Mar 29, 2012   //   by Administrator   //   Procedures  //  Comments Off on UNIFORM RULES AND PRACTICE FOR INTERMEDIARIES

These are the rules of trade we practice. They have been developed by Davide Papa over the course of 25 years of international commodities trading. You will not find courses taught about international commodities trading that involve intermediaries. Almost all courses assume that trading goes on between buyers and sellers only. In the oil business there may be 500 or so principals (majors) that do primary transactions. But there are thousands of intermediaries, agents and people posing as mandates that are attempting to get lucky (in the secondary market) on just one oil transaction. Why do they chase such a dream? Because the commission from just one deal will set them up financially for life.
When I entered this business I looked at transactions and offers that were floating around and realized very quickly, “How do these people expect to get paid?”
Non disclosure agreements and non circumvention agreements are for the most part unenforceable. How is a person with no money going to take on a multi-lawyer firm representing a billion dollar company and expect to get any resolution? And when you consider the international nature of the business, how do you expect to deal with differing legal jurisdictions? So I started looking and found Davide Papa’s writings. The rules derived from his brilliant legal mind, over the course of many failures and successes, are the only safe trading procedures that will protect every party in a deal where an intermediary is in the middle of a transaction. If you are an agent (intermediary) and are not using these procedures it will be a truly rare moment that you will ever see any money coming your way. It is more likely that you will get sued for everything you own from just one little oversight, that at the time seemed insignificant. “It’s only a few cents”, but multiply that by 24 million barrels and it becomes a big deal.
Most of the intermediaries, agents and those posing as mandates for a seller or buyer are uninformed boneheads that are trying their best to insert themselves in between a buyer and seller and expect by some miracle that they are going to make some money. I can’t tell you how many offers I have received that have faulty procedures and quote banking instruments that do not even exist or that could never work in an oil deal for multiple reasons. It is like they are saying if you want my oil just deposit 300 million in my account and we will take out what we need.
Excuse me. I think I’m on a rant. Well here are the rules.  We are including them because we follow them (for your benefit).


Amended: 1st March 2012

Must be applied by those who have purchased and studied FYBR, ITSI or WTMW doctrine once such declares a URPIB Practitioner status. All advance application apparent in rules update are considered latest application to which URPIB rules override matters of the doctrine should conflict to the overall trading structure is apparent.

© URPIB Rules of Trade Full Revision 1988-2011.
Last Revision:1st March 2012
English spelling and corrections. 10th March 2012
Copyright: FTN Exporting Australia 1988-2012

New Addition: Article 23: FOA
10th March 2012

URPIB Article 1:
Definitions and Overall Premise:
1. An International Trade intermediary shall be defined as a sourcing Intermediary, and/ or Intermediate seller, intermediate agent, intermediate broker or intermediate buyer. An entity working as a independent ‘middle person’ individually or grouped between two other principal entities shall also be known as the ‘Buyer/Seller’. The other principal entities who are not acting in the position of the intermediary are; the actual owner in possession of goods being offered, also referred to as the ‘Supplier’ and the person paying for the goods who is also the person taking possession of the goods being purchased, also referred to as the ‘End Buyer.’
2. A Procurement intermediary is one who is specifically trading under the name of either the principal supplier or principal end buyer. (Mandate holder of such) One who is- “Acting on behalf of a disclosed principal.” It is said that these type of traders are in the minority and not a preferred position for a independent intermediary to hold nor trade in.
3. The private intermediary is one who prefers to hold a position and trade “On behalf of an undisclosed principal.” In where ultimately the said intermediary holding such a position does so as “Seller and Buyer.”
4. Any intermediary acting in the position of an undisclosed principal is not required to disclose the principal End Buyer or Supplier at anytime throughout the course of any transaction.
5. An Intermediary claiming to be acting on behalf of a disclosed principal must disclose such principal upfront at the start of the transaction. Such an intermediary is defined as a Procurement or Sourcing Intermediary or Agent of said disclose principal once such disclosure is made.
6. A URPIB intermediary may consider acting as a procurement agent of any principal, but ostensibly its said that all URPIB intermediaries do not procure nor act as agent for anyone and are defined to trade holding position as intermediate buyer and or seller at any given time;as being the best , safest position to hold when dealing in the export and import of commodities and the sales of such for commission.
7. In a scenario where no other ‘sourcing intermediaries’ are involved within a transaction, the parties are as follows:
8. (a)Supplier (b)Buyer/Seller (c)End Buyer
9. Where sourcing intermediaries are involved, the group to the transaction to be implied in similar mode:
10. (a)Supplier
11. (b)Sourcing intermediaries (one or many)
12. (c)Seller/ Buyer (middle person in control of the whole deal)
13. (d)Sourcing Intermediaries (one or many)
14. (e)End buyers
15. If a ‘Mandate holder’ has disclosed his principal or produced a written mandate ship issued by his claimed principal, and if such a mandate ship has been authenticated as being genuine, the following group will eventuate. Mandate ship of a disclosed principal paying for and accepting goods purchased or; Mandate ship of a supplier in possession of goods and not another intermediary.
16. (a)Supplier
17. (b)Suppliers Mandate holder (or Procurement agent of disclosed Principal )
18. (c)Sourcing intermediaries (one or many)
19. (d)Seller/ Buyer(Middle Person in control or the whole deal)
20. (e)Sourcing Intermediaries (one or many)
21. (f)End Buyer’s mandate holder (or Procurement agent of disclosed Principal )
22. (g)End buyers
23. The ‘middle person’ who leads a trading group of ‘sourcing intermediaries’ and or mandate holders is also referred to as a primary principal.
24. A ‘seller’ is not the same thing as a ‘supplier’ and an ‘end buyer’ is not the same as a ‘Buyer’.
25. For the purpose of these rules a primary principal is different from the other principal entities, in that the primary principal shall only be able to proceed in a transaction as a person holding and transferring title or leading delivery documents of the goods without ever taking actual or physical ‘possession’ of the goods.
26. A ‘sourcing intermediary’ is not a primary principal or a ‘primary intermediary’. Sourcing intermediaries answer directly to the primary intermediary (PI). The primary intermediary in turn answers to his primary principal, the leading ‘middle person’ in a trading group, commonly referred to in international trade as the ‘Buyer/Seller’. A person acting for the head of a group is a “Principal of Agency.”
27. A Seller/Buyer shall also define a single person acting as a ‘Seller and Buyer’ at the same time in the position between a Supplier and end Buyer and as per URPIB, shall also mean to define the activities as they pertain to a ‘Primary Principal of Agency’.
28. Where the Seller/Buyer is advising his immediate primary intermediary, the primary intermediary is responsible for advising all other intermediaries on that side of transaction, in particular where language and cultural barriers may need to be addressed in an effort to appease the end Buyer of the primary principal’s contracting requirements.
29. There will only ever be a maximum of three primary principals involved in any one deal. (1) The supplier. (2) The Buyer/Seller. (3) The end Buyer or End user. All others involved in the same deal are defined as ‘Sourcing intermediaries’ in the collective form even where genuine mandate-ship is held of a principal.
30. A ‘String contract’ is where many ‘Sourcing intermediaries’ are acting as a collective ‘middle group’ or with a middle entity located between the principals to the particular side of a transaction.
31. A Buyer/Seller is a single entity in a trade, in that both entities are selling and buying is activated and conducted by the same entity within a transaction. There cannot be an intermediate ‘Buyer’ and another intermediate ‘Seller’ acting as the single controlling entity in a string contract. A single Buyer or Seller is trading on the premise that they are able to buy goods for reselling and vice versa, which means that when entities claim to be able to do this it infers that they are also a ‘Buyer/Seller’. A middle controlling Buyer/Seller cannot transact on any deal where another Buyer/Seller is involved but may occasionally use the option of an IPG ( Intermediary Payment Guarantee ) in an attempt to cause the other Buyer/Seller or indeed any other intermediaries to ‘Step back’.
32. The middle controlling Buyer/Seller must be in a position of strength as to knowledge of international trade procedures.
33. A middle Buyer/Seller will never step back to another Buyer/Seller who makes reference to LOI, RWA, ICPO, NCND, BCL, POP, PB, MPA, ASWP and other variants no matter how infrequently they are referred to nor in which combination. (Please see Glossary for these terms.)
34. An intermediary shall not entertain another intermediary who is using the above flawed procedures.
35. A sourcing intermediary not prepared to take up the mantle of a controlling middle Seller/Buyer without the protection and guidance of a middle controlling trusted Seller/Buyer should not be trading.
36. A sourcing intermediary is treated with respect by the middle Buyer/Seller who in turn guides the sourcing intermediary as to the way in which a deal should be closed. This is done so that eventually the sourcing intermediary may also learn the correct procedures to further enhance the whole trading group to which they will eventually attach themselves.
37. Any middle controlling Buyer/Seller who is trading but not using his own trusted intermediaries should not be considered a Buyer/Seller holding a position built upon honorable intent. The exception to this is if a specific reason is given as to why this trader does not allow intermediaries in a transaction.
38. In the formation of a string contract there is a principal supplier, one or more intermediaries leading to the Buyer/Seller and a principal end buyer with one or more intermediaries leading to the controlling Buyer/Seller. In this formation the Buyer/Seller, holds the ultimate position of strength and is the controlling principal. The Buyer/Seller is well versed in procedures and has chosen intermediaries who are similarly well informed and able to verify the proficiency and good intent of the Buyer/Seller.
39. All informed URPIB Intermediaries shall trade using trademark rules of delivery as defined by the owners International Chamber of Commerce, (ICC) Paris, France as currently applicable under latest ‘Incoterms’ at any given time in where any new incoming delivery rules becoming apparent, outgoing incoterms delivery rules may still be used as the intermediary slowly dissolves the use of one application to favour the new incoming application.
40. Any person heading a deal amongst all intermediaries involved in such a deal is specifically defined to hold the position of ‘Seller and Buyer’, within such a group and hold position as a (Prima) Principal within the group.
41. Such trade procedures as per the Intermediary doctrine of trade created by FTN exporting
42. Whether such a doctrine has been studied and applied fully or in part as such with allowable or acceptable variations enacted.
43. Middle Buyer and Seller applying URPIB Rules of reference and who has studied fully FTN exporting Doctrine shall not step back to anyone.
44. A Buyer/Seller is not entitled to or have obligation to guide or assist anyone unless such is reasonably informed of basic procedures as per said doctrine.
45. A Buyer / Seller shall attempt to trade on his own or where appropriate with other trusted associated intermediaries who trust the Buyer/Seller implicitly and who are able to endorse the buyer/seller accordingly.
46. All informed URPIB Intermediaries shall trade using trademark rules of delivery as defined by the owners , International Chamber of Commerce , (ICC) Paris, France as currently applicable under latest “UCP” banking rules at any given time in where any new incoming Banking rules becoming apparent, outgoing banking rules may still be used as the intermediary slowly dissolves the use of one application to favour the new incoming application. Banking rules as it applies to financial instrument issuance and collection under current collection rules at any given time.
47. Financial instrument specific to at sight collection of documentary letters of credit to exclude of all other forms of payment
Next is Article 2, but this is a monster long post so I am going to break it up a bit. These rules are acronym heavy, but don’t worry I’ll write about each of them in the Glossary. You will notice that there are English spellings for some words. Here is a link to Mr. Papa’s site (the author of these rules):
FTN Exporting

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