Wealth Enhancement Programs
Wealth Enhancement Programs (WEPs) also known under other names, such as Private Placement Programs (PPPs) or Trade Platforms (TPs), exist only to “create” trade proceeds in order to stimulate economic markets worldwide.
WEPs involve trading with discounted bank-issued debt instruments. Trade proceeds are created due to the fact that such instruments are deferred payment obligations and or debts. Money is created from establishing the Debt.
Debt i.e. Medium Terms Notes (MTNs) Bank Guarantees (BGs) and SBLCs.
Programs are based on arbitrage transactions with pre-defined exit prices.
Thus, the traders never need to be in control of the client’s funds. However, no program can start unless there is a sufficient quantity of money backing each transaction. It is at this point the clients are needed because the involved banks - commitment holders are not allowed to trade with their own money unless they have reserved enough funds on the market, comprising unused money that belongs to clients, clients whose money is never at risk. Never means Never.
Banks profit from commissions involved in each transaction.
The client's principal is not used for transactions as it is only ("reserved") as a compensating balance ("mirrored") against each credit line. This credit line is then used to back up arbitrage transactions. Since trading is done as arbitrage, money (“credit line”) does not need to be used, but the money must still be set aside (held by the client in client's account) not moved to back up each and every transaction.
The trading banks can then loan (lend) currency (money) to the traders.
This money is loaned at a ratio of 1:10 (10X), but during certain conditions this ratio can be as high as 20:1 (20X). If the trader can “reserve” $100M, then the bank can loan $1B/$2B. In all actuality, the bank is giving the trader a line of credit based on how much money the trader/commitment holder has, since the banks cannot loan money without "mirrored collateral" even though client's money is never touched.
As an example, let’s assume a client has $100,000,000. to participate in a wealth enhancement program. The $100M is leveraged to $1,000,000,000. so the trader has access to the market and can buy and sell Medium Term Notes etcetera. As a purely indicative return, if we presume that MTNs can be traded for a 1% profit, this will result in a return of $10 Million per traded MTN, which is in fact 10% return for client (i.e. $10 Million return on $100 Million invested is a 10% return) per trade.
Even though returns are split with trading platform (20%+-) and client (80%+-), the returns to client are incredibly high. It is important to note that all these figures are based on "trades historically" so clients should not take returns for granted.
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