Swifts

NEW ANNOUNCEMENTS                                                                  translate_logo_sm

To translate a page just copy what is in the page click on Google Translate and choose translate from English and then your language. When you click on Google Translate it will open up another web page for you . 

History of Swifts

Founded in Brussels in 1973, the Society for the Worldwide Interbank Financial Telecommunication (SWIFT) is a co-operative organization dedicated to the promotion and development of standardized global interactivity for financial transactions. SWIFT’s original mandate was to establish a global communications link for data processing and a common language for international financial transactions. The Society operates a messaging service for financial messages, such as letters of credit, payments, and securities transactions, between member banks worldwide. SWIFT’s essential function is to deliver these messages quickly and securely — both of which are prime considerations for financial matters. Member organizations create formatted messages that are then forwarded to SWIFT for delivery to the recipient member organization. SWIFT operates out of its Brussels headquarters and processes data at centers in Belgium and the United States.

SWIFT currently provides messaging and transaction processing services for over 7,000 financial organizations located in 194 countries worldwide.

MT (Message Types) Swift Banking Definitions

MT199

Format of the MT199transfer including all the data, like the MT202, which refers to a cover payment and you can only see numbers, codes, and information regarding the banks. A Mt199 Swift message is what I call a “chat” message. Basically you use this format when a transfer order has been sent and you want to “talk” to the beneficiary bank in order to sort out something, or to find out if funds have been applied, or whatever. But it can be used for any other purpose.

MT799

(Swift MT799) Is a Simple Text Message Sent from buyer’s bank to seller’s bank. This is used for a bank to bank POF (Proof of Funds) only. The Swift MT799 is not a form of payment & is not a bank undertaking a promise to pay. It is simply a bank to bank confirmation of the funds on deposit, nothing more.

The MT799 is usually issued before a contract is signed and before a letter of credit or bank guarantee is issued. After the MT799 has been received by the seller’s bank, it is then normally the responsibility of the seller’s bank to send a POP (proof of product) to the buyer’s bank, at which point the trade continues towards commencement.The actual payment method commonly used is a documentary letter of credit, which the seller presents to the issuing or confirming bank along with shipping documents. Once the bank confirms the documents, the seller is then paid. An alternative method is to use a bank guarantee in place of a letter of credit. It is normally at the seller’s discretion which method of payment is used.

The function of the MT799 is simply to assure the seller that the buyer does have the necessary funds to complete the trade.

MT760

MT Name= Guarantee/Standby LC Purpose= Issues or requests the issue of a guarantee or Standby LC

A Swift MT760 (MT means Message Type) is a bank-responsible guarantee (LC, SBLC, BG) as well as Blocked Fund Letter issue communicated bank to bank by the sender bank. MT 760 sent upon instructions of its client (applicant) in favor of a particular transactions or country party (beneficiary). I the case of Blocked Fund Your issuing bank will submit a bank to bank message stating that they have blocked funds for a particular time frame specifically for the beneficiary of a recieving bank. Those funds are now an asset of the Beneficiary bank account.

The MT 760 is a swift message used to block funds in favor of someone other than the owner, collateralizing the asset via this message, while allowing for loans and liens against it.  For example, most private placements require the investor to send a MT 760 to the trader’s account, allowing the trader to use this swift as a collateral guarantee for their bank. Again, despite what many brokers may claim, this is NOT everything you need to know about the MT 760. Now that you do know the definitions and applications, let’s cover the key points no one ever brings up about the MT 760: the FEES, and the RISKS…First and foremost, the fees for blocking a large amount of funds via MT 760 can be more than you would expect. In most cases, your bank will charge 1-2% of the value being blocked for this service.  For example, on a 100M bank instrument this can be 1-2M that the owner must come out of their pocket with, unless they have a special relationship with their bank. If you complete the MT 760 and pay the fees, you should observe everything very closely from that point on.  Once the MT 760 has hit the account of the trader, the line of credit should become available within 72 hours.  At that time, the trader should be able to make their first bank instrument purchase, and give you a DEFINITE TIMELINE for your first profit disbursement.  You may say, “Why do I need to watch this process so closely?”  Well, here is the part that most brokers don’t tell their clients…When blocked in someone’s favor, the MT 760 collateralizes assets in the form of a swift guarantee, and by doing so, allows the beneficiary to draw credit against it.  This means, if the loan to the “trader” was defaulted on, the bank would seize the collateral and you would be out of your money! Though this scenario is possible, I would consider it rare for two reasons…  In today’s world, no bank will loan Millions of dollars to someone they haven’t vetted, no matter what collateral is on hand.  Second, the MT 760 is quite rare, and this usually draws attention to the beneficiary of the swift.The main risks of MT760 is Identity theft.

But, be careful, there is always a SPECIAL VERBIAGE necessary if investor don’t want to loose his funds ! It is a bank guarantee with full responsibility from the bank. It means if the beneficiary of the swift call for the funds, the bank must pay immediatly. It is for this reason a very safe verbiage must be indicated in the swift.

The MT 799 is a swift message used between banks to communicate in written form, and is usually referred to as “pre-advice”. For example, Bank “A” may send a MT 799 to Bank “B” stating: “We confirm “XXX” amount on deposit and are ready to block this amount via MT 760 in favor of account “XXX” at your bank. Please confirm readiness and receipt.” Typically, the MT 799 will be needed directly before the MT 760 is issued, and there may be small fees. Despite what most brokers may claim, the MT 799 is NOT used as collateral, and can NOT be used to enter a private placement program. Now that we know about the MT 799, let’s take a look at it’s cousin, the Swift MT 760.

The MT 760 is a swift message used to block funds in favor of someone other than the owner, collateralizing the asset via this message, while allowing for loans and liens against it. For example, most private placements require the investor to send a MT 760 to the trader’s account, allowing the trader to use this swift as a collateral guarantee for their bank. Again, despite what many brokers may claim, this is NOT everything you need to know about the MT 760.

First and foremost, the fees for blocking a large amount of funds via MT 760 can be more than you would expect. In most cases, your bank will charge 1-2% of the value being blocked for this service. For example, on a 100M bank instrument this can be 1-2M that the owner must come out of their pocket with, unless they have a special relationship with their bank.

If you complete the MT 760 and pay the fees, you should observe everything very closely from that point on, when instrument will be used for trading. Once the MT 760 has hit the account of the trader, the line of credit should become available within 72 hours. At that time, the trader should be able to make their first bank instrument purchase, and give you a DEFINITE TIMELINE for your first profit disbursement.

When blocked in someone’s favor, the MT 760 collateralizes assets in the form of a swift guarantee, and by doing so, allows the beneficiary to draw credit against it. This means, if the loan to the “trader” was defaulted on, the bank would seize the collatera land you would be out of your money! Though this scenario is possible, I would consider it rare for two reasons… In today’s world, no bank will loan Millions of dollars to someone they haven’t vetted, no matter what collateral is on hand. Second, the MT 760 is quite rare, and this usually draws attention to the beneficiary of the swift.

WHEN AN INSTRUEMNT IS USED AT PPP´s In summary, the MT 760 can be safe. As always, the key is having a real trader and most importantly, getting your payments as scheduled. If the trader makes a statement about yields and a time line, they must ALWAYS keep in line with their promises.

What Happens When My Bank Issues An MT-760?

When an MT-760 is issued, the issuing bank puts a hold on the client Â’s funds, blocking the client from using them. The funds are then at the disposal of the person the MT-760 was issued in favor of. For this reason it is not wise to issue an MT-760 before receiving product, as this can mean a large financial loss for absolutely no gain. In some cases, unscrupulous traders can even use the MT-760 to open a line of credit, which they then default on, leaving the issuer of the MT760 out of pocket.

How Much Does A MT760 Cost?

The cost of an MT760 varies greatly from bank to bank. Be aware however, that due to the amount of risk involved for a bank in guaranteeing payment, a MT760 is normally fairly expensive, with the usual bank fee for issuing a MT760 being between 0.5% and 1.5% of the total value of the MT760.

Is A MT760 Negotiable?

No. Once a MT760 has been issued, it is not negotiable. For this reason, many sugar traders prefer a Letter of Credit, which is negotiable and can be amended in response to unforeseen changes in circumstances, such as a delayed shipping schedule, lower production than anticipated, and other such events.

How Do I Get A MT760?

A MT760 can be obtained from your bank. Some banks are not willing to issue MT760’s however, so if an MT760 is absolutely essential, you may have to be prepared to move your funds to another banking institution. It is wise to inquire at your bank before committing to any sale that requires a MT760 as part of its terms and conditions.

Are MT760’s Safe?

As an issuer of an MT 760, you should be aware that you are exposing yourself to a great deal of risk. Unlike other payment methods, such as a Letter of Credit, which requires the seller to fulfill certain conditions and provide proof that sugar has shipped before being paid, a MT760 provides the seller with free access to your funds with no restrictions whatsoever. For this reason, it is not recommended that you issue an MT-760 to an unfamiliar trading partner.

MT766

MT766 IS A SWIFT COMMUNICATION BETWEEN TWO BANKS FOR STANDBY LETTER OF CREDIT ADVICE

bLCI7

 

Disclaimers

disclaimer

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s