EUCMS Application Processing For Financial Cash Backed Collateral :
Clients applying for Collateral through EUCMS, must go through eligibility test. Upon successful eligibility test, Clients Pays Onboarding fees to EUCMS in order to directly on board them to Collateral Instrument issuing Bank. In this process clients have to conduct with EUCMS's International Banking Counsel for processing their request.
The Int' Banking counsel will execute the processing and follow up the collateral issuing Bank until accomplishment of the task.
Clients are advised to pay the issuance fees 1%, Bank Charges & Fees : 6.5 % for One Year (As because, it is availed as Leased facility) to EUCMS {The Banking Instruments are facilitate as a Guarantee against the Business Loan or Funding for the Client's requirements to meet up obligation & repayment security assurance.}, rest all Bank charges and fees are directly payable to the issuing Bank.
As an issuer EUCMS will hold the issuance fees on our escrow account until issuing Bank completes the KYC documents Verification and onboard the clients for Collateral facilitation.
Once the Collateral issuing Bank completes the KYC documents Verification and onboarding process. Gives notification of Debit note. After that, we release the payment to the Collateral issuing Bank. Moreover, as an issuer of the Collateral EUCMS will instruct the confirming Bank to approve the clearance for Encashment of Collateral ( Banking Instrument ).
We would like to inform our clients for their acknowledgement that, due to Cross Border / International Banking Transaction Rules & Regulation EUCMS follows strict guidelines for AML, KYC documents fraudulent and ACA protocol instructed & Governed by International Chamber of Commerce. As we follow the rules & regulations of International Organization of Securities Commissions.
Therefore, it is mandatory for all respective clients to comply for the same.
Process of Collateral
1. Acceptable types of Collateral
1.1. Define acceptable collateral types (cash, securities, real estate, etc.).
1.2. Establish criteria for asset quality and liquidity.
2. Valuation Procedures
2.1. Set standards for initial and periodic valuations.
2.2. Determine approved valuation methods (market price, independent appraisal, etc.).
3. Haircuts and Margins
3.1. Specify haircut percentages based on asset type and risk.
3.2. Establish margin requirements and monitoring procedures.
4. Settlement and Custody Procedure
4.1. Collateral Submission
4.1.1. Notification: The collateral provider must notify the collateral receiver of the intended submission of collateral at least one business day in advance.
4.1.2. Documentation: Submit the required documentation, including asset identification details and proof of ownership.
4.2. Asset Verification
4.2.1. Eligibility Check: Verify that the assets meet the eligibility criteria set by the EUCMS.
4.2.2. Valuation Confirmation: Confirm the market value of the assets through an approved valuation method.
4.3. Transfer of Assets
4.3.1. Instruction: Issue instructions to the custodian to transfer the collateral assets to the specified account.
4.3.2. Execution: The custodian executes the transfer of assets to the designated account of the collateral receiver.
4.4. Confirmation and Record Keeping
4.4.1. Acknowledgment: The collateral receiver acknowledges receipt of the assets and confirms that the collateral meets all requirements.
4.4.2. Record Entry: Both parties record the transaction details in their respective collateral management systems, including asset type, quantity, value, and date of transfer.
4.5. Ongoing Custody
4.5.1. Custodian Duties: The custodian is responsible for the safekeeping, administration, and, if necessary, the reinvestment of the collateral assets.
4.5.2. Periodic Valuation: Conduct periodic revaluation of the collateral assets to ensure their value meets the margin requirements.
4.6. Substitution of Collateral
4.6.1. Request: The collateral provider can request substitution of collateral by notifying the collateral receiver.
4.6.2. Approval: The collateral receiver reviews and approves the substitution, ensuring the new collateral meets all eligibility and valuation criteria.
4.6.3. Transfer: Follow the same steps for asset verification, transfer, and confirmation as described above for the substitution process.
4.7. Release of Collateral
4.7.1. Settlement Completion: Upon fulfillment of the underlying obligation, the collateral receiver initiates the release of collateral.
4.7.2. Transfer Back: The custodian transfers the assets back to the collateral provider's account.
4.7.3. Final Confirmation: Both parties confirm and record the completion of the collateral release process.
5. Supporting Business Loans
5.1. Application Process
5.1.1. Loan Application: The business applies for a loan, providing necessary financial statements and business plans.
5.1.2. Collateral Proposal: The business proposes collateral to secure the loan, meeting EUCMS criteria.
5.2. Evaluation and Approval
5.2.1. Credit Assessment: Conduct a comprehensive credit assessment of the business.
5.2.2. Collateral Evaluation: Evaluate the proposed collateral using standard valuation procedures.
5.2.3. Loan Approval: Approve the loan if creditworthiness and collateral are satisfactory.
5.3. Loan Disbursement
5.3.1. Documentation: Complete and sign the loan agreement and collateral pledge documents.
5.3.2. Fund Transfer: Disburse loan funds to the business’s account.
5.4. Monitoring and Compliance
5.4.1. Regular Reviews: Conduct periodic reviews of the business’s financial condition and collateral value.
5.4.2. Reporting: Require the business to submit regular financial reports.
6. Guarantee of Collateral & Securities
6.1. Issuance of Guarantees
6.1.1. Guarantee Request: The borrower requests a guarantee for their collateral or securities.
6.1.2. Documentation: Provide necessary documents, including asset details and valuation reports.
6.2. Evaluation of Guarantees
6.2.1. Risk Assessment: Conduct a risk assessment of the proposed guarantee.
6.2.2. Approval: Approve the guarantee if the risk is acceptable and the collateral meets criteria.
6.3. Management of Guarantees
6.3.1. Recording: Record the details of the guarantee in the collateral management system.
6.3.2. Monitoring: Continuously monitor the collateral’s value and the borrower’s compliance with the guarantee terms.
6.4. Claims and Recovery
6.4.1. Default Handling: In case of borrower default, initiate the claim process on the guaranteed collateral.
6.4.2. Asset Liquidation: If necessary, liquidate the collateral to recover the guaranteed amount.
7. Monetization Facilities
7.1. Overview
7.1.1. Definition: Monetization facilities allow businesses to convert their collateral into liquid funds without selling the underlying asset.
7.1.2. Purpose: Provide liquidity to businesses, enhancing cash flow and financial stability.
7.2. Types of Monetization
7.2.1. Repo Transactions: Use securities as collateral in repurchase agreements to obtain short-term funding.
7.2.2. Secured Loans: Obtain loans using collateral without selling the asset.
7.2.3. Factoring: Sell accounts receivable to a third party at a discount in exchange for immediate funds.
7.2.4. Securitization: Pool various financial assets to create a new security that is then sold to investors.
7.3. Application and Approval Process
7.3.1. Application: The business submits an application detailing the collateral and desired monetization facility.
7.3.2. Documentation: Provide necessary documentation, including valuation reports and proof of ownership.
7.3.3. Evaluation: Conduct an assessment to determine the eligibility and value of the collateral.
7.3.4. Approval: Approve the monetization facility if the collateral meets criteria and the risk is acceptable.
7.4. Execution
7.4.1. Agreement: Finalize and sign the monetization agreement detailing terms and conditions.
7.4.2. Transfer: Transfer the collateral to the custody of the institution providing the monetization facility.
7.4.3. Funds Disbursement: Disburse funds to the business’s account as per the agreed terms.
7.5. Monitoring and Compliance
7.5.1. Regular Valuation: Conduct periodic valuations of the collateral to ensure it maintains adequate coverage for the monetization facility.
7.5.2. Reporting: Require the business to submit regular reports on the use of funds and financial health.
7.6. Repayment and Release
7.6.1. Repayment: The business repays the monetization facility according to the agreed schedule.
7.6.2. Release of Collateral: Upon full repayment, release the collateral back to the business.
7.6.3. Final Confirmation: Both parties confirm and record the completion of the monetization process.
8. Dispute Resolution
8.1. Dispute Reporting: Establish a clear process for reporting disputes related to collateral.
8.2. Mediation: Provide mechanisms for mediation and arbitration.
8.3. Resolution Timeline: Set timelines for resolving disputes to ensure prompt action.
9. Default Procedures
9.1. Default Notification: Immediately notify all relevant parties in the event of a counterparty default.
9.2. Collateral Liquidation: Follow predefined steps for the liquidation of collateral to cover outstanding obligations.
9.3. Legal Action: Take necessary legal actions to recover any remaining amounts.
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