A safekeeping receipt is a contract with a bank that a valuable item or items will be kept at the bank and protected, but is not included as a part of the assets of the bank. The items will not be used for the investment purposes of the bank, but will be safe guarded for the person who initiates the receipt.
During the time the investor is in possession of the safekeeping receipt, he or she receives the benefits of that security. An investor may try to make money by leasing safekeeping receipts. This is a process of leasing a valuable property or security.Leasing safekeeping receipts works just like any other leasing of an instrument. Clients may wish to lease an instrument in order to increase likelihood of trading or as collateral for a credit line. Safekeeping receipts may be issued as a certificate of deposit for a lease to keep an instrument safe until the contract is up.
For the time of the lease contract, the investor, in essence, owns the security. This can be a low risk way to invest money. Responsibility of the security is greatly decreased when an investor only leases it for a time. It is easy to get out if the security goes bad, or if problems arise with the investor. He or she can re-lease the security if things are going well, or can move on to a more profitable investment if it doesn?t work out.
There are also many risks associated with leasing safekeeping receipts. The fees that are paid to the lender can be quite high and may be a percentage of the full value of the security. Treasury securities are especially dangerous. These often involve foreign treasuries and the lenders may not even produce proof of a security. It is amazing how easily scam artists are able to get away with such offerings. It is filled with scams and false claims.
Investors should never buy excuses that explain away the reasons no documentation can be provided. Demand proof, appraisal, receipts, bank statements, etc to ensure that the investment lease is legitimate. Be aware of current trends in fees for leases so that an inappropriate fee is not sustained. Knowledge is power when it comes to safe investing. To avoid problems with leasing safekeeping receipts it is important to get plenty of paperwork that proves the value and nature of the items in the safekeeping of a bank.
With so many investments choices, it can be really confusing choosing the perfect investment strategy. Inquest can advise you the best track to invest in the market with poise.
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