The broker and the IMFPA: how fees are protected without distorting the deal
Most people in a commodity deal are neither buyer nor seller. Handled properly, the intermediaries are not a risk to remove. They are how deals get found.
By Hugo Amanajás
Most people involved in a commodity deal are not the buyer or the seller. They are the brokers, mandates and agents who connected them. The market has an old habit of treating those people as a risk to be removed. Handled properly, they are not a risk. They are how deals get found, and the IMFPA is how they get paid without bending anything out of shape.
The fear, and where it comes from
The fear is circumvention: that once the buyer and seller finally meet, they cut the intermediary out of the next deal, and the one after that. That single fear drives most of the dysfunction in this market. It is why principals get hidden, why chains grow to five and six undisclosed layers, and why so many offers cannot be verified. And it is self-defeating, because hiding the principals is exactly what makes a deal impossible to close in the first place.
What the NCNDA and IMFPA actually do
- NCNDA, the non-circumvention and non-disclosure agreement, is signed before any introduction. It turns circumvention from bad manners into a breach of contract with consequences.
- IMFPA, the master fee protection agreement, fixes the intermediaries' fees and secures them out of the transaction. The fee is paid from the deal, not added on top of the buyer's price.
Because the fee is protected and paid from the transaction rather than bolted onto the price, nobody in the chain has a reason to inflate the price or bend the terms to defend their cut. The incentive to distort the deal, which is what makes long broker chains dangerous, simply goes away.
What we need from an intermediary
- A disclosed principal you genuinely represent, a buyer or a seller with a name.
- A mandate or authority you can show.
- Willingness to sign the NCNDA and IMFPA before introductions are made.
/ Disclosure is what makes the fee safe
A broker who insists on staying invisible is asking you to trust a chain you cannot see. A broker who discloses, signs the protections and names the principal is doing the job the right way. That is the broker we work with, and that is the broker who actually gets paid.
The full documentary procedure referenced here is published on our Procedures page.
View Procedures/ About the author
Hugo Amanajás
Hugo Amanajás is an engineer and commodities broker, and the founder of Juros e Bolsa, a CVM-authorised investment advisory in Brazil. He works on the origination and structuring of Brazilian commodities and writes Duna Trading's Insights on how the physical trade actually works, from documentary procedure to compliance.
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