Membership, Fees & Charges

IMPORTANT:- Some links in this article will only be accessible to authorised Members that have logged into the Exchange Trade Centre

Credebt Exchange® aims to be clear and transparent on the how it deducts charges (i.e. fees and commissions) from payments to any Member account. Before examining any deductions from a Member account, the Originator should log in to their account and view the Important Information items listed on the Exchange Trade Centre |
Dash Board (access to the Exchange Trade Centre is restricted to Members only) The information provided here is required reading.

There is also additional information in all of the articles in the Credebt Exchange® Tips & Help public section of this web site.   If any aspect of what is documented is not clear, Originators are invited to submit questions to Support using the Support & Customer Care Form.  Questions submitted using this form are regularly added to the Frequently Asked Questions, or FAQ, section of this web site.

Combining the Frequently Asked Questions, the articles contained in this section, the Credebt Exchange® Tips & Help and the Exchange Trade Centre | Dash Board with the documentation sent to all Originator Members, should provide a comprehensive understanding of the service.  Originators and all Members are encouraged to communicate their views to the Customer Care Team.

The most efficient way to communicate with Credebt Exchange® is by using the Support & Customer Care Form.  All submissions are responded to within 24-72 hours.

Exchange Fees & Charges

IMPORTANT:- Some links in this article will only be accessible to authorised Members that have logged into the Exchange Trade Centre

In accordance with the Credebt Exchange® Master Agreement sub section 6.13: “The Account Bank will draw any fees and/or commissions that the Member owes to Credebt Exchange® from the relevant Member Account. Credebt Exchange will provide the Member with an electronic invoice of such fees to the Member.” Sub section 6.13 also states: “In the event that a Member does not pay all amounts owed to Credebt Exchange, Credebt Exchange shall have the right to set-off any amounts then owed by the Member to Credebt Exchange against any amounts then or thereafter due to the Member and/or Credebt Exchange shall have the right to deduct any outstanding amounts due to Credebt Exchange from any Collections in respect of a Traded ETR, or from the Member Account, in respect of that Member.”

Fees are liable for VAT and electronic invoices are issued for each charge that may include a:

• Arrangement Fee – one-time setup charge for arranging Membership as indicted on the RSA Offer
• Debtors Ratings Fee – €11.75 charge for checking each Debtor’s credit rating when requesting an RSA Offer
• Digital Certificate Fee – annual digital certificate charge as indicted on the RSA Offer
• Membership Fee – monthly charge for Exchange Membership as indicted on the RSA Offer
• Posting Fee – discretionary charge per posted ETR as indicted on the RSA Offer
• Collection Charges – discretionary charge for providing credit management and/or debt collection services

Fees are charged on the first ETR sales transaction conducted by the Originator each month. In the absence of any sale of ETR in any month, in accordance with the Credebt Exchange® Master Agreement, fees may be deducted from ETR Settlement or Reserve payments. To view specific RSA Offer(s) and invoices for all fees charged on a Member account, login to the Exchange Trade Centre | Dash Board and use the My Reports link on the left side of the Exchange Trade Centre | Dash Board.

All ETR trading is subject to the Discount and Commissions specified in the RSA Offer. The total Discount is easily calculated as explained in the Calculate the Cost of Funds article. Neither the Discount nor the Commissions are liable for VAT and no invoice is required because these are an integral part of the Purchase Price and the Reserve calculations. These are automatically deducted from transaction payments and may include a:

• Processing Commission – deducted from the Purchase Price, Reserve and other payments due
• Trade Commission – deducted from every payment transferred to the Originator
• Over Allocation Commission – discretionary surcharge for substantial underutilisation of allocated funds

Add New User

IMPORTANT:- Some links in this article will only be accessible to authorised Members that have logged into the Exchange Trade Centre

In many instances there is more than one user in an Originator organisation that requires access to the Exchange Trade Centre. To add a new Debtor, use the Add new User interface that is accessed directly from the Originator Dashboard using the yellow ‘Add new User’ menu item from the left side menu: My Organisation -> Add new User.

When this form is submitted, the new user receives an email inviting them to complete a simple form and submit it. Once the request is approved, the user will receive a second email to complete the process. Once completed, they too will have access to the Exchange Trade Centre.

IMPORTANT:- The new use must complete both forms using the same web same browser, otherwise their digital certificate will not work and they will not be able to access the Exchange Trade Centre.

The SB³ Trading Algorithm

The Sell, Bid Bumps & Buy [SB³] algorithm uses two mathematical calculations to regulate efficient, and smooth, trading in volume. The SB³ algorithm injects simple ingenuity into the practical issues of operating an efficient Exchange. The components of the algorithm are:

• Sell
• Buy
• Bid Bumps

 
Sell
Originators want a simple, fast, efficient and most importantly: reliable source of alternative working capital. This can only be achieved in one of two ways, either by having:

• sufficient deposits ‘waiting’ to be approved and lent (by a bank, for example)
• committed funds that are delivered automatically, subject to meeting specific criteria

As Credebt Exchange® is not a deposit taker or lender, it can only achieve the second alternative if it has the requisite funds committed for automatic delivery. One requisite component for the success of Credebt Exchange® relies on its ability to control the Sell (i.e. the Originator offer) price. The Sell price Minimum Offer stop setting is controlled from the Back Office.

Buy

Investors, provided with choice, will naturally ‘rush to quality’, meaning that they will always seek Investment Grade [IG] with the highest yields, first. This causes a trade imbalance where medium and low IG yields force ‘heavy discounts’ onto Originators. Together, these result in Originators’ Sell price erosion to unacceptable levels and ultimately, may destroy the Exchange business proposition.

To prevent this, the Exchange must focus and adequately deliver on the Investors’ primary requirements for yield and capital protection. During the negotiation of the Buy rate with the Retail Investors/intermediaries, they commit to automated trading in the Revolving Market. This confirmation occurs during the Investor signup process where the acceptance of automated trading, at the negotiated Buy rate, and is activated using the “I Agree” button. The second requisite component for the success of Credebt Exchange® is achieved by its ability to control the Investor bid and Buy price. The Buy price is then automatically manipulated by the two Bid Bump components of the SB³ algorithm.

Bumps

Investor automated, positive or negative, bidding adjustments, or Bid ‘Bumps’, occur using two variables in the SB³ algorithm, namely the:

• CDP Fixed Variable
• Order Floating Variable

 
CDP Fixed Variable
Credit Default Protection [CDP] is the Credebt Exchange® trade name for credit insurance. Organisations like AIG provide credit insurance to thousands of companies. Like Credebt Exchange®, their risk exposure is to the Debtor. OngThe AIG OnRisk insurance policy, written specifically Credebt Exchange® Master Agreement, provides CDP to Retail Investors on the Exchange. In the event that any Debtor fails to Settle (i.e. pay in full) their ETR, AIG pays 90% of the Face Value of the ETR.
When an Investor buys an ETR, they pay the Purchase Price (i.e. a discounted amount) of the Face Value. The Purchase Price is calculated as follows:
                                                                           Purchase Price =                    Face Value                  
                                                                                                           1+((180/360) x (Buy Price x 12)))
On average, the Purchase Price will be about 90.000% of the ETR Face Value. In such an example, if an ETR fails to Settle, the Investor’s risk exposure would be 0.000%. Therefore, to completely eliminate the Investor’s risk exposure, the Buy Price must be increased by a CDP Fixed Variable percentage to ‘fill the gap’. The CDP Fixed Variable increase is the first Bid Bump.

Order Floating Variable

There is no sure method of predicting what ETR value a Originator will post to the Trade Floor. Equally, there is no practical and efficient method of automatically matching the total value of any single Investor’s funds to the exact same and equal value of a collection of ETR†. To maintain the negotiated Investor return for a fixed period the ‘gap’, created between their purchased ETR and the total value of their fund, must be eliminated. As ETR Settle and new ETR are purchased, this gap will frequently fluctuate throughout the fixed period. Each specific Investor will have a different and changing percentage that is called the Order Floating Variable.

SB³ Algorithm Result
The unpredictability of the Order Floating Variable creates a true random number. Its unpredictability is combined with the CDP Fixed Variable to produce a single SB³ algorithm result. This truly random figure is then used to create a truly random set of multiple, automated Investor Bids that:

• creates volatility and/or liquidity on the Exchange;
• prevents reverse engineering for price derivation;
• drives the ‘best Buy price’ towards Originators;
• ensures no Originator Offer is left without a Bid;
• maintains Investor yield at all times;
• mitigates Investor risk; and
• enables institutional Investors to manually trade the volatility

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ETR Overview

GLI Finance AIM: GLIF

Today and subject to final contract, GLI Finance Limited (AIM: GLIF) signed an agreement to act as the lead Investor to provide €25.0m of funding to the Exchange. This will bring the total year-to-date funding on the Exchange to €30.m and provides for a further capacity to purchase in excess of €150.0m ETR during 2014.

GLI Finance is a Guernsey-domiciled loan company listed on the AIM market of the London Stock Exchange (ticker GLIF). The Company’s objective is to produce a stable and predictable dividend yield, with long term preservation of net asset value. This the Company aims to achieve through the provision of secured lending to small and medium sized companies with the view to exit the CLO business over time and focus on the provision of alternative finance to SME’s.

The Company Strategy is to become a leading alternative provider of SME finance and in the last year the Company has made significant strides to achieve this by completing a number of partnership transactions with lending platforms. The platforms which have been invested in vary by geography, industry, size of lending and by type of lending. These include Global trade Finance, UK SME Lending, Offshore Lending, UK invoice discounting, European invoice discounting, Global multi-asset crown funding and UK property-backed lending.

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• Star loan investor reshaping his exceptional fund

4-Tier Capital Protection

Investors’ funds are protected using 4-Tier Capital Protection, as follows:

• ETR Off-Set – ETR not Settled (i.e. paid in full) are replaced with Eligible ETR
• Originator Reserve – paid from Reserve on all Traded ETR (averages 10% of all ETR)

Originator credit insurance protection

• Credebt Exchange® loss and default reserve – paid from founders funds†; and/or
• AIG insurance

• Selling model, as opposed to a lending model
• No liens & no personal guarantees
• Low discount rates & no ‘face value’ charge
• Access up to 90% of your invoices’ value quickly

• Single Membership fee, regardless of volume
• Payment terms can be greater than 90 days
• Not required to sell all invoices/entire ‘book’
• No long term contract & leave at any time

• No ‘Debtor Concentration’ (i.e. no maximum value per Debtor)
• Block trading & trade automation are possible
• No retrospective, refactoring, or review fees
• Simple, streamlined online reporting