When trading internationally, there are many acronyms which feature in contracts, reports, orders, and descriptions. This document outlines commonly used terms and acronyms in international training.
AMEX – Amex is one of the three largest stock exchanges in the United States. Founded in 1842, it trades mostly mid size and small companies.
ASWP – An acronym which stands for ‘Any Safe World Port’ Generally sugar sellers offer delivery to any safe world port of the buyer’s choice, so this term comes up quite often in sugar trading.
BG – Stands for “Bank Guarantee“, which acts as insurance for the seller on a purchase. When a Bank Guarantee is in place, the bank is legally required to pay the seller in the event of the buyer defaulting on the sale.
BCL – “Bank Comfort Letter” also known as “Bank Capability Letter“. Similarly to the Bank Guarantee, a Bank Comfort Letter is a letter written to the seller from the buyers bank. It states that the buyer has sufficient liquid funds to cover the cost of the sale. A bank comfort letter is not however, an agreement to cover the seller if the buyer defaults on the purchase.
CAD- “Cash Against Documents“. This is a type of selling procedure where title documents are transferred upon receipt of payment.
CIA – “Cash In Advance“. As the name suggests, this is a type of sale where the full amount of the purchase price must be paid upfront.
CIF – A popular term in sugar trading, CIF stands for Cost, Insurance, and Freight. It means that the cost of shipping and insuring the sugar is covered by the seller.
Commodities Exchange – A body or association which sets out rules and guidelines to govern trading in a particular jurisdiction.
Commodity Futures Contract – This is a contract stipulating to an agreement to trade a set amount of sugar (or other commodity) for a certain price on a certain date. These types of contracts are useful for buyers who wish to secure sugar supply into the future but do not wish to risk price fluctuations affecting their bottom line, and sellers who wish to set and maintain a price for their sugar.
CPR – Cédula de Produto Rural, is a Portuguese phrase, which in translation means ‘Agricultural Product Certificate.’ The government of Brazil issues such certificates which offer discounts on large amounts of sugar (and other commodities) into the future. For the buyer, this means securing a government guaranteed sugar source at a low rate for a specified period of time. For the Brazilian Government it is a quick way to raise funds.
CPR – F – These are Agricultural Product Certificates (Cédulas de Produto Rural) which deal in sugar that has yet to be produced.
CPR – X – These are Agricultural Product Certificates (Cédulas de Produto Rural) which deal with sugar that is already in existence.
CWO – “Cash With Order” This term refers to a type of trading arrangement where the buyer makes payment at the time of placing the order, and both parties are then obliged to complete the transaction.
DC – Draft Contract.
FCO – “Full Corporate Offer“. This is a piece of documentation which specifies the nature of the product, and outlines all conditions associated with purchasing said product.
FOB – “Free On Board“. This is a term which declares that the seller must deliver the sugar to the buyer at a location of the buyer’s choosing on board a ship of the buyer’s choosing. In such instances, the seller’s obligations and responsibilities are said to have been fulfilled when the goods pass over the rail of the ship.
ICPO – “Irrevocable Corporate Purchase Order” Used by corporate entities, this document is an order to purchase a certain amount of sugar (or other commodity) of a certain type. This document outlines the terms and conditions which have been agreed upon by the seller and the buyer, and is sent to the seller by the buyer when the buyer wishes to place its order.
ICPO With Banking Coordinates – An ICPO where the buyer also authorizes the seller to do what is called a “soft probe” on the buyer’s accounts which is used to determine that the buyer has sufficient funds to make payment on the sale.
Soft Probe - is a confirmation method used by banks to verify funding for a seller from a buyer, conducted by the seller’s bank to the buyer’s. The Sellers Bank asks the Buyers Bank if the Buyer has enough funds to pay for the purchase.
ICUMSA – “International Commission for Uniform Methods of Sugar Analysis”. This is the international organization which standardizes testing of sugar across the globe.
ILOC – “Irrevocable Letter Of Credit” This is a letter provided from the buyer’s bank to the seller which guarantees that payment for goods will be made on time and in full. This letter cannot be canceled, and upon shipping of the goods, the seller with be paid.
LC / LOC – “Letter of Credit” A very popular device for guaranteeing payment to sellers, a letter of credit is issued by the buyer’s bank and provided to the seller. It guarantees payment to the seller when the seller’s obligations are met according to the terms of trade. Because sugar trading is done on a global scale and parties are not always able to reliably verify the reputation and trustworthiness of their potential trading partners, letters of credit are often requested by sellers.
LOI “Letter of Intent” – A preliminary document sent from the buyer to the seller indicating that the buyer would seriously like to enter into negotiations with the seller. This is not a legally binding contract, but it is often the first step in opening negotiations between a buyer and a seller.
MFPA – “Master Fee Protection Agreement“. This is a document outlining the terms for payment of third party brokers. In many cases sugar is not traded directly from the seller to the buyer, but through middle men who receive a cut of the proceeds from the sale as a commission. The master fee protection agreement protects these agents and ensures that they are paid.
MOG – “Minimum Order Quantity” Fairly self explanatory, the minimum order quantity is simply the smallest amount that a buyer can purchase from a seller.
PB “Performance Bond“ – This is a bond which guarantees the buyer that the seller will meet its obligations and supply the agreed commodities in accordance with the terms and conditions agreed upon. Issued by an insurance company, it acts as protection for the buyer.
POF – “Proof of Funds“. There are many ways in which a buyer can prove that it has the funds to cover the transaction, the most common of these being soft probes and bank comfort letters.
POP - “Proof of Product” means different things to different people. Basically it is some kind of proof that the seller really is in possession of the goods which are being sold. An example of POP can be an allocation letter, ownership certificate, SGS report of the stock, past Bill of Landing. You have to specify which is needed by the buyer and which could be provided by the seller.
SBLC – “Stand By Letter of Credit” This is a document which is issued from one bank to another bank and which confirms that the company has sufficient collateral to cover potential fiscal responsibilities incurred in a sale.
LC at Sight – A letter of credit that is payable once it and certain documents are sighted.
Soft Commodities – This term generally refers to commodities which are grown. Sugar is therefore considered a soft commodity.
SWIFT – “Society for Worldwide Interbank Financial Telecommunication” A global service which facilitates inter bank communication and transactions all over the world.
RWA – “Ready Willing Ability“. Means Ready to sign Willing to pay and your bank confirms that you are Able to meet the payment conditions. The RWA is ssued by the buyer’s bank.
Nenhum comentário:
Postar um comentário