments by the government.  You can go to the Wall Street Journal and look at the market price of Treasury Strips or commonly called T-strips.  They are offered at a very low discount because they have been stripped of their principal, hence the name T-"strip."  This is the end of the year 2010 and the 2010 issue will mature in 2040 or, in short, they are a long term bond, a safe investment and they do have tax advantages.  If you buy a T-strip you will buy them at a super discount and they will mature as times goes by.  What you are doing is taking your money out of circulation by buying the bond and giving the government a loan until you redeem it at face value or sell it at market price.  They have auctions to buy the securities a few times each year.

Where did the "so-called" T-strip program come from?  This is another program made up by brokers to make themselves sound important.  For illustrative purposes, lets say someone bought a T-strip at 30.  How are they going to trade them up in value, or buy them low to resell them high to make a good return?  They can't.  T-strips will only go up in price with time.  It is literally impossible to buy a T-strip at 30, a real one, and turn around and resell it at 40.

Then we are posed with this!  The "so-called" traders are buying them at a discount below 20.  The only time you can buy a T-strip below 20 is when the market bears the price.  If the market says, in the Wall Street Journal, (WSJ), they are trading at 29, then you are not going to buy them at 20.  This is another market dreamed up by brokers which are in non-banking reality.

In conclusion, you will never hear of anyone making any money on these fictitious programs or discounted T-strips below market price.  What anyone is really attempting to do is steal your contacts or even worse, commit fraud and take money.  We recommend to "not" entertain any "so-called" program where they promote generating high returns with Treasury Strips.

Thursday, December 2, 2010

Bloomberg for the experts

If by chance you have not closed business over Bloomberg with a sell/buy ticket  then you may be asking yourself, "What is the truth with Bloomberg?"  Most of the people you run into in this business will not understand how Bloomberg works and will have joker brokers running in all directions.  Bloomberg is the primary transacting conduit to sell and buy instruments in the United States of America.  Contrary to believe you do not have to be licensed to get paid on an instrument deal.  That is one of our secrets which we do not give out to just anyone. 
 
The procedures are simple and not complex.  There will be security traders involved in the transaction.  They must have authority to authorize a sell or buy ticket on Bloomberg.  One point we will like to point out is if there is not a licensed person that will issue a sell or buy ticket with having either (1) the instrument or (2) the funds to pay for it; nothing will happen.  We brought this point up because there are so many brokers believing in this process of transacting with a buyer which has to show proof of financial capability.  This is NOT the case.  Bloomberg transactions happen in a smaller scale of tranches then they do in Europe.  We are not saying either is better than the other.  What we are saying is there is the American way of doing business and there is the European way of doing business.  This is one of the reasons why it is imperative to inform yourself and know the difference between the procedures.  A European buyer will not be able to buy a security from Bloomberg unless they have a satellite office in Europe.  You have to take this into consideration.  If the European buyer does not have the satellite office then you will have to go with European Procedures with the hopes the instrument is lodged in an European Institution.
 
For more information please visit:  http://www.thejokerbrokers.com

MT-103 The real story‏

What is an unconditional MT-103 (no field)?  It is payment made to another bank via Swift. Nothing else.  It is similar to telling your bank to wire money to another bank for payment.  There is no rocket science to it.  And the field 23?  There is no such thing!   Not anymore!  There is an actual field 23 that would state the bank would phone the beneficiary before the release of funds.  Why would you though?  You wouldn’t.  If you are the seller and you deliver your product and/or commodity than you want a swift transfer of funds.  Nothing more and nothing less.

The next time that you see a document with MT-103/23 then you already know that the seller (broker actually) doesn’t have any idea what is going on.  Although those that are in a swift terminal room would use the messages it is very important for you to know the difference when working in the world of commodities.

Now you know the difference.  The MT-103/23 would never be used.  Only a MT-103 and all anyone would be saying is that the seller of the product would like to have their money wired to a bank account via Swift.  Stay away from the MT-103/23 it is a red flag that the person, entity, or group you are dealing with does NOT know what they are doing!  If you do not believe us, feel free to do your own due diligence with “bankers” that understand and you will soon realize the MT-103/23 is a thing of the past.

For more information please visit:  http://www.thejokerbrokers.com