The Secure Procedure

Our objective is to provide the most professional service to both buyer and seller. Those who achieved a high level of competence in brokering commodity transactions, made a lot of money and left, to spend it.
They are not here to teach the novices, just entering this business
Brokers enter this business, because they have heard about the huge rewards, but few have any skills.
Few can write a clear text message
Few have skills in making a presentation of a buyer to a seller
Very few can make a cogent presentation of a purchase order
Few brokers can describe a seller, in favorable terms, without giving away the source
For these reasons, a procedure is needed and that's why this web page exists.

The skilled Broker introduces buyer and seller in such a way that there is mutual respect for each other. Both are described in terms which do not reveal their identity. Each is described to the other in such a way that both Buyer and Seller have confidence in the other and want to do business with each other

Many brokers do not reason very well
Buyers are very clever in extracting the information about the seller
When brokers are circumvented, it's the procedure that failed and so we must put a lot of cadence on the procedure we use. If this procedure is the most highly developed method, then we follow it, closely. If this procedure needs changes, we modify it.

Any procedure should accomplish the objectives of those who implement it

Brokers love to chase deals and it reminds me of a dog, who loves to chase a stick. You can pretend to throw a stick and the dog will start running. A buyer can set a broker in motion just as easily; he pretends to 'throw a stick' and the broker is set into motion; an inexperienced broker will 'chase the stick', every time!

On the second round of faking the throw of the stick, the dog learns; You can't fool him!
That's where the broker and the dog are different.
The broker will continue to 'chase the stick', but the dog learns, after being fooled, just once.
So, the dog is much smarter than the broker, who never learns.

When a buyer says, I want to buy, the stupid broker chases the 'stick'
He's fooled again and again and never learns.

The dog's look says, 'No! I'm not chasing fake sticks....I want a contract'
The contract requires that you:
1. have a real stick and
2. actually throw the stick

The broker should learn from the dog; the dog makes you respect him, by demanding a contract; he won't run, unless you really throw the stick.

The ICPO is the work contract and the broker should not chase the 'stick' until the buyer gives him a work contract, in the form of an irrevocable corporate purchase order
Buyers don't want to make this commitment, because they want the seller's information for free
The industry would be nice and simple, if all you have are buyers, who want free services and brokers who just want to get a commission and don't want to learn any new skills or follow any procedure

You hear many people complaining that the commodity business is full of crooks and incompetent people and this procedure is an attempt to eliminate incompetence in the industry.

Professionalism is badly needed and brokers should study and master a procedure, but buyers are also guilty of attempting to circumvent brokers, so they can buy cheaper. If any broker gets to the finish line and learns that the buyer can't get an L/C, it's the broker's fault. This is incompetence and the solution is a well thought out procedure.

We come to the bargaining table to make a deal
The commissions are rarely small and so we want to do our best, always
When the commissions are huge, we want to be the very best in the world
You practice on little deals, so that you are prepared, when a big deal comes along

Often, the buyer is not real or the seller is not real
So, you must be meticulous, in your process and carry out the procedure with the utmost care
A mistake can cost you millions of dollars so you have to learn, quickly; Please study this page
Second chances are rare, so it has to be right, the first time

Blood in the water brings out the sharks
There are many kinds of sharks
Some brokers are sharks and some buyers are ten times worse
You already know the 'sea' I write about

Sharks are big fish; They devour little fish
In the commodities business, the 'sharks have no shame'
Little fish have to swim very carefully
Sharks ask for an LOI and amateur brokers gladly send it

The inexperienced broker dreams of getting rich, easily
They have no idea why a broker can't reveal the buyer's contact information to the seller's side
The LOI has all the buyer's contact information on it and the shark knows it
The amateur apparently doesn't know it or can't imagine anyone going around him for a few million dollars

Huge commissions are often not made because an inexperienced broker gave contact information. He foolishly forwarded an LOI to a shark and the shark made a meal out of him
If you release your buyer's contact information to a shark, he will take your buyer away from you. The 'shark' will do it, without hesitation or internal conflict!

If you want to get paid, read on
There is a procedure to learn
I'm going to share some ideas with you
See if you agree :-)

Putting a deal together requires an understanding of the process and sticking to the procedure
Print this page and refer to it, often, using the checkboxes so you get the sequence down
When you are out of sequence, you will learn why you don't want to go out of sequence
Lessons are expensive, so cut your loss and learn the procedure, now

There are two sides at the bargaining table; Buyer and Seller
You come with one or the other and few have both, so we have to cooperate
If you bring buyer, with money, you have to present what you have
You don't get a seat at the bargaining table, without something to bargain with
At times, it is necessary to be patient and learn about the seller
Nobody has time to waste and some will depart and you won't be able to coax them back
The only way to avoid losing someone who is impatient is to be prepared to present what you have. The checklist, above, will allow you to organize your thoughts and make a powerful presentation

For example:

I have a buyer for urea 46% nitrogen
He's bought this product from me, before
The current order is for 25,000 mt/month for 12 months

My buyer has completed his shopping and has found suppliers
The best prices quoted to him are $312/mt, $300/mt and $150/mt
He doesn't believe in the seller at $150/mt, but the others are OK
He gave me the phone numbers of the other two suppliers
I have talked to both and they seem very sincere
I've asked for the name and phone number to their performance bond insurer and I might have it soon
My buyer gave me an LOI
It's made out to me and has product specifications, quantity, shipment size, bank information and a target price of $200/mt
Do you feel we can do business?


This is a very good introduction, but the buyer has not been quoted a price below $300/mt from a credible seller and now he wants us to give him product $100/mt cheaper than this
A broker should not entertain a target price, without some substance and in the above example, the buyer shopped around, received price quotes from credible sellers and the broker has demonstrated skill in presentation and the handling of a client
The broker did not volunteer the buyer's contact information and therefore, still has control over the order
He implied that a price of $299/mt would beat any other price quote and the deal is very interesting, because we have real product, the buyer bought before and is not fooled by those who offer a very low price and likely do not have product
It won't be easy to sell this buyer; He is a veteran and knows what he's doing
His rejection of the low ball price quote was probably not based on price, alone
We must make our debut with him and convince him that we have real product to sell and a price better than any he has had so far

Even if you are not good at collecting and organizing information, you can still work this checklist
The questions are easy and you can have it in front of you, every time you negotiate a deal
Be friendly and ask questions!
It's your right to make the buyer prove that he can pay
It's your duty to get a committment from the buyer in writing
You'll be more valuable, if you do and you'll always have a seat at the bargaining table

The verbal agreement is first
What good does it do to take a buyer and an entourage of brokers to the finish line and then have the buyer tell you he didn't agree to that price or didn't know you were making so much commission?
When brokers don't agree, deals don't close
Ask each broker what he has agreed to
Don't let anyone speak for the others
Have each sign off with an IMFPA
If everyone does not accept the terms of the purchase, then you don't have a purchase
You have to finalize negotiations, before you prepare and sign documents and reveal your source

You do not want to divulge your source to anyone, before you have an NCNDA1 signed
My supplier informs me that every buyer and every broker we have dealt with, so far, has attempted to go around us

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Here is an email I sent to a client who wanted to send me an LOI, instead of an ICPO:
Thanks Anthony,

Recently, I turned in an ICPO for JP54 and it was swiftly rejected by the supplier
They said the buyer is known to them and the seller feels that this is not a serious buyer
They recommended that we ignore the ICPO document and forget the order request
It was indeed, an embarrassment to me, because we could have discovered the same and never sent this ICPO off for rejection by my seller
I have devised a checklist of steps that all of us believe in, but in our haste, we failed to use that checklist for the purpose for which it was created
The seller has trained me in their procedures and they are a large refinery
Their procedures have developed over thousands of transactions and it seems that everyone, who wished to buy or broker a deal with them, wants to change the procedures of this giant company
I have been warned, repeatedly that this won't happen; To give up that idea and just stick to their procedures, but when I'm pressured by brokers, I cave in and act, without relying on my own devised procedures
If we had followed my own checklist of procedures, part of which was given to me, by the supplier and contrived and incorporated into our own device by me and my associates, we would not have been embarrassed by the results of this presentation

Frankly, the LOI is not a work order and you should not think it's going to help you close any deal
Buyers can use an LOI to obtain the name, address and phone number of my supplier and then the buyers and brokers can back out of the deal
We get nothing and they get my source

It's a very good move for all of them and very bad for those who want to get paid for doing meaningful work
So far, all buyers have taken us to the finish line and then backed out
They are very hungry to do the deal, until we give them the vital information about my seller and then they back out, as if they lost their appetite

If you want to get paid, you have to have an irrevocable order and that means an ICPO
If you want to get paid, someone has to call the bank and ask if the buyer can obtain an L/C to pay for this product; Let that person be the one who is taking the most commission
Without these two things, it's not very likely, based on our recent experience, that any buyer will complete any purchase

We can learn from our mistakes or we can just repeat those mistakes, indefinitely
We are like the dog who chases the stick which wasn't thrown
I want to be the type of broker, who learns quickly from my own mistakes, because I'm not smart enough to learn from the mistakes of others
Most brokers in your position will not be able to learn from hearing about our mistakes
You will just have to make your own mistakes and learn from them

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Some will try to persuade you not to go forward with the NCNDA, claiming that it's not worth the paper it's written on, in the case of the ICC NCNDA form, I agree!

If you use the ICC form, you will learn some things about that form
For one, the ICC doesn't arbitrate for non members
Most brokers don't know that
They use the ICC form, because it's easy
The ICC form invites trouble
It calls for damages of one to one
That's like putting a sign on the store which reads, Come in and shoplift; If caught, you will have to pay for the merchandise you attempted to steal
This invites buyers and sellers to cheat brokers, because the only penalty, if caught, is to pay the broker
Now, how are you going to catch them? Do you think the buyer will tell you? How about the seller?
They both have an incentive to cheat you, because the buyer pays less and the seller keeps more, if you are not in the picture
Since the ICC does not arbitrate for non members, you have to join, first, then pay them the arbitration fee and then they will take 30 days to consider it
If your case is like ours, then you will also be asked to pay $88,000 up front to the ICC, before you even know if they will take the case
If they don't take your case, do you get a refund? What do you think?
So, the ICC form of the NCNDA is worthless to us and it invites trouble and so I changed it
My form calls for triple damages
A buyer or seller will think twice, before going around me
If they do, I will have an excellent case, maybe. All I need is proof that they did the deal
My NCNDA form also calls for no arbitration
If I have a problem, I will take my case to an international lawyer and present my evidence and see if he will take the case, without an up front fee.

Broker Objectives
1. To provide buyer and seller with the most professional service
2. To protect the commission of the brokers

If this procedure is the most highly developed method, then we follow it, closely
If it need changes, we modify it
1. Verbal agreement on
a. product specifications
b. grade
c. quantity
d. payment terms:
CIF CNF FOB
CIF CNF FOB
e. port destination
f. discharge rate
g. shipment schedule
h. shipment sizes
i. term of contract
j. price
k. commission
l. commission split

2. NCNDA signed my all parties who have involvement in any way
3. ICPO with bank information, payment terms, term of contract, acknowledgment of broker, product specifications
4. NCNDA signed my all parties who have involvement in any way
5. ICPO with bank information, payment terms, term of contract, acknowledgment of broker, product specifications
6. Confirm the buyer can get an L/C
7. IMFPA filled out by all brokers who are getting paid
8. Government Licensing and registration - advise broker that the buyer must be licensed to do business in that country
9. Allocation and Soft Offer must be signed by the buyer and returned
10. FCO
11. Draft Contract
12. Final Contract
13. Visit factory or refinery
14. Pull L/C
15. Ships loaded
16. SGS Inspection
17. Bill of Lading
18. Bank Receives Documents
19. Bank Releases Funds to Seller
20. Wire Funds to Brokers
21. Spend the Money