The Transaction Architecture Constructor returns a diagram and seven panels. This note explains what each of them means, in what order to read them, how to treat the structural checks, and where an indicative structure stops and a mandate begins.
Five diagram layers · Seven panels · Three levels of finding · The limits of the model
Anatomy of the outputFigure · one
Six decisions go in; a diagram in five layers and seven panels come back. Only F judges — and what it finds is an instruction to change a selection, not a risk to be priced.
1 What the constructor produces
And what the word indicative is doing in the disclaimer.
The constructor assembles a transaction from ten decisions. It returns the shape of that transaction: who stands where, what document moves between whom, how the price is formed and settled, how cash is applied, what can go wrong and what answers it, and which conflicts the combination itself creates. It is a structuring instrument, not a pricing engine and not a credit decision.
Indicative has a precise meaning here. Every panel is derived from the ten selections by rule, not from a market feed and not from a specific counterparty. The output is correct as a structure and neutral as to the deal. Two things follow. First, no figure in the output is a quotation. Second, nothing in the output survives contact with a named counterparty untested - the bank still underwrites, the insurer still prices, the lawyer still drafts.
What the constructor is good for is the conversation before all of that. It sets the vocabulary, exposes the conflicts early, and produces a document that a producer, a buyer and a bank can read at the same table.
2 Working order
The selections are not independent. This sequence avoids rework.
Step
Decision
Why it comes here
01
Commodity and destination market
These two fix the regulatory frame - CBAM scope and CN codes, standards, licences and quotas. Everything downstream inherits it. The destination is the import jurisdiction, not the seller's.
02
Delivery basis
The Incoterm decides who arranges carriage, where risk passes and who declares the import. It also decides who carries the border carbon obligation in fact, which is why it is set before the financing.
03
Trade structure
Matched, held, pre-paid or converted. This is where the working capital sits, and it constrains which instruments can work at all.
04
Pricing and hedging
Pricing decides what is being financed - a known amount or a moving one. Hedging decides who absorbs the movement. A provisional invoice and a margin call are the same question asked twice.
05
Instrument and variant
Chosen by what the bank lends against. The variant then moves bank and country risk between the parties without changing the instrument.
06
Credit enhancement
Added last, because it answers a risk that the first five steps have already made visible.
07
Read panel F
The structural checks fire on the combination, not on any single choice. They are the reason to go back and change one of the six decisions above.
The role of MSE is orthogonal to all seven and can be set at any point. It changes who signs, not what the structure is.
3 The diagram
Five layers over one scene. The layers hide relationships, they do not change them.
Layer
What it isolates
Full map
Every party and every relationship at once. Use it to check that nobody is missing, not to read detail.
MSE mandate
What MSE touches. The dotted spokes on this layer are coordination, not contract - MSE organises the flow without standing inside the parties' own agreements, except where it contracts in its own name as commission agent.
Physical & title
Goods, transport documents and the passage of title and risk. The corridor across the scene is the physical movement, and the marker on it is the Incoterms transfer of risk.
Financing & security
The lender, the accounts and the security package - assignment, pledge, control of documents and of cash.
Hedging & price
The broker or swap counterparty, the margin flow and where the price is fixed.
Line colour carries meaning and is repeated in the legend under the diagram: goods and title, funds and margin, security and account control, service and clearing. Solid and dashed lines are contracts between the parties. Dotted spokes are coordination. An arrowhead shows direction of the obligation, not of the paperwork.
4 The seven panels
Each panel answers one question. Read them in this order the first time.
Panel
The question it answers
What to look for
A · MSE role
What does MSE actually do here and how is it paid.
Whether MSE contracts in its own name. That single line decides whether MSE is inside the chain or beside it.
B · Parties & roles
Who is in the transaction and why each is needed.
Any party you did not expect. A surveyor, a collateral manager or a security agent appearing here is the structure telling you what it costs to be bankable.
C · Documentation
What is signed and issued, by whom, to whom, and what each document does.
The sequence. Documents are numbered in the order they arise, and the order is the deal - a document out of place is a control that has been lost.
D · Pricing & waterfall
How the price forms, how the invoice works, and in what order cash is applied.
The waterfall. It says who is paid first when there is not enough, which is the only moment the answer matters.
E · Risk matrix
Which risks the structure carries and what answers each one.
Any risk whose mitigant is a party rather than an instrument. That is a dependency, not a mitigant.
F · Structural checks
What this specific combination breaks, strains or requires.
Everything. See the next section.
G · Standards
Which certifications and standards the commodity brings with it.
Anything with a date attached. Standards with commencement dates are the items that turn a working structure into a failed one at a fixed point in the future.
Professional terms and abbreviations in the panels are linked to the MSE Lexicon, which defines them. This note explains how to read the structure. The lexicon explains what the words mean.
5 Structural checks and their three levels
Panel F is the only panel that judges. The severity is not a tone, it is an instruction.
Severity
Meaning
What to do
Blocking
The structure does not work as selected. The combination is internally contradictory, or it is prohibited in the jurisdiction chosen.
Change a selection. A blocking finding is not a risk to be priced, it is an error to be removed. Nothing downstream of it is reliable.
Review
The structure works, but a condition sits outside the parties' control - a licence, a quota position, a regulatory clock, a counterparty decision.
Convert it into drafting. A review finding is the sentence that belongs in the contract as a condition precedent, a long-stop date or an allocation of a cost that has not yet been fixed.
Note
A property of the structure that experienced parties are expected to know and that inexperienced parties consistently miss.
Confirm it is understood on both sides. Most disputes in physical trade begin as a note that nobody read out loud.
Findings are sorted by severity. A structure with no blocking findings is not therefore approved - it is merely internally consistent. Approval is a credit decision and lives elsewhere.
6 The document
What the exported PDF is for.
The export carries the diagram, all seven panels and the basis of preparation, on MSE letterhead, with a reference and a date. It is built to be circulated as a pre-read: to a producer before a term sheet, to a buyer before an off-take discussion, to a bank before a credit application. The optional Prepared for line names the recipient on the document itself.
It is deliberately not a term sheet. It contains no prices, no volumes, no names of counterparties and no commitments, which is exactly why it can be sent early and to more than one party.
7 Where the model stops
Stated plainly, because the value of the tool depends on the boundary being clear.
Not modelled
Why
Price levels and premiums
The constructor names the reference and the mechanism. The number is a market fact on a date and belongs in the contract, not in a structural model.
Credit appetite and pricing of finance
Margins, advance rates, tenor and approval depend on the borrower, the bank and the moment. No structural rule produces them.
Named-party screening
Sanctions and KYC apply to persons, vessels and beneficial owners, not to structures. Screening is a separate exercise and is assumed, not performed.
Tax
VAT treatment, permanent establishment, withholding and transfer pricing turn on facts and residence, and vary by pair of jurisdictions.
Terminal and port operations
Handling, storage regimes, throughput and berth performance are set at the terminal, not by the transaction structure.
Insurance underwriting
The structure states what cover is required. Whether it is available, at what rate and with what exclusions is an underwriting question.
Defence, military and dual-use flows are outside MSE's scope entirely and are not modelled at any level.
8 From structure to mandate
What changes when a structure stops being indicative.
An indicative structure becomes a transaction when three things are supplied that no model can generate: a named counterparty on each side, a bank that has said yes in writing, and a set of conditions precedent with dates against them. MSE acts at that point as commission agent under Swiss OR Art. 425-438, as structuring adviser, or as execution and risk-management agent, depending on which of the three is missing.
The route from this page is short. Build the structure, read panel F, change what it tells you to change, export the document, and send it with a question rather than a proposal.
This note describes a modelling method. It is not legal, tax, accounting or financing advice. Metal Supply Experts GmbH acts as commission agent, structuring adviser or mandated arranger under Swiss OR Art. 425-438 and is not a principal, lender, hedge counterparty or insurer in any structure shown by the constructor. Parties, documentation, pricing and the allocation of risk are subject to negotiated contracts, applicable law, sanctions and KYC screening, hedge and credit lines and bank credit approval.
