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Norstar Concept on Trade

"Trade Facilitation" (NU_TF)

Our concept of Facilitating Trade is about streamlining and simplifying trade procedures in order to allow for easier flow of goods and trade at both a national and international level.

Norstar Unlimited analyses the benefits and costs of trade facilitation efforts and also provides support to Trade Facilitation discussions in the core area of a particular trade. Steady increases in trade volumes and complexity have significantly changed the operating environment for the national as well international trading community and for involved government agencies.

This has laid bare the inefficiencies of outdated modes of operation and motivated an essential rethinking of border procedures both within national administrations and at the international level. Analysis underway includes reflections on core trade facilitation principals, such as, product verification, transport viability, financial transparency, product predictability, respectful non-discrimination communication, and contract accuracy.

Norstar Unlimited's facilitation principles, such as transparency, predictability, non-discrimination and simplification, and approaches for implementing facilitation measures at the national level are based on country's best practices principals. Particular approaches such as harmonization, risk management and automation are systematically reviewed. Research conducted by Norstar Unlimited for Trade Facilitation includes the evaluations of product pricing, costs of storage, product verification, and product transport in the current market.

In depth reviews evaluate contract clarity, streamline trade procedures, and verification of financial capacity to complete a successful transaction. Considerations to variations with respect to different types of products or companies, and appropriate methodologies based on country's best practices are also investigated for the betterment of Trade arrangements. Norstar Unlimited research also seeks to evaluate the costs caused by inefficient trade procedures and the benefits of remedial trade facilitation action for businesses and for governments in developed and developing economies. Possible variations with respect to different types of products or companies, and appropriate methodologies for self-evaluation by concerned countries are also investigated for the betterment of Trade between Traders Globally.


Norstar Unlimited Finance (NU_FF)

Trade Finance Facilitations is related to international trade. While a seller (the exporter) can require the purchaser (an importer) to prepay for goods shipped, the purchaser (importer) may wish to reduce risk by requiring the seller to document the goods that have been shipped. Banks may assist by providing various forms of support

For example, the importer's bank may provide a letter of credit (LC) to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill Bill of lading Lading (BL). The exporter's bank may make a loan (by advancing funds) to the exporter on the basis of the an export contract( Contract). Other forms of trade finance can include Documentary collection (Documents), trade credit insurance (Insurance), export factoring, and forfeiting.

Some forms are specifically designed to supplement traditional financing, such as “transactional equity” (a product developed by Norstar Unlimited, Inc. INC. which can assist the borrower in funding the down payment required by a bank before it extends credit. In many countries, trade finance is often supported by quasi-government entities known as export credit agencies( ECA Agency) that work with commercial banks and other financial institutions. Since secure trade finance depends on verifiable and secure tracking of physical risks and events in the chain between exporter and importer, the advent of new methodologies in the information technology systems worldwide has allowed the development of risk mitigation models which have developed into new advanced finance models.

This reduces allows very low the risk of payment advances to exporters to be made, while preserving the importers normal payment credit terms and without burdening the importers balance sheet. As the world progresses towards more flexible, growth oriented funding sources post the global banking crisis, the demand for these new methodologies has increased dramatically amongst exporters, importers and banks. Trade finance refers to financing international trading transactions. In this financing arrangement, the bank or other institution of the importer provides for paying for goods imported on behalf of the importer.


Multilateral trading facility (NU_MTF)

A multilateral trading facility (MTF) is a specific type of European financial trading system. The concept was introduced within the Markets in Financial Instruments Directive (MiFID),[1] a European financial law, and describes a trading venue that brings together buyers and sellers in a non-discretionary way, according to a defined set of rules resulting in trades.

The United States equivalent is and Alternative Trading System. Origin. Before the introduction of MiFID trading in stocks and shares was typically centered on large national stock exchanges, such as London Stock Exchange (LSE), Deutsche Börse and Euronext. The rules for operating exchanges varied from country to country, with some exchanges granted exclusivity over certain services for that country's market.

As a result, European share trading tended to be conducted on one specific venue, such as the Euronext Paris market for French securities or the LSE for United Kingdom securities. MiFID classified three types of trading venue:
1) A regulated market (RM) run by a market operator
2) A multilateral trading facility (MTF)
3) A systematic internaliser(SI)
Permission to run any of the three types of service was required from an appropriate regulator, with the existing exchanges registering as regulate markets. Difference between MTFs and exchanges MTFs have been described as a form of "exchange lite"[2] because they provide similar or competing trading services and have similar structures, such as rulebooks and market surveillance departments.

Market operators also act as an arbiter for securities. Companies that wish to list upon an exchange undergo a listing process and pay fees; this allows the operator to ensure that only appropriate securities are available for trading. This may involve requirements about the number of shares that are available, standards around how the accounts of the company are maintained or strict rules about how news is released to the market. Whether or not a security has been "admitted to trading on a regulated market" is a key concept within MiFID, and is fundamental in how the rules apply to trading in the security. MTFs do not have a listing process and can not change the regulatory status of a security. Rules for operating an MTF:MiFID lays out a number of obligations for an MTF to operate:

  • It must be pre-trade transparent, the price of existing orders must be made available on market data feeds. An MTF may be exempted from pre-trade transparency via use of an appropriate waiver,[3] such as a large in size waiver or price referencing waiver - in this case the MTF will be a dark pool.
  • It must be post-trade transparent, any trades carried out on the platform must be published in real-time.
  • Prices and charges must be public and applied consistently across all members.
  • There must be a rulebook advising how the system works and a means for applying for membership.

Impact of MTFs

New entrants MTFs have had a considerable impact on European share-trading. MiFID enabled trading venues to compete with one another. The legacy exchanges largely chose to keep to their existing business models and scope, but new entrant MTFs have made a significant impact. Chi-X Europe, the largest MTF by volume,[4] is also the largest trading venue in Europe according to some statistics.

This is part of a process known as fragmentation, where liquidity for one security is no-longer concentrated on one exchange but across multiple venues. This in turn forced traders to make use of more sophisticated trading strategies such as smart order routing.

  • High trading speeds, using technology to make their platforms attractive to high frequency traders;
  • Low cost bases, running their organizations with minimal headcount;
  • Maker/taker pricing, paying members to trade on the platform as long as the trading adds liquidity rather than takes it;
  • Trading incentives, often called jump-balls, in which stakes are given to trading members in return for volume traded.

These all made the new venues highly attractive and to take market share. In turn, existing venues were forced to discount heavily,[5] significantly impacting revenues. Limited individual success. Although they have forced significant adjustments within the equity trading markets, the MTFs themselves have had limited success. Chi-X Europe claims to be profitable,[6] howeverNasdaq OMX Europe was shut down in 2010[7] and Turquoise was bought by the LSE. Many consider the MTF business model unsustainable, although Alisdair Haynes, the Chi-X Europe CEO, said "We are not going to raise prices, though most people expect we have to".[8]Investment bank MTFs Most investment banks run an internal crossing system.

These systems cross clients' orders against one another, or fill the orders directly off the bank's book. Nomura has converted its internal crossing system, NX, into an MTF. Nomura said its decision was for "commercial purposes". UBS has established UBS MTF, this works in conjunction with its crossing system, UBS PIN. Goldman Sachs has also announced that it will launch an MTF. The exact regulatory status of broker crossing systems is a matter of debate and controversy. It is expected to be an area of future regulatory intervention.

About -
Norstar Unlimited

We are known as "Trade Facilitators" We review how procedures and controls governing the movement of goods across international borders can be improved to reduce associated cost burdens, maximize efficiency.

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