Description:

Frequent payments can be made outside of normal regular contractual terms.

Appears in:

• Acquisition Leveraged Finance
• Certificate of Deposit (Broker Acting on Behalf of Client)
• Certificate of Deposit (Direct Interaction with Clients)
• Deposit
• Deposit (Direct with Client)
• Deposit (via Broker)
• Dual Currency Deposit (DCD)
• FX Prime Brokerage (Continuous Linked Settlement)
• FX Prime Brokerage (Non-Continuous Linked Settlement)
• FX Spot
• International Services
• Overdraft Facility
• Receivable Purchase Facility
• Repurchased (Repo) Agreement and Reverse Repo (UK)

Addressed by:

• Book Entry or DVP: The product is not easily transferable, and payment flows are restricted due to book entry (recorded electronically) and Delivery vs. Payment (DVP), a settlement system that stipulates cash payment must be made prior to or simultaneously with the delivery of the security to a specified party.
• Collateral or Payment Terms or Timeframes Defined in Agreement or Contract: A product or service requires entering into a legally binding agreement or contract between specified parties, which sets out: (1) the minimum amount of funds to be maintained in an account as collateral; (2) payment terms; and (3) timeframes.
• Documentary Evidence to Identity Parties and Details of Transaction: Agreement supported by underlying documentation (i.e., bills of lading, invoices, shipping documents, warehouse receipts, and warrants) that contains details of all parties to the transaction, currency, value, all countries involved, and the purpose of the transaction.
• Documentary Evidence to Support Conditions of Agreement Met: Agreement supported by underlying documentation (bills of lading, invoices, shipping documents, warehouse receipts, and warrants) containing details of all parties involved in the transaction, currency, value, all countries involved, the purpose of the transaction, and allowing payment only when all conditions outlined in the terms of the instrument have been met.
• Investment Capped: Total investment curtailed at a low value due to internal policy.
• Legally Binding Standard Agreement or Contract: A product or service requires entering into a legally binding agreement or contract (which can be standard or tailored) with the relevant counterparty (i.e., ISDA, Repo Agreements).
• Payment Terms Defined in Agreement or Contract: A product or service requires entering into a legally binding agreement or contract between specified parties that outlines the drawdown and repayment terms.