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PRIVATE PLACEMENT PROGRAMS
This Type Of Programs Are A Particular Type Of Investment That Allows Access To The Marketplace For Trading Bank Assets And Instruments, Most Commonly Medium Term Notes (MTN’s), Although Other Bank Instruments May Also Be Used. Medium-Term Notes Are Essentially Debt Notes That Allow Banks And Other Institutions To Lend To Their Customers. These Debt Notes Initiate From Governing Bodies And Are Released To A Small Number Of Major Banks At A Discounted Rate. From Here The MTN’s Can Be Openly Traded Between Banks, Pension Funds, And Other Financial Institutions. Because They Are Released At A Discounted Price, There Is An Opportunity To Buy MTN’s And Sell Them For A Profit. The Profit May Only Be Small In % Terms, But As Several Trades Can Potentially Be Made In A Week, Or Even Within A Day, The Returns Can Quickly Accumulate. Because The Trade Of MTN’s Is Essentially Using Arbitrage (Buying For A Low Cost And Selling For A Profit) And Due To The Nature Of Transactions Already Having A Buyer In Place, The Trades Are Very Safe. What’s More, The Funds Aren’t Used To Actually Buy And Sell The Assets, But Purely For The Purposes Of Collateral For Raising A Line Of Credit, Which Is Used To Help Facilitate An Arbitrage Trade Of These Instruments.