Chapter 06
Trade Finance & Payment Mechanics
Physical copper is financed, not simply paid for. Understanding the instruments protects you from both commercial loss and the fraud that clusters around financial jargon.
| Instrument | What it is | When used |
|---|---|---|
| DLC (MT700) | Documentary letter of credit — bank pays seller against compliant shipping documents | Standard for physical purchases; often transferable |
| SBLC (MT760) | Standby LC — a bank guarantee that pays only if a party defaults | Backstop / security, e.g. under CIF terms |
| Escrow | Neutral third party holds funds until conditions are met | Smaller deals; adds a layer of protection |
| T/T (wire) | Direct bank transfer | Avoid for first deals — no document protection |
Finance red lines
- No legitimate seller needs an advance fee before issuing a proforma or letting you inspect.
- SBLCs are security instruments — they are not ‘traded’ or ‘leased’ as investments. Anyone who says otherwise is running a scam.
- Instruments must be issued bank-to-bank through official SWIFT channels; a PDF emailed from a personal account proves nothing.
- If a term sheet is heavy on MT799 / MT760 / ‘bank pre-advice’ language but light on the actual metal, slow down.