You are on page 1of 11

'HPDQG6LGH$SSURDFKHVWR3ODQQLQJ:DWHU6XSSO\3URYLVLRQ

E\

6XPLOD*XO\DQL

3URSRQHQWVRIGHPDQGVLGHDSSURDFKHVSUHVHQWWKHPDVWKHQHZDQGDOWHUQDWLYH
DSSURDFKWRSODQQLQJIRUDQGSURYLVLRQRIZDWHUDQGVDQLWDWLRQVHUYLFHVLQGHYHORSLQJ
FRXQWULHV,QLWVVLPSOHVWIRUPWKHQHZDSSURDFKDUJXHVWKDWVHUYLFHVSURYLGHUVVKRXOG
SURYLGHVHUYLFHVWKDWSHRSOHZDQWDQGIRUZKLFKWKH\DUHZLOOLQJWRSD\'HILQHGDV
VXFKWKLVQHZDSSURDFKPHUHO\DWWHPSWVWRLPSOHPHQWDQRWLRQWKDWKDVH[LVWHGLQSXEOLF
ILQDQFH WKHRU\OLWHUDWXUHIRUDORQJWLPH 0LOOLPDQ*UDPOLFK 2QWKHRWKHU
KDQGWKHUHDUHIHZSUHFHGHQWVLQHLWKHUWKHGHYHORSHGRUWKHGHYHORSLQJZRUOGZKHUH
ZDWHU XWLOLWLHVD SURYLGHVHUYLFHRQO\WRKRXVHKROGVWKDWDUHZLOOLQJWRSD\WKHIXOOFRVW
RIWKHVHUYLFHDQGE FRQVFLRXVO\SODQWRSURYLGHDORZHUOHYHORIVHUYLFHRUQRVHUYLFHDW
DOOEHFDXVHDSDUWLFXODUFRPPXQLW\KDVDORZHUZLOOLQJQHVVWRSD\RUDIIRUGDELOLW\,WLV
ZRUWKHPSKDVL]LQJWKDWWKHODWWHUSRLQWLVQRUPDWLYHO\GLIIHUHQWIURPDVLWXDWLRQZKHUHD
XWLOLW\GHIDFWRSURYLGHVQRVHUYLFHRUSRRUHUVHUYLFHLQVD\DVTXDWWHUVHWWOHPHQWWKH
QHZDSSURDFKDUJXHVWKDWLWLVOHJLWLPDWHIRUWKHXWLOLW\WRQRWSURYLGHVHUYLFHWRD
QHLJKERUKRRGRUYLOODJHWKDWFDQQRWSD\IRUWKHVHUYLFH7KHWZRSRLQWVGHOLQHDWHGDERYH
DUHWKHQWKHGLVWLQJXLVKLQJIHDWXUHVRIWKHQHZDQG:RUOG%DQNOHGGHPDQGGULYHQ
DSSURDFKWRZDWHUVXSSO\
,QWKLVSDSHU,ZLOOILUVWGLVFXVVKRZWKHSURSRQHQWVRIWKHGHPDQGGULYHQDSSURDFK
SHUFHLYHWKHSUREOHPZLWKZDWHUVXSSO\WKHLULQWHUSUHWDWLRQRIZK\VXSSO\VLGH
DSSURDFKHVGRQRWZRUNDQGWKHHYLGHQFHWKDWKDVLQIOXHQFHGWKHP6HFRQG,SUHVHQWWKH
:RUOG %DQN
VGHILQLWLRQRIWKHQHZDSSURDFKDQGLWVLPSOLFDWLRQV7KLUG,H[DPLQHWKH
GHPDQGGULYHQDSSURDFKDVDQDQDO\WLFDOWHFKQLTXHDQGSODQQLQJWRROLWV
UHFRPPHQGDWLRQVRQNH\FRPSRQHQWVRIVHUYLFHGHVLJQDQGWKHHYLGHQFHLIDQ\RILWV
HIILFDF\)LQDOO\,GLVFXVVWKHFRQWULEXWLRQVDQGZHDNQHVVHVRIWKLVQHZDSSURDFK

7KH SUREOHPDQGZK\ROGVXSSO\DSSURDFKHVGRQRWZRUN
7KH:RUOG%DQN
V:RUOG'HYHORSPHQW5HSRUW  HVWLPDWHVWKDWDERXWELOOLRQ
SHRSOHLQWKHZRUOGGRQRWKDYHDFFHVVWRVDQLWDWLRQVHUYLFHV$ERXWDELOOLRQSHRSOHGR
QRWKDYHDFFHVVWRDGHTXDWHZDWHUVXSSO\VSHFLILFDOO\PLOOLRQXUEDQUHVLGHQWVODFN
D VRXUFHRISRWDEOHZDWHUQHDUWKHLUKRPHDQGPLOOLRQUXUDOUHVLGHQWVDUHZLWKRXWVDIH
ZDWHU SS 7KH5HSRUWDUJXHVWKDWIRUPDQ\SHRSOHLQGHYHORSLQJFRXQWULHVZDWHU
VXSSO\VDQLWDWLRQDQGVROLGZDVWHDUHWKHPRVWLPSRUWDQWRIDOOHQYLURQPHQWDOSUREOHPV
 DQGKHQFHQHHGWREHDFFRUGHGWRSSULRULW\LQWKHHQYLURQPHQWDODJHQGD SS 
+RZHYHUFXUUHQWVXSSO\VLGHDSSURDFKHVDUHXQOLNHO\WRVROYHWKHSUREOHP$OWKRXJK
WKHUH KDYHEHHQYLJRURXVHIIRUWVWRLPSURYHFRYHUDJHDQGXSJUDGHZDWHUV\VWHPVPDQ\
RIWKHLPSURYHGV\VWHPVGRQRWZRUND DQHVWLPDWHGRQHLQIRXUV\VWHPVDUHQRW
ZRUNLQJDWDQ\RQHWLPHE WKHQXPEHURIV\VWHPVEHLQJDEDQGRQHGLVDSSUR[LPDWHO\
HTXDOWRWKHQXPEHURIV\VWHPVEHLQJFRPPLVVLRQHGDQGF HYHQLIWKH\GRIXQFWLRQWKH\
DUHRIWHQQRWXVHGIRUH[DPSOHVXUYH\VLQ.HQ\DDQG&RWHG
,YRLUHVKRZWKDWRQO\RQH
WKLUG RIWKHSRSXODWLRQUHSRUWHGWRKDYHDFFHVVWRLPSURYHGIDFLOLWLHVDFWXDOO\XVHWKHP
%ULVFRHGH&DVWUR*ULIILQDQG2OVHQ 

7KH:RUOG%DQN
V:DWHU'HPDQG5HVHDUFK7HDP  DUJXHVWKDWSURMHFWIDLOXUHDQG
ODFN RIPDLQWHQDQFHFDQEHGLUHFWO\DVFULEHGWRDIRFXVRQVXSSO\VLGHLVVXHVLQZDWHU
SURYLVLRQDODFNRIXQGHUVWDQGLQJRIGHPDQGIRUZDWHUDQGXVHRISRRUUXOHVRIWKXPE
WKDW EHOLHDQDGHTXDWHXQGHUVWDQGLQJRIWKHLVVXH)RUH[DPSOHWKH7HDPDUJXHVWKDWWKH
VXSSO\VLGHWKXPEUXOHWKDWSHRSOHZLOOSD\DERXWSHUFHQWRIWKHLULQFRPHKDVQR
EDVLVVLPLODUO\WKHQRWLRQWKDWUXUDOKRXVHKROGVFDQQRWDIIRUGWRSD\IRUSLSHGZDWHULV
RIWHQDPLVWDNH,WLVWKHVHLQFRUUHFWUXOHVDQGDSRRUXQGHUVWDQGLQJRIZDWHUGHPDQGWKDW
KDYHOHGWRPDVVLYHDQGSRRUO\WDUJHWHGVXEVLGL]DWLRQRIVHUYLFHLQVXSSO\GULYHQ
DSSURDFKHV7KHVXEVLGLHVKDYHKHOSHGWKHULFKEXWWKHQRWWKHSRRUKDYHKXUWWKH
ILQDQFLDOYLDELOLW\RIXWLOLWLHVDQGOHGWRGHWHULRUDWLRQLQVHUYLFHUHOLDELOLW\DQG
FRQVHTXHQWO\WRORZZLOOLQJQHVVWRSD\E\XVHUVQRZPRVWFRPPXQLWLHVDUHFDXJKWLQD
ORZOHYHOHTXLOLEULXPWUDS)LQDOO\WKH7HDPVWURQJO\GHQRXQFHVWKHZLGHO\KHOGEHOLHI
RI VRPHIRUDOOUDWKHUWKDQPRUHIRUVRPHWKDWKDVXQGHUSLQQHGVXSSO\VLGHZDWHU
SURMHFWVGXULQJWKH8QLWHG1DWLRQVGHFDGHIRUZDWHUDQGVDQLWDWLRQ2YHUDOOVXSSO\VLGH
DSSURDFKHVDUHLQDGHTXDWHWRVROYHWKHSUREOHPDQGWKHUHLVQHHGIRUDQHZSDUDGLJP

(YLGHQFHIURPPLFURVWXGLHVDVWKHEDVLVIRUWKHQHZGHPDQGGULYHQSDUDGLJP
(YHQDVHYLGHQFHRISUREOHPVZLWKVXSSO\DSSURDFKHVZDVPRXQWLQJPLFURVWXGLHVZHUH
GRFXPHQWLQJZLGHVSUHDGXVHRIZDWHUYHQGLQJLQGHYHORSLQJFRXQWULHV7KHVHVWXGLHV
KDYHIRXQGWKDWDPDMRULW\RIWKHSRSXODWLRQLQFLWLHVDVGLIIHUHQWDV-DNDUWD2QLWVKDDQG
3RUWDX3ULQFHLVUHO\LQJRQSULYDWHZDWHUYHQGRUVWRPHHWWKHLUQHHGVDQGWKDWWKH\DUH
SD\LQJH[RUELWDQWSULFHVVHYHUDOWLPHVWKRVHFKDUJHGE\WKHJRYHUQPHQWXWLOLW\IRU
WKHVHVHUYLFHV)RUH[DPSOHDVWXG\RI2QLWVKD1LJHULDILQGVWKDWRXWRIDSRSXODWLRQRI
URXJKO\KRXVHKROGVRQO\KRXVHKROGV  KDYHDFFHVVWRZRUNLQJZDWHU
FRQQHFWLRQVDQGWKHYDVWPDMRULW\UHOLHVRQWKHYHQGLQJV\VWHP :KLWWLQJWRQ/DXULDDQG
0X  'XULQJWKHGU\VHDVRQWKHZDWHUYHQGLQJV\VWHPFROOHFWVDERXWWLPHVDV
PXFK UHYHQXHDVWKHSXEOLFZDWHUXWLOLW\2QDQDQQXDOEDVLVKRXVHKROGVLQ2QLWVKDSD\
ZDWHU YHQGRUVWZLFHWKHRSHUDWLRQDQGPDLQWHQDQFHFRVWRIDSLSHGGLVWULEXWLRQV\VWHP,Q
FRQWUDVWWRWKHWKXPEUXOHWKDWSHRSOHZLOOSD\PD[LPXPRIRIWKHLULQFRPHWKH
VWXG\ILQGVWKDWWKHSRRUHVWKRXVHKROGVDUHSD\LQJWKHPRVWIRUZDWHUDQGDVPXFKDV
RIWKHLULQFRPHGXULQJWKHGU\VHDVRQYHUVXVIRUWKHXSSHULQFRPHKRXVHKROGV7KH
FRQFOXVLRQLVFOHDUHYHQLQWKLVUHODWLYHO\SRRUDQGVPDOOWRZQLQ1LJHULDKRXVHKROG
H[SHQGLWXUHVRQZDWHUDUHVXIILFLHQWWRPDNHDSLSHGZDWHUV\VWHPIHDVLEOHDQGDOORZIXOO
FRVWUHFRYHU\
7KH UHVXOWVIURP2QLWVKDDUHFRQVLVWHQWZLWKILQGLQJVHOVHZKHUH)RUH[DPSOHHYHQLQDQ
DIIOXHQWFLW\OLNH-DNDUWDRQO\SHUFHQWRIWKHSRSXODWLRQKDVDFFHVVWRSLSHGZDWHU
&UDQH  DQGLQ3RUWDX3ULQFH+DLWL)DVV  ILQGVWKDWWKHSRRUHVWKRXVHKROGV
VRPHWLPHVVSHQGDVPXFKDVRIWKHLULQFRPHRQZDWHU,QVXPWKHVHVWXGLHVVHUYHDV
WKHEDVLVIRUWKHFRQFOXVLRQWKDWVXEVLGLHVIRUZDWHUWKDWDUHPHDQWWREHQHILWWKHSRRUGR
QRWUHDFKWKHPRQO\DIHZWKHULFKDUHVHUYHGE\XWLOLWLHVDQGHQMR\WKHVXEVLG\DQG
WKHVHVXEVLGLHVWHQGWRORFNXWLOLWLHVDQGFRPPXQLWLHVLQDORZOHYHOHTXLOLEULXPWUDS7KH
VWXGLHVDOVRVXJJHVWDZD\RXWRIWKHWUDSWKHHYLGHQFHRIKLJKZLOOLQJQHVVWRSD\IRU
ZDWHU PHDQVWKDWXWLOLWLHVFDQDQGVKRXOGFKDUJHIXOOFRVWVIRUZDWHUDQGXVHWKHUHYHQXHV
WR LPSURYHVHUYLFHDQGWRH[SDQGLWWRFRYHUWKHSRRU7KHVHVWXGLHVRIWHQIXQGHGE\

DJHQFLHVOLNHWKH:RUOG%DQNKDYHKDGDVWURQJLPSDFWRQZDWHUDQGVDQLWDWLRQSROLFLHV
HVSRXVHGE\WKHVHDJHQFLHV
7KH :RUOG%DQN
VGHPDQGGULYHQDSSURDFKWRSURYLVLRQRIVDQLWDWLRQDQGFOHDQZDWHU
7KLVVHFWLRQGHOLQHDWHVWKH:RUOG%DQN
VFXUUHQWDSSURDFKZKLFKDUJXDEO\UHSUHVHQWV
WKH GHILQLWLYHGHILQLWLRQRIWKHQHZGHPDQGVLGHDSSURDFK3URSRQHQWVRIWKHQHZ
GHPDQGGULYHQDSSURDFKHPSKDVL]HWKDWLWQHHGVWREHLPSOHPHQWHGDVDZKROH
LQWHUQDOO\FRQVLVWHQWSDFNDJHDQGWKH\GRQRWOHDYHPXFKURRPIRUDOWHUQDWLYH
LQWHUSUHWDWLRQVRIWKHDSSURDFK+RZHYHUWKHDSSURDFKKDVQRWWKXVIDUEHHQ
LPSOHPHQWHGDQ\ZKHUHDVDSDFNDJHLWLVOLNHO\WKDWJRYHUQPHQWVPD\FKRVHWR
LPSOHPHQWRQO\FHUWDLQDVSHFWVRIWKHQHZDSSURDFKRUWRUHO\RQGHPDQGVLGHVWXGLHV
RQO\WRWDLORUWKHLUXVXDOVXSSO\VLGHDSSURDFKHV

7KH :RUOG'HYHORSPHQW5HSRUW :RUOG%DQN DUJXHVWKDWGHYHORSLQJFRXQWULHVFDQ


JHQHUDWHODUJHJDLQVIURPDGRSWLQJWKHIROORZLQJDSSURDFK
 PDQDJLQJZDWHUUHVRXUFHV
 SURYLGLQJDWIXOOFRVWSULYDWHVHUYLFHVWKDWSHRSOHZDQWWKDWLVZDWHUDQGFROOHFWLRQ
RIH[FUHWDZDVWHZDWHUDQGVROLGZDVWH
 DOORFDWLQJVFDUFHSXEOLFIXQGVRQO\IRUVHUYLFHVZLWKZLGHUFRPPXQDOEHQHILWVWKDW
LV WUHDWPHQWDQGGLVSRVDORIH[FUHWDZDVWHZDWHUDQGVROLGZDVWH
 FUHDWLQJIOH[LEOHDQGUHVSRQVLYHLQVWLWXWLRQDOPHFKDQLVPVIRUSURYLGLQJVHUYLFHVZLWK
D ODUJHUROHIRUFRPPXQLW\RUJDQL]DWLRQVDQGWKHSULYDWHVHFWRU
7KH DSSURDFKLVEDVHGRQHYLGHQFHWKDWXUEDQUHVLGHQWVZDQWRQSORWZDWHUFRQQHFWLRQV
DQGDUHZLOOLQJWRSD\DORWIRULWFRQWUDU\WRSUHYLRXVQRWLRQVUXUDOGHPDQGLVQRWIRUD
EDVLFQHHGVSDFNDJHFRPPXQDOKDQGSXPSVRUERUHZHOOVUXUDOKRXVHKROGVDUHRIWHQ
ZLOOLQJWRSD\IRUKLJKHUOHYHOVRIVHUYLFHVXFKDV\DUGWDSVDQGDOOXVHUVDUHZLOOLQJWR
SD\PRUHIRUPRUHUHOLDEOHVHUYLFH2YHUDOOXVHUFKDUJHVGHVLJQHGWRUHFRYHUIXOOFRVWV
FDQKHOSFRPPXQLWLHVEUHDNRXWRIWKHORZOHYHOHTXLOLEULXPWUDS

:KDW DUHWKHLPSOLFDWLRQVRIWKLVDSSURDFK"7KHLPSOLFDWLRQVDUHSHUKDSVEHVWLOOXVWUDWHG
E\WKH:RUOG%DQN
VDSSURDFKWRUXUDOZDWHUSURYLVLRQ7KH%DQNKDVGHYHORSHGD
W\SRORJ\RIYLOODJHVEDVHGRQWKHLUGHPDQGIRUZDWHUDQGVXJJHVWVKRZRQHPLJKWEHJLQ
GHVLJQLQJSURJUDPVIRUWKHVHUXUDOFRPPXQLWLHV :RUOG%DQN:%:DWHU
'HPDQG5HVHDUFK7HDP 7KHVWXGLHVVXJJHVWWKDWWKHUHDUHIRXUFDWHJRULHVRIUXUDO
FRPPXQLWLHV
7\SH , XVHUV
ZLOOLQJQHVVWRSD\IRUSULYDWHFRQQHFWLRQVLVKLJKDQGZLOOLQJQHVVWRSD\
IRU SXEOLFZDWHUSRLQWVLVORZ5HFRPPHQGHGVWUDWHJ\RIIHUSULYDWHFRQQHFWLRQVUHFRYHU
DOOFRVWVWKURXJKWDULIIVDQGGHOLYHUDUHOLDEOHVHUYLFH
7\SH ,, RQO\DPLQRULW\RIKRXVHKROGVDUHZLOOLQJWRSD\WKHIXOOFRVWVRISULYDWH
FRQQHFWLRQEXWPRVWKRXVHKROGVDUHZLOOLQJWRSD\WKHIXOOFRVWRISXEOLFZDWHUSRLQWV
+HUH WKHFKDOOHQJHLVWRGHVLJQUHYHQXHFROOHFWLRQV\VWHPVWKDWDUHVHQVLWLYHWRSHRSOHV

SUHIHUHQFHVDERXWZKHQWKH\ZDQWWREX\ZDWHUDQGKRZWKH\ZDQWWRSD\IRULW3RVVLEOH
VWUDWHJ\EXLOGNLRVNVDQGRIIHUSULYDWHFRQQHFWLRQVWRWKRVHWKDWDUHZLOOLQJWRSD\IXOO
FRVWV
7\SH ,,, KRXVHKROGV
ZLOOLQJQHVVWRSD\IRULPSURYHGVHUYLFHLVKLJK DVDSHUFHQWRI

LQFRPH EXWQRWKLJKHQRXJKWRSD\IRUWKHIXOOFRVWRIDQLPSURYHGVHUYLFH XVXDOO\


EHFDXVHWKHFRVWRISURYLGLQJVHUYLFHLVKLJK 3RVVLEOHVWUDWHJ\LIVXEVLGLHVDUHDYDLODEOH
IURPFHQWUDOJRYHUQPHQWRUDLGDJHQFLHVWKHSULPDU\VHUYLFHRIIHUHGVKRXOGEHSXEOLF
WDSVZHOOVRUERUHKROHVKRZHYHULQSLSHGV\VWHPVPHWHUHG\DUGWDSVVKRXOGEHDOORZHG
ZLWK WDULIIVVHWWRUHFRYHUIXOOFRVWV
7\SH ,9 ZLOOLQJQHVVWRSD\IRUDQ\NLQGRILPSURYHGVHUYLFHLVORZ$FFRUGLQJWRWKH
%DQNWKLVLVXVXDOO\HLWKHUEHFDXVHWKHUHDUHDGHTXDWHDOWHUQDWLYHVRXUFHVRUEHFDXVH
ZDWHU VXSSO\LVVHHQDVWKHILQDQFLDOUHVSRQVLELOLW\RIWKHJRYHUQPHQW5HFRPPHQGHG
VWUDWHJ\GRQRWKLQJ XQOHVVDZLOOLQJQHVVWRSD\HPHUJHV 
,QVXPWKHGHFLVLRQRQZKDWOHYHORIVHUYLFHWRSURYLGHWRDFRPPXQLW\DVDZKROH
SULYDWHSLSHGFRQQHFWLRQVPHWHUHG\DUGWDSVSXEOLFWDSVDQGRUZDWHUNLRVNVRU
ERUHKROHVGHSHQGVRQRQO\RQHIDFWRUWKDWLVWKHDPRXQWWKDWWKHFRPPXQLW\LVZLOOLQJ
WR SD\+RZHYHUWKHWRSOHYHORIVHUYLFHSLSHGZDWHUDQGPHWHUHGSULYDWHFRQQHFWLRQV
 VKRXOGEHPDGHDYDLODEOHWRKRXVHKROGVZKRDUHZLOOLQJWRSD\IRULWHYHQLQ
FRPPXQLWLHVZKHUHWKHPDMRULW\ZLOOEHRIIHUHGDFFHVVRQO\WRORZHUOHYHOV\VWHPVVXFK
DVSXEOLFWDSV:KHWKHUWKLVDSSURDFKZLOOOHDGWRDV\VWHPWKDWLVPXFKGLIIHUHQWIURPWKH
FXUUHQWVLWXDWLRQZKHUHRQO\WKHULFKDUHFRQQHFWHGUHPDLQVXQFOHDU7KHNH\
GLIIHUHQFHLVSHUKDSVWKDWWKHULFKDQGFRQQHFWHGZLOOEHUHTXLUHGWRSD\VXEVWDQWLDOO\
PRUH IRUWKHLUZDWHU
7KH 'HPDQGGULYHQDSSURDFKDVDSODQQLQJWRRO
7KHJRDORIWKHQHZDSSURDFKLVWRVHOHFWSURMHFWVWKDWKDYHDKLJKHUFKDQFHRIVXFFHVV
SURMHFWVWKDWDUHHFRQRPLFDOO\MXVWLILDEOHDQGILQDQFLDOO\VXVWDLQDEOH)RUWKLVVXSSO\
QHHGVWREHPDWFKHGWRGHPDQG7KHLQWHQWLV L WRJLYHFXVWRPHUVEHWWHUVHUYLFHDQG
DOVRFKRLFHRIVHUYLFHOHYHOEDVHGRQWKHLUZLOOLQJQHVVWRSD\DQG LL WRJLYHXWLOLWLHV
UHYHQXHVDQGLQFHQWLYHVWRSHUIRUP,QWKLVVHFWLRQ,IRFXVRQKRZZDWHUSURMHFWVDUHWR
EHSODQQHGXQGHUWKLVDSSURDFKDQGZKDWWKHDSSURDFKVXJJHVWZLWKUHVSHFWWRD SURMHFW
VHOHFWLRQE VHOHFWLRQRIDOWHUQDWLYHV\VWHPVF PHWHULQJDQGG WDULIIV7KHUHLVOLWWOH
OLWHUDWXUHWKDWH[SOLFLWO\DUWLFXODWHVWKHRIILFLDORUVWDQGDUGSRVLWLRQRQWKHVHWRSLFVLQ
WKH GLVFXVVLRQEHORZ,ZLOOKHQFHUHO\RQP\LQWHUSUHWDWLRQRIZKDWWKHOLWHUDWXUHRQ
GHPDQGGULYHQDSSURDFKHVDSSHDUVWRVXJJHVW

3URMHFW VHOHFWLRQPXVWEHEDVHGDPRQJRWKHUWKLQJVRQHFRQRPLFDQDO\VLV7KHVHOHFWHG
SURMHFWPXVWEHHFRQRPLFDOO\MXVWLILDEOH:KLOHWKLVPLJKWVRXQGOLNHDVWDQGDUGUXOHD
UHYLHZRI:RUOG%DQNZDWHUSURMHFWVUHYHDOHGWKDWHFRQRPLFEHQHILWVKDGQRWEHHQ
HVWLPDWHG TXDQWLILHG LQDQ\RIWKHSURMHFWVWKDWLVJRRGHFRQRPLFDQDO\VLVZDVQRWD
FULWHULRQIRUVHOHFWLRQ :KLWWLQJWRQOHFWXUH 7KHQHZDSSURDFKDSSHDUVWRVXJJHVWV
WZR UXOHVD PD[LPL]HQHWEHQHILWV WKHVXPRIWKHSURGXFHUDQGFRQVXPHUVXUSOXV 
WKLV UHTXLUHVUHODWLYHO\DFFXUDWHHVWLPDWHVRIGHPDQGDQGVXSSO\FRVWFXUYHVDQGE VHOHFW
RQO\WKRVHSURMHFWVIRUZKLFKWKHUHFDQEHIXOOFRVWUHFRYHU\$QH[FHSWLRQZRXOGEH
7\SH,,,NLQGRIFRPPXQLWLHVZKHUHVRPHRIWKHFDSLWDOEXWQRW2 0FRVWVFRXOGEH
ILQDQFHGWKURXJKJUDQWVRULQWHUQDWLRQDODLG
7\SLFDOO\WKLVLQYROYHVKRXVHKROGOHYHOVXUYH\V ZLWKDSSURSULDWHVDPSOLQJWHFKQLTXHV
IRU HDFKRIWKHFRPPXQLWLHVWKDWDSURMHFWLQWHQGVWRFRYHU7KHVXUYH\VQHHGWRLGHQWLI\

IRUH[DPSOHDOWHUQDWLYHZDWHUVRXUFHVSHUFHLYHGTXDOLW\FXUUHQWOHYHOVRIZDWHUXVHDQG
H[SHQGLWXUHVRQZDWHU7KHVXUYH\VDOVRQHHGWRHVWLPDWHXVHUV
ZLOOLQJQHVVWRSD\HLWKHU
WKURXJKGLUHFWPHWKRGVWKDWDVNSHRSOHKRZPXFKWKH\ZRXOGEHZLOOLQJWRSD\
FRQWLQJHQWYDOXDWLRQ RUWKURXJKLQGLUHFWPHWKRGVZKHUHZLOOLQJQHVVWRSD\LVLQIHUUHG
IURP FXUUHQWSUDFWLFHVDQGH[SHQGLWXUHV LHUHYHDOHGSUHIHUHQFHV 6XUYH\VLQRQH
FRPPXQLW\XVXDOO\FDQQRWEHXVHGWRSUHGLFWKRXVHKROGEHKDYLRUHYHQLQDQHLJKERULQJ
FRPPXQLW\VWXGLHVKDYHIRXQGZDWHUGHPDQGWREHH[WUHPHO\VLWHVSHFLILF *ULIILQHWDO
 
6HOHFWLRQRIOHYHORIVHUYLFHDQGDOWHUQDWLYHV*LYHQWKDWSURMHFWSODQQHUVKDYHWDNHQWKH
WLPHWRVWXG\DQGXQGHUVWDQGORFDOGHPDQGDQGSUDFWLFHVWKH\DUHLQDEHWWHUSRVLWLRQWR
DVVHVVZKLFKV\VWHPVWKHFRPPXQLW\SUHIHUVZKLFKRIYDULRXVWHFKQLFDODOWHUQDWLYHVLV
OLNHO\WRZRUNDQGZKLFKDOWHUQDWLYHVDUHHFRQRPLFDOO\DQGILQDQFLDOO\YLDEOH)XUWKHU
FXVWRPHUVFDQFKRVHDKLJKHUGLIIHUHQWOHYHORIVHUYLFHLIWKH\SD\IRULW3URSRQHQWVRI
GHPDQGGULYHQSODQQLQJDUJXHWKDWWKLVLVDNH\GLIIHUHQFHDVFRPSDUHGWRVXSSO\VLGH
SODQQLQJZKLFKKDVWHQGHGWRIRFXVRQLGHQWLI\LQJRQHEHVWWHFKQLFDOVROXWLRQZLWKLQWKH
ERXQGVRIDUELWUDULO\HVWDEOLVKHGFRQVWUDLQWVRUUXOHVRIWKXPEDQGKDYHQRWRIIHUHG
DOWHUQDWLYHV ,GLVFXVVWKLVSRLQWLQPRUHGHWDLOVXEVHTXHQWO\ 
8VHU IHHVDUHRIFRXUVHDFHQWUDOSLHFHRIWKHQHZDSSURDFK7KH\DUHFULWLFDOEHFDXVH
WKH\ZLOOKHOSUHGXFHZDVWHIXOFRQVXPSWLRQFXUWDLOH[FHVVGHPDQGWKDWDULVHVZKHQD
YDOXHGJRRGLVSURYLGHGIUHH)XUWKHUXVHUIHHVKHOSHQVXUHWKDWXWLOLWLHVKDYHDGHTXDWH
UHYHQXHVZKLFKWKH\FDQXVHWRLPSURYHVHUYLFHTXDOLW\DQGUHOLDELOLW\DQGWRH[SDQG
VHUYLFHWRFRYHUDJUHDWHUQXPEHURISHRSOHLQSDUWLFXODUWKHSRRU

0HWHULQJLVQHFHVVDU\WROHY\DSSURSULDWHXVHUFKDUJHVDQGHDFKZDWHUFRQQHFWLRQPXVW
EHPHWHUHG1RQYROXPHWULFXVHUFKDUJHVVXFKDVDSHUFDSLWDFKDUJHRUDPRQWKO\IODW
IHH DUHQRWUHDOO\WHQDEOHEHFDXVHHYHQWKRXJKWKH\UDLVHUHYHQXHVWKH\FRPSURPLVH
WKH NH\JRDORIDFKLHYLQJHFRQRPLFHIILFLHQF\0HWHULQJDOVRSURYLGHVYDOXDEOH
FRQVXPSWLRQLQIRUPDWLRQWRWKHXWLOLW\ZKLFKFDQEHXVHGWRGHVLJQDQDSSURSULDWHWDULII
VWUXFWXUH

7DULII VWUXFWXUHDQGUDWHVQHHGWREHGHVLJQHGWRHQVXUHWKDWWKHIXOOFDSLWDODQGRSHUDWLRQ
DQGPDLQWHQDQFHFRVWVFDQEHUHFRYHUHG7REHHIILFLHQWWKHYROXPHWULFWDULIIVKRXOGEH
VHW HTXDOWRWKHPDUJLQDOFRVWRIVHUYLFHSURYLVLRQ+RZHYHUWKLVPD\UHVXOWLQWKHXWLOLW\
ORVLQJPRQH\EHFDXVHDYHUDJHFRVWVWHQGWREHKLJKHUWKDQWKHPDUJLQDOFRVWRI
SURGXFWLRQ7RVROYHWKHSUREOHPWKHWDULIIFRXOGEHGHVLJQHGDVDWZRSDUWWDULIIIRU
H[DPSOHWKHPRQWKO\ELOOZRXOGFRQVLVWRIDIL[HGIHHSOXVDYDULDEOHFKDUJHZLWKWKH
WDULII RUUDWHSHUXQLW IRUWKHODWWHUEHLQJVHWHTXDOWRWKHPDUJLQDOFRVWRISURGXFWLRQ
:KLWWLQJWRQOHFWXUH 

'HYHORSLQJFRXQWULHVKDYHWHQGHGWRRSWIRUDQLQFUHDVLQJEORFNWDULIIVWUXFWXUHWKH
QRWLRQEHLQJWKDWWKHULFKFRQVXPHPRUHDQGFDQDIIRUGWRSD\PRUH5HFHQWVWXGLHV
VKRZ KRZHYHUWKDWWKLVPD\EHDKLJKO\LQDSSURSULDWHVWUXFWXUH7KLVLVEHFDXVHSRRU
KRXVHKROGVWHQGQRWWRKDYHLQGLYLGXDOFRQQHFWLRQV6HYHUDOSRRUKRXVHKROGVRIWHQVKDUH
D FRQQHFWLRQRUEX\IURPRWKHUKRXVHKROGVNLRVNVFRQVHTXHQWO\WKHSRRURIWHQHQGXS

SD\LQJDVLJQLILFDQWO\KLJKHUDYHUDJHSULFHWKDQULFKHUKRXVHKROGVZLWKLQGLYLGXDO
FRQQHFWLRQV &UDQH:KLWWLQJWRQ 7KHUHFRPPHQGHGWDULIIVWUXFWXUHLVKHQFH
QHLWKHULQFUHDVLQJRUGHFUHDVLQJEORFNWDULIIVEXWDXQLIRUPWDULIIVWUXFWXUH7KHDSSURDFK
DOVRDUJXHVWKDWWKHVDPHWDULIIVKRXOGDSSO\DFURVVYDULRXVZDWHUXVHUJURXSVVXFKDV
LQGXVWU\FRPPHUFLDOHVWDEOLVKPHQWVDQGUHVLGHQFHVWKDWLVLWDUJXHVIRUDQHOLPLQDWLRQ
RIFURVVVXEVLGLHV :KLWWLQJWRQOHFWXUH 7KHRQO\H[FHSWLRQWKDWPD\EHUHTXLUHG
IRU SRRUKRXVHKROGVLVSHUKDSVDQDPRUWL]DWLRQRIFRQQHFWLRQFKDUJHV :RUOG%DQN
 LQUDUHFDVHVIUHHSXEOLFWDSVDQGRUVXEVLGL]HGFRQQHFWLRQFKDUJHVPD\EH
MXVWLILDEOH

(YLGHQFH$VQRWHGHDUOLHUWKHUHLVQRHYLGHQFHRQZKHWKHUWKHUHFRPPHQGDWLRQV
VXJJHVWHGE\GHPDQGVLGHSODQQHUVZRXOGZRUNWKH\KDYHQRWEHHQLPSOHPHQWHG
DQ\ZKHUHDVDSDFNDJH7KHUHLVRQHFDVHKRZHYHUZKHUHLWVSRZHUDVDSODQQLQJWRRO
KDVEHHQWHVWHG,Q.HUHODDZLOOLQJQHVVWRSD\VXUYH\ZDVFRQGXFWHGEHIRUHDZDWHU
SURMHFWZDVLPSOHPHQWHGDQGDJDLQWKUHH\HDUVODWHUDIWHULPSOHPHQWDWLRQZDVFRPSOHWH
*ULIILQ HWDO 7KHIROORZXSVWXG\DWWHPSWHGWRDVFHUWDLQZKHWKHUSHRSOHLQGHHG
GLGZKDWWKH\VDLGWKH\ZRXOGGR*ULIILQDQGKLVFRDXWKRUVDUJXHWKDWWKH\SUHGLFWHGWKH
SURSRUWLRQRIKRXVHKROGVWKDWZRXOGFRQQHFWYHU\DFFXUDWHO\ SHUFHQWDFFXUDF\ DQG
WKDW WKH\ZHUHVXUSULVLQJO\DFFXUDWHLQDVVHVVLQJLQGLYLGXDOKRXVHKROGEHKDYLRU
SHUFHQWRIWKHKRXVHKROGVGLGZKDWWKH\VDLGWKH\ZRXOGGR LHFRQQHFWRUQRWFRQQHFWWR
WKH V\VWHP 7KHUHLVQRHYLGHQFHKRZHYHURQZKHWKHUWKHLUUHFRPPHQGDWLRQVRQLVVXHV
VXFK DVSULFLQJZRXOGKDYHZRUNHGDQGLQFUHDVHGWKHSURSRUWLRQWKDWFKRVHWRFRQQHFW
LQ .HUHODWKHZDWHUDXWKRULW\SURFHHGHGWRLPSOHPHQWWKHSURMHFWRQWKHVDPHWHUPVWKDW
LW ZDVRIIHULQJEHIRUHWKHZLOOLQJQHVVWRSD\VXUYH\ZDVFRQGXFWHG *ULIILQHWDO 
&RQWULEXWLRQVRIWKHGHPDQGOLWHUDWXUH
0LFUROHYHOGHPDQGVWXGLHVDQGWKHEURDGHUOLWHUDWXUHRQGHPDQGVLGHDSSURDFKHVKDYH
PDGHDYDOXDEOHFRQWULEXWLRQWRRXUXQGHUVWDQGLQJRIKRXVHKROGGHPDQGIRUZDWHUDQG
KRXVHKROGOHYHOGHFLVLRQVRQVRXUFHFKRLFH7KHVHVWXGLHVSURYLGHLPSRUWDQWKLQWVDVWR
ZK\SHRSOHPD\RUPD\QRWFRQQHFWWRDQHZV\VWHPDQGWKHYDULDEOHVWKDWSODQQHUV
QHHGWRFRQVLGHU,ZLOOGHOLQHDWHILYHLQVLJKWVWKDWDSSHDUWREHSDUWLFXODUO\VLJQLILFDQW

)LUVWWKHOLWHUDWXUHHPSKDVL]HVWKHMRLQWQHVVRIYDULRXVLQGHSHQGHQWYDULDEOHVLQ
GHWHUPLQLQJGHPDQGDQGVRXUFHFKRLFH :%:DWHU7HDP 8QOLNHSUHYLRXVVWXGLHV
WKDW KDYHWHQGHGWRIRFXVRQLQGLYLGXDOYDULDEOHVVXFKDVLQFRPHRUGLVWDQFHWKHQHZ
VWXGLHVHPSKDVL]HWKDWLQFRPHLVQRWWKHVROHGHWHUPLQDQWRIGHPDQGDQGLWLVRIWHQQRW
HYHQWKHPRVWLPSRUWDQWGHWHUPLQDQW5DWKHUWKUHHVHWVRIFKDUDFWHULVWLFV
VRFLRHFRQRPLFFKDUDFWHULVWLFVRIWKHKRXVHKROGFKDUDFWHULVWLFVRIH[LVWLQJZDWHUVRXUFHV
DQGKRXVHKROGDWWLWXGHVWRZDUGVSXEOLFSURYLVLRQMRLQWO\LQIOXHQFHDKRXVHKROG
V
ZLOOLQJQHVVWRSD\IRURUXVHDQLPSURYHGZDWHUVRXUFH)RUH[DPSOHLQ8NXQGD .HQ\D
ULFKHU EHWWHUHGXFDWHGIDPLOLHVZLWKPRUHZRPHQDUHPRUHOLNHO\WRXVHDNLRVNZKHUH
WKH\KDYHWRSD\IRUZDWHUDVFRPSDUHGWRDIUHHZHOO 0X:KLWWLQJWRQDQG%ULVFRH
 .LRVNVDUHXVHGPRUHZKHQWKHDOWHUQDWLYHZDWHUVRXUFHV ZHOOVRUYHQGRUV DUH
PRUH H[SHQVLYHIDUWKHUDZD\DQGSURYLGHDORZHUTXDOLW\RIZDWHUWKH\DUHXVHGOHVVDV
WKH SULFHRIZDWHUDWWKHNLRVNDQGWKHGLVWDQFHWRWKHNLRVNLQFUHDVHDQGDVWKHWDVWHRI
ZDWHU IURPWKHNLRVNGHFOLQHV

6HFRQGWKHVHVWXGLHVVKRZWKDWZDWHUSURMHFWVPD\UHVXOWQRWRQO\LQKHDOWKEHQHILWVEXW
DOVRLQVDYLQJVLQWLPHDQGRUHQHUJ\VSHQWLQFROOHFWLRQDQGRULQVXEVWDQWLDOUHGXFWLRQV
LQ WKHSULFHWKDWSUHYLRXVO\XQVHUYHGKRXVHKROGVQRZQHHGWRSD\IRUZDWHU,ILQGHHGD
ZDWHU SURMHFWSURYLGHVSLSHGFRQQHFWLRQVRU\DUGWDSVWRKRXVHKROGVDQGHOLPLQDWHVWKH
QHHGIRUWKHPWREX\ZDWHUDWH[RUELWDQWSULFHVIURPYHQGRUVLWLVOLNHO\WRUHVXOWLQ
VXEVWDQWLDOVDYLQJVIRUSRRUKRXVHKROGVHYHQLIWKHFKDUJHVDUHEDVHGRQDSULQFLSOHRI
IXOOFRVWUHFRYHU\6XFKSURMHFWVFDQKHQFHGLUHFWO\FRQWULEXWHWRSRYHUW\DOOHYLDWLRQ
:KLWWLQJWRQDQG6ZDUQD 

$ WKLUGFRQWULEXWLRQDOEHLWUHODWHGWRWKHSUHYLRXVSRLQWLVWKHILQGLQJWKDWSRRU
KRXVHKROGVSD\KLJKSULFHVIRUZDWHUSULFHVWKDWDUHVXEVWDQWLDOO\KLJKHUWKDQWKRVHSDLG
E\EHWWHURIIKRXVHKROGVWKDWDUHVHUYHGE\SXEOLFXWLOLWLHV7KHVHVWXGLHVDOVRVKRZKRZ
ZHOOLQWHQWLRQHGSROLFLHVVXFKDVLQFUHDVLQJEORFNWDULIIVFDQKXUWWKHSRRUDQGKRZ
SURMHFWVPLJKWEHEHWWHUWDLORUHGWRPHHWWKHQHHGVRIWKHSRRU
)RXUWK WKHILQGLQJWKDWGHPDQGLVYHU\ORFDWLRQVSHFLILFKDVVHULRXVLPSOLFDWLRQVIRUWKH
GHVLJQRISURMHFWV)LQDOO\LIRQHFDVHWKDWRI.HUHOD,QGLDFDQEHFRXQWHGDV
HYLGHQFHWKHGHPDQGGULYHQDSSURDFKGRHVDSSHDUWRKDYHGHYHORSHGDQDO\WLFDO
WHFKQLTXHVDQGSODQQLQJWRROVWKDWKDYHUHDVRQDEOHSUHGLFWLYHSRZHU
:HDNQHVVHVRIWKHGHPDQGGULYHQDSSURDFK
3URSRQHQWVRIGHPDQGVLGHDSSURDFKHVDGPLWWKDWWKXVIDUDPDMRULW\RIWKHZRUNKDV
IRFXVHG RQVKHGGLQJOLJKWRQOHYHOVRIVHUYLFHDQGILQDQFLQJDUUDQJHPHQWVWKDWZLOO
HPHUJHIURPDGHPDQGGULYHQDSSURDFKLWKDVQRWDGGUHVVHGFULWLFDOLQVWLWXWLRQDO
TXHVWLRQV :%:DWHU7HDPSS )XUWKHUDVQRWHGHDUOLHUWKHSDFNDJHRI
UHFRPPHQGDWLRQVSURSRVHGKDVQRWEHHQLPSOHPHQWHGDQ\ZKHUH7KHUHLVWKXVQR
HPSLULFDOHYLGHQFHWRVXSSRUWWKHQRWLRQWKDWWKLVDSSURDFKLVOLNHO\WRZRUNEHWWHUWKDQ
WKH SUHYLRXVVXSSO\VLGHDSSURDFK,QWKHVHFWLRQEHORZ,GLVFXVVVRPHRIWKH
ZHDNQHVVHVRIWKHDSSURDFK

3URSRQHQWVRIWKHGHPDQGGULYHQDSSURDFKKLJKOLJKWWKHFRQWUDVWEHWZHHQWKHLU
SHUFHSWLRQRIWKHXVHUKRXVHKROGZLWKWKDWRIWKHVXSSO\VLGHSODQQHUV7KH\DUJXHIRU
H[DPSOHWKDWVXSSO\VLGHSODQQHUVKDYHDVVXPHGWKDWUXUDOKRXVHKROGVFDQQRWDIIRUGWR
SD\IRUH[SHQVLYHV\VWHPVDQGVKRXOGEHSURYLGHGWKHFKHDSHVWDQGPRVWGXUDEOH
WHFKQLFDOVROXWLRQ)RULQVWDQFHWKH\KDYHWHQGHGWRFRQVWUXFWKDQGSXPSVDQGWKHLU
UHVHDUFKDJHQGDKDVIRFXVHGH[FHVVLYHO\RQIL[LQJWKHWHFKQLFDOSUREOHPVZLWKWKHVH
V\VWHPV6XSSO\VLGHSODQQHUVKDYHDOVRWHQGHGWRDVVXPHWKDWKRXVHKROGVWKDWGRQRW
FRQQHFWWRDQLPSURYHGV\VWHPGRVREHFDXVHWKH\ODFNHGXFDWLRQDQGRUDQ
XQGHUVWDQGLQJRIWKHEHQHILWVRIWKHLPSURYHGVRXUFH%\FRQWUDVWGHPDQGGULYHQ
SODQQLQJDVVXPHVWKDWXVHUVDUHUDWLRQDOGHFLVLRQPDNHUV LQHFRQRPLFWHUPV WKH\IXOO\
XQGHUVWDQGWKHYDOXHRIFOHDQZDWHUDQGWKHLUGHFLVLRQRQZKHWKHUWRFRQQHFWRUQRW
UHIOHFWVHFRQRPLFWUDGHRIIV+HQFHXQGHUVWDQGLQJKRXVHKROGEHKDYLRUDQGGHFLVLRQ
PDNLQJLVVXIILFLHQWWRJXLGHSROLF\7KDWLVLISHRSOHVD\WKH\GRQRWZDQWWRFRQQHFWWR
D V\VWHPRUGRQRWZDQWWRSD\IRULWWKLVQHFHVVDULO\PHDQVWKDWWKH\DWWDFKDORZYDOXH
WR ZDWHUWKDWLWLVQRWDSULRULW\DQGWKDWSROLF\VKRXOGKHQFHGRQRWKLQJLWVKRXOGQRW

DWWHPSWWRFKDQJHWKHLUSUHGLVSRVLWLRQ$OWKRXJKWKHWZRDSSURDFKHVSODFHWKHPVHOYHVRQ
RSSRVLWHHQGVRIWKHVSHFWUXPZLWKUHVSHFWWRKRXVHKROGEHKDYLRUWKHUHDOLW\DQGEHWWHU
DSSURDFKLVPRUHOLNHO\WROLHVRPHZKHUHLQEHWZHHQ$VPDQ\KHDOWKH[SHUWVZRUNLQJRQ
GHYHORSLQJFRXQWULHVZRXOGDUJXHWKH\DUHLQWKHEXVLQHVVRIFKDQJLQJSHRSOHV
DWWLWXGHV
DQGEHKDYLRUQRWRIDFFHSWLQJWKHPDVGHPDQGGULYHQSODQQHUVVXJJHVWWKH\GR FI&KRH
HWDO 
$ VHFRQGFULWLTXHLVWKDWWKHPHWKRGRORJ\RQZKLFKWKHVHVWXGLHVDUHEDVHGLVIUDXJKW
ZLWK SUREOHPVZKLFKFDQSRWHQWLDOO\OHDGWRVHULRXVHUURUV:LOOLQJQHVVWRSD\VWXGLHV
VXIIHU IURPYDULRXVNLQGVRIELDVK\SRWKHWLFDOVWUDWHJLFDQGFRPSOLDQFHELDV IRU
H[DPSOH*ULIILQHWDO :KLOHWKHVHPHWKRGRORJLFDOSUREOHPVFDQEHGHDOWZLWKLI
WUHDWHG ZLWKH[WUHPHFDUHWKHPHWKRGRORJ\LVQRWIRROSURRIDQGPD\SHUKDSVEHWRR
SURQHWRHUURULQWKHFRQWH[WWRGHYHORSLQJFRXQWULHVJLYHQWKHKXPDQUHVRXUFH
FRQVWUDLQWVWKDWPDQ\RIWKHFRXQWULHVIDFH

7KLUGZKLOHWKHGHPDQGGULYHQDSSURDFKLWVHOIHPSKDVL]HVWKHMRLQWQHVVDQGFRPSOH[LW\
RISUHGLFWLQJGHPDQGIRUZDWHULWVHOHFWVEXWRQHYDULDEOHSULFHWKDWSHRSOHDUHZLOOLQJ
WR SD\WRDVVHVVWKHZKHWKHUWKH\ZRXOGVZLWFKWRDQHZVRXUFH)RUH[DPSOHXVHUV
PD\EHZLOOLQJWRSD\IRUSLSHGZDWHURUIRUSXEOLFWDSVEXWLIWKH\ILQGDIWHUWKHSURMHFW
KDVEHHQLPSOHPHQWHGWKDWWKH\GRQRWOLNHWKHWDVWHWKH\PD\VWLOOFKRRVHQRWXVHWKH
VRXUFH 7KDWLVGHVSLWHDSHUIHFWO\YDOLGZLOOLQJQHVVWRSD\DVVHVVPHQWWKHLPSURYHG
DQGDSSURSULDWHO\WDUJHWHGZDWHUVRXUFHPD\QRWEHXVHG
)RXUWK LVWKHODFNRIDWWHQWLRQRQLQVWLWXWLRQDOIDFWRUVD LQWHUPVRIFDSDFLW\UHTXLUHG
WR LPSOHPHQWWKHDSSURDFKDQGE KRZWKHQHZDSSURDFKLQWHUSUHWVLQVWLWXWLRQDO
SUREOHPVVXFKDVQRQSHUIRUPDQFHRIXWLOLWLHV7KHILUVWLVDSXUHO\SUDJPDWLFFRQFHUQ
WKH GHPDQGGULYHQDSSURDFKUHTXLUHVWKDWWKHSUREOHPVRIHDFKFRPPXQLW\YLOODJHEH
LQGHSHQGHQWO\LGHQWLILHGDQGWKDWWKHVROXWLRQVEHWDLORUHGDFFRUGLQJO\+RZHYHUD:RUOG
%DQNZDWHUGHPDQGVWXG\LQWKH3XQMDELQ3DNLVWDQLWVHOIDGPLWVWKHLQVWLWXWLRQDO
FDSDFLW\GRHVQRWFXUUHQWO\H[LVWRQWKHSDUWRIWKHJRYHUQPHQWWRXQGHUWDNHWKHNLQGRI
WHFKQLFDODVVLVWDQFHUHTXLUHGWRDGGUHVVWKHQHHGVDQGFRQGLWLRQVRIYLOODJHVRQD
FRPPXQLW\E\FRPPXQLW\EDVLV $OWDIHWDO 
7KH VHFRQGLQVWLWXWLRQDOFRQFHUQDQGSHUKDSVWKHJUHDWHVWZHDNQHVVLVWKDWWKHQHZ
DSSURDFKGRHVQRWUHDOO\DFNQRZOHGJHDNH\OHVVRQRIH[SHULHQFH7KDWLVLWLVWKHODFNRI
LQVWLWXWLRQDOFDSDFLW\DQGRULQDSSURSULDWHLQVWLWXWLRQDODUUDQJHPHQWVWKDWKDYHEHHQD
NH\FDXVHRIIDLOXUHQRWMXVWRIZDWHUSURMHFWVEXWRIGHYHORSPHQWSURMHFWVLQJHQHUDO
,VUDHO2VWURPHWDO7KHUNLOGVHQHWF ,QRWKHUZRUGVLWLVQRW
MXVW SULFHVRUXVHUFKDUJHVWKDWKDYHEHHQLQFRUUHFW%\FRQWUDVWWKHGHPDQGGULYHQ
DSSURDFKDVVXPHVUDWKHUVLPSOLVWLFDOO\WKDWRQHRIWKHNH\SUREOHPVLVODFNRI
DSSURSULDWHFKDUJHVWKDWWKHVHFKDUJHVFDQEHGHVLJQHGLPSOHPHQWHGDQGHQIRUFHGE\
WKH XWLOLWLHVDQGWKDWRQFHWKH\KDYHUHYHQXHVZDWHUXWLOLWLHVZLOO DXWRPDWLFDOO\ KDYH
WKH LQFHQWLYHWRLPSURYHVHUYLFHDQGZLOODFWXDOO\H[SDQGVHUYLFHWRFRYHUWKHSRRU
+RZHYHUWKHQHZDSSURDFKPD\QRWQHFHVVDULO\PRYHSHRSOHIURPDORZSULFHORZ
TXDOLW\VHUYLFHWRDKLJKSULFHKLJKTXDOLW\VHUYLFH,WPD\ZHOOUHVXOWLQKLJKSULFHORZ
TXDOLW\VHUYLFHVWKDWFKDUDFWHUL]HXWLOLWLHVLQRWKHULQIUDVWUXFWXUHVHFWRUVVXFKDV

HOHFWULFLW\DQGWHOHFRPPXQLFDWLRQVLQGHYHORSLQJFRXQWULHV

,QFRQFOXVLRQWKHQHZGHPDQGGULYHQDSSURDFKGHVHUYHVDWWHQWLRQDVDDQDO\WLFDO
WHFKQLTXHDQGSODQQLQJWRRO,WKDVFRQWULEXWHGVLJQLILFDQWO\WRRXUXQGHUVWDQGLQJRIWKH
SUREOHPZLWKZDWHUVXSSO\DQGWRVRPHH[WHQWZLWKVDQLWDWLRQVHUYLFHV7KHODFNRI
DWWHQWLRQWRWKHLQVWLWXWLRQDOGHWHUPLQDQWVRIVXFFHVVDQGIDLOXUHLVSHUKDSVWKH$FKLOOHV
+HHO RIWKHQHZSDUDGLJP
%LEOLRJUDSK\

%ULVFRH-RKQ$5ROHIRU:DWHU6XSSO\DQG6DQLWDWLRQLQWKH&KLOG6XUYLYDO
5HYROXWLRQ%XOOHWLQRIWKH3DQ$PHULFDQ+HDOWK2UJDQL]DWLRQ 9RO1R

%ULVFRH-RKQ0DQLVKD&KDNURERUW\DQG6KDKDQD$KPHG+RZ%HQJDOL9LOODJHUV
&KRRVH 6RXUFHVRI'RPHVWLF:DWHU:DWHU6XSSO\DQG0DQDJHPHQW 9ROSS

%ULVFRH-RKQ3DXOR)XUWDGRGH&DVWUR&KDUOHV*ULIILQ-DPHV1RUWKDQG2UMDQ2OVHQ
7RZDUG(TXLWDEOHDQG6XVWDLQDEOH5XUDO:DWHU6XSSOLHV$&RQWLQJHQW9DOXDWLRQ
6WXG\LQ%UD]LO7KH :RUOG%DQN(FRQRPLF5HYLHZ 9RO1RSS
%URRNVKLUH'DYLGDQG'DOH:KLWWLQJWRQ:DWHU5HVRXUFHV,VVXHVLQ'HYHORSLQJ
&RXQWULHV:DWHU5HVRXUFHV5HVHDUFK 9RO1R-XO\SS

&KHR .\HRQJ$H'DOH:KLWWLQJWRQDQG'RQDOG7/DXULD7KH(FRQRPLF
%HQHILWVRI6XUIDFH:DWHU4XDOLW\,PSURYHPHQWVLQ'HYHORSLQJ&RXQWULHV$&DVH6WXG\
RI'DYDR3KLOLSSLQHV/DQG(FRQRPLFV 1RY
&UDQH5DQGDOO:DWHU0DUNHWV0DUNHW5HIRUPDQGWKH8UEDQ3RRU5HVXOWV
IURP -DNDUWD,QGRQHVLD:RUOG'HYHORSPHQW 9RO1RSS

)DVV6LPRQ3ROLWLFDO(FRQRP\LQ+DLWL7KH'UDPDRI6XUYLYDO &KDSWHU1HZ
%UXQVZLFN1-7UDQVDFWLRQ3XEOLVKHUV

*DNHQKHLPHU5DOSKDQG&DUORV+-%UDQGR,QIUDVWUXFWXUH6WDQGDUGVLQ/OR\G
5RGZLQ HG 6KHOWHU6HWWOHPHQWDQG'HYHORSPHQW %RVWRQ$OOHQDQG8QZLQSS


*DNHQKHLPHU5DOSK,QIUDVWUXFWXUH6KRUWIDOO7KH,QVWLWXWLRQDO3UREOHPV-RXUQDO
RIWKH$PHULFDQ3ODQQLQJ$VVRFLDWLRQ 9RO1R:LQWHU
*UDPOLFK(0,QIUDVWUXFWXUH,QYHVWPHQW$5HYLHZ(VVD\-RXUQDORI(FRQRPLF
/LWHUDWXUH9RO;;;,, 6HSW SS

+RZH&KDUOHV:-RKQ$'L[RQ,QHIILFLHQFLHVLQ:DWHU3URMHFW'HVLJQDQG
2SHUDWLRQLQWKH7KLUG:RUOG$Q(FRQRPLF3HUVSHFWLYH:DWHU5HVRXUFHV-RXUQDO 9RO

1R-XO\SS

,VUDHO$UWXUR,QVWLWXWLRQDO'HYHORSPHQW,QFHQWLYHVWR3HUIRUP %DOWLPRUH-RKQV
+RSNLQV8QLYHUVLW\3UHVV

/RYHL/DV]OR'DOH:KLWWLQJWRQ5HQW([WUDFWLQJ%HKDYLRUE\0XOWLSOH$JHQWVLQ
WKH 3URYLVLRQRI0XQLFLSDO:DWHU6XSSO\$6WXG\RI-DNDUWD,QGRQHVLD:DWHU
5HVRXUFHV5HVHDUFK 9RO1RSS
0DF5DH'XQFDQ-UDQG'DOH:KLWWLQJWRQ&KRRVLQJ&ULWHULDLQ([SHUW$GYLFH
IRU 3ROLF\&KRLFH :DVKLQJWRQ'&*HRUJHWRZQ8QLYHUVLW\3UHVV
0LOOLPDQ-HURPH0%HQHILFLDU\&KDUJHV7RZDUGVD8QLILHG7KHRU\&KLQ
3XEOLF3ULFHVIRU3XEOLF3URGXFW6HOPD0XVKNLQ HGLWRU :DVKLQJWRQ'&7KH8UEDQ
,QVWLWXWH

2VWURP(OLQRU/DUU\6FKURHGHU6XVDQ:\QQH,QVWLWXWLRQDO,QFHQWLYHVDQG5XUDO
,QIUDVWUXFWXUH6XVWDLQDELOLW\
2VWURP(OLQRU/DUU\6FKURHGHU6XVDQ:\QQH$QDO\]LQJWKH3HUIRUPDQFHRI
$OWHUQDWLYH,QVWLWXWLRQDO$UUDQJHPHQWVIRU6XVWDLQLQJ5XUDO,QIUDVWUXFWXUHLQ'HYHORSLQJ
&RXQWULHV -RXUQDORI3XEOLF$GPLQLVWUDWLRQ5HVHDUFKDQG7KHRU\   
5DPDPXUWL5DYL HG 3ULYDWL]LQJ0RQRSROLHV/HVVRQVIURPWKH
7HOHFRPPXQLFDWLRQVDQG7UDQVSRUW6HFWRUVLQ/DWLQ$PHULFD &KDSWHU

7HQGOHU-XGLWK'\QDPLFVRI5XUDO'HYHORSPHQWLQ1RUWKHDVW%UD]LO1HZ/HVVRQV
)URP 2OG3URMHFWV 2SHUDWLRQV(YDOXDWLRQ'HSDUWPHQW7KH:RUOG%DQN5HSRUW1R
:DVKLQJWRQ'&
7HQGOHU-XGLWK*RRG *RYHUQPHQWLQWKH7URSLFV %DOWLPRUH-RKQV+RSNLQV
8QLYHUVLW\3UHVV

7KHUNLOGVHQ2OH:DWHU:KLWH(OHSKDQWV/HVVRQVIURP'RQRU)XQGHG3ODQQLQJ
DQG,PSOHPHQWDWLRQRI5XUDO:DWHU6XSSOLHVLQ7DQ]DQLD 8SSVDOD6FDQGLQDYLDQ
,QVWLWXWHRI$IULFDQ6WXGLHV
9DQ :LMN6LMEHVPD&KULVWLQH:KDW3ULFH:DWHU"8VHU3DUWLFLSDWLRQLQ3D\LQJ
IRU &RPPXQLW\%DVHG:DWHU6XSSO\ 2FFDVLRQDO3DSHU6HULHV1R,QWHUQDWLRQDO
5HIHUHQFH&HQWHUIRU&RPPXQLW\:DWHU6XSSO\DQG6DQLWDWLRQ7KH+DJXH
:DGH 5REHUW+RZ,QIUDVWUXFWXUH$JHQFLHV0RWLYDWH6WDII&DQDO,UULJDWLRQLQ
,QGLDDQGWKH5HSXEOLFRI.RUHDLQ0RG\ HG 7KH8QWROG6WRU\,QIUDVWUXFWXUH
6WUDWHJLHVLQ(DVW$VLD  )RUWKFRPLQJ

:KLWH*LOEHUW'DYLG%UDGOH\DQG$QQH:KLWH'UDZHUVRI:DWHU'RPHVWLF
:DWHU8VHLQ(DVW$IULFD&KDSWHUV &KLFDJR8QLYHUVLW\RI&KLFDJR3UHVV

:KLWWLQJWRQ'DOHDQG9HQNDWHVZDUOX6ZDUQD7KH (FRQRPLF%HQHILWVRI3RWDEOH
:DWHU6XSSO\3URMHFWVWR+RXVHKROGVLQ'HYHORSLQJ&RXQWULHV (FRQRPLF6WDII3DSHU
1R $VLDQ'HYHORSPHQW%DQN0DQLOD

:KLWWLQJWRQ'DOH'RQDOG7/DXULD;LQPLQJ0X$6WXG\RI:DWHU9HQGLQJ
DQG:LOOLQJQHVVWR3D\IRU:DWHULQ2QLWVKD1LJHULD:RUOG'HYHORSPHQW 9RO1R
SS
:KLWWLQJWRQ'DOH'RQDOG7/DXULD.\HRQJ$H&KRH-HIIUH\+XJKHV9HQNDWHVZDUOX
6ZDUQD+RXVHKROG6DQLWDWLRQLQ.XPDVL*KDQD$'HVFULSWLRQRI&XUUHQW
3UDFWLFHV$WWLWXGHVDQG3HUFHSWLRQV:RUOG'HYHORSPHQW 9RO1RSS

:KLWWLQJWRQ'DOH;LQPLQJ0X5REHUW5RFKH&DOFXODWLQJWKH9DOXHRI7LPH
6SHQW &ROOHFWLQJ:DWHU6RPH(VWLPDWHVIRU8NXQGD.HQ\D:RUOG'HYHORSPHQW 9RO
1RSS
:RUOG %DQN:DWHU'HPDQG5HVHDUFK7HDP7KH'HPDQGIRU:DWHULQ5XUDO
$UHDV'HWHUPLQDQWVDQG3ROLF\,PSOLFDWLRQV7KH :RUOG%DQN5HVHDUFK2EVHUYHU 9RO
1R-DQXDU\SS
:RUOG %DQN:RUOG'HYHORSPHQW5HSRUW&KDSWHUDQG2[IRUG2[IRUG
8QLYHUVLW\3UHVV

:RUOG %DQN:RUOG'HYHORSPHQW5HSRUW2[IRUG 2[IRUG8QLYHUVLW\3UHVV

You might also like