The UFT Commercial Finance Vision

Master Credit Participation Certificates™

A Truly Global Credit Market

Photo by FeelPic/iStock / Getty Images

The Market Yesterday

The first decade of the 21st century saw the collapse of securitizations as the financial industry had come to know and love them.  The consequences were devastating.  Although securitizations have been revived in many cases as a "rose by another name", gone are a variety of structured credit products characterized by mind-numbing complexity, lack of transparency, and inflexible administration.  Those assets had been issued in amounts of billions of dollars by investment and commercial banks, brokerage firms and others via decentralized platforms and sold to passive investors whose reliance on independent third-party experts turned out to be woefully misplaced.  The worldwide credit markets have been largely in recovery-mode ever since. 

Investors continue to seek solutions that both capture the legitimate objectives of securitizations without the proven risks. Unfortunately, there haven't been many viable and fundamentally different alternatives brought to light, so many investors -- although once bitten -- have returned to old patterns of relying upon securitized products to gain credit exposure.  We offer an alternative.

Our Master Credit Participation Certificates™ have been acknowledged as an entirely new credit asset class and are offered to qualified investors in several formats. With top banks serving as escrow agents and trustees, our scalable, fully transparent, borderless, web-based financial products - engineered with the help of some of the world’s largest law firms - represent a new industry paradigm.


A New Credit Market

UFT Commercial Finance has been laying the foundation to re-engineer the global credit market - not just to be different or gain a competitive edge, but to lead the way with an entirely new and scalable direct credit solution that is accessible by, enhances liquidity to, and improves returns for, investors.  Most importantly, we recognized that the solution must foster on-demand transparency so that the collateral securing the credit – whether it be a single asset or a collection of compatible underlying assets – is visible to the investor so that the investor, in fact, actually knows what it is buying. We wanted that transparency to be to underlying data and information supporting a specific credit, and we wanted the credit originator to be accountable to the investor.  Unlike most securitizations, we wanted clearly understandable products in the market.

UFT Commercial Finance envisioned a standardized central credit contract that would eliminate the bilateral and one-off nature of traditional credit transactions, thereby opening up a new class of universally accessible direct credit and investment opportunities to a globally diverse community of lenders and investors.  Instead of one borrower entering an individual contract with one lender -- or even a syndicated group of lenders -- we sought to enlarge the available source credits and provide greater and unprecedented access to qualified investors so that the investment possibilities would be multiplied. 

 We believed that standardizing credit underwriting criteria for assets that span the yield curve made sense and corrected the systemic problems caused by the decentralized nature of traditional securitization offerings.  We then took the next step of governing our investor relationships with a common master participation agreement.  In today’s electronic world, we considered it essential to package our offerings via a robust cloud-based technology platform, not only to provide transparency through to the underlying credit, but also to provide daily indicative pricing access to investors across the world and a virtual forum for investors to shop for and directly participate in opportunities that suit their particular risk appetite and portfolio requirements, with full online disclosure and one-click purchase commitment capability.

Our vision generated the solution: an institutionally recognized, innovative, and disruptive alternative credit instrument – the Master Credit Participation Certificate™, more commonly known as a CPC™.

Photo by NicoElNino/iStock / Getty Images

The CPC™ Exchange

The estimated volume of outstanding syndicated commercial loans at any one time exceeds fifteen trillion U.S. Dollars, and that amount is only what is accounted for via DTCC.  Actual volume of outstanding commercial credit in the hands of investors and bank participants is potentially significantly greater, but there is little ability to confirm exact amounts. With recent events having deconstructed many landmarks in the operation of the credit markets, countless structured financial products long considered reliable standbys have become obsolete, further expanding the potential for new credit solutions within this multi-trillion-dollar market.

Through the fundamental redesign of loan participations into a standardized, fractionalized US$100,000 unitized equivalent -- like that which is embodied in every CPC™, the ability to swiftly transact and trade in a truly liquid exchange-based credit market becomes possible.  As CPC™ primary market volumes continue to climb to target a US$10,000,000,000 benchmark, the viability of a CPC™ exchange becomes evident. UFT Commercial Finance is driving its business model toward those critical volume levels by seeking out proven credit originators around the globe that can use the CPC™ systems and methods under royalty-free license to create the source credit loans and facilities that serve as fodder to produce a variety of high-quality CPCs™ for investor purchase.

Reaching Across Borders

UFT Commercial Finance believes in the fundamental power of the individual to drive his or her own destiny. The democratization of "credit" is a vital first step in providing the means for entrepreneurs and businesses around the globe to access capital and grow their businesses.  

The advent of the CPC™ improves access to capital in mature jurisdictions, but we believe that it will change lives in developing economies. Places where banking and regulatory structures may not be developed fully to international standards would, for the first time, be able to tie in to the international investment community on a "Main Street" banking level. Circumstances in which a quality, local bank  in a far-off country can make a loan to a local business, have it validated by a local validation agent engaged by UFT Commercial Finance, and then on-board it into the UFT Commercial Finance CPC™ Platform to be fractionalized into a CPC™ will become commonplace. Once on-boarded, UFT Commercial Finance's private network of  international investors can see and analyze the credit investment opportunity and purchase that related CPC™ with confidence. Gone will be the days of investing in government bonds to gain investment exposure in a foreign land -- relying on the government to use the proceeds wisely. Instead, Participating Lenders, upon buying a CPC™, will know exactly where the proceeds of their investment went and exactly who they helped. That type of transparency has never before been widely achieved.