Trade Vault™

Scenario: HQIA Owner seeks to invest in an Enhancement CPC™ series, requiring the issuance of a Letter of Credit. HQLA Sponsor is willing to cause the issuance of the required Letter of Credit against the HQIA, but the form of HQIA is not consistent with HQLA Sponsor’s investment mandates. In such case, the HQLA Sponsor requests an indemnification that protects its HQLA in the event of an unreimbursed Letter of Credit draw.

HQLA can be used to obtain a Letter of Credit to acquire a Master Enhancement CPC™ in support of the operation of a particular Trade Vault by CSS

• A Master Enhancement CPC series credit enhances each segregated Trade Vault, resulting in cash funding into each Trade Vault.

• Funded proceeds are used by CSS to acquire individual CPCs that may be held on the Trade Vault for up to 9 months with a flowthrough of returns to the HQLA Sponsor after deduction of Trade Vault operating expenses.

  
  

• Each Trade Vault possesses a defined CPC eligibility and compliance criteria as to nature of CPCs that may be purchased.

  
  

• Qualifying CPCs purchased by a Trade Vault are required to have a minimum of 9-months of interest/debt service reserve on account on the date of purchase.

• Returns consistent with the nature of CPCs held, even though CPC default is heavily de-risked while within the Trade Vault.

  
  

• All CPC purchases by a Trade Vault are transparent to and auditable by the HQLA Sponsor.