Jersey-based fintech collaborates with big name banks to 'unlock' repo market

Jersey-based fintech Consort1, which has managed to unlock the potential of the wholesale repo market, is pleased to announce a collaboration with Clearstream, Standard Chartered Bank, NatWest, Alpha Group, BankClarity, and Arlingclose, supporting the trading of Secured Deposits, with Gloucestershire County Council amongst the first UK local authorities to utilise the new service.

As a result of the collaboration, the wholesale repurchase agreement and securities lending market can now be accessed by local authorities, corporates, fund managers, and other institutions who have not previously enjoyed access, it said in a statement on 14 June.  

The initiative represents a significant milestone, providing more opportunities for institutions to diversify their investment portfolios, lower the risk profile of cash deposits, and continue to work with mainstream banks across the usual tenors - with the potential to earn higher returns on their cash.

Secured Deposits offer many benefits, one of which is that the cash deposit can be fully collateralised with government bonds, corporate bonds, or other securities, to mitigate the financial risk of a bank failure. Even if the bank were to fail, this means that the cash depositors' funds would be secured by the collateral held with Clearstream. What is more, cash depositors can potentially earn higher returns than with unsecured cash deposits, due to the liquidity benefits provided to banks that can support the collateralisation of deposits.

Providing access to the repo market by removing all the usual barriers to entry, Consort1 is the coordinator and facilitator of this service, having implemented tri-party trading contracts on behalf of clients to enable a simple cash deposit placed with the client's chosen bank to be fully collateralised for the duration of the deposit.

Commenting on the initiative, Justin Clapham, Co-Founder and CEO at Consort1 said, "We are committed to providing innovative solutions for our clients and we are both proud and honoured to be working with so many global institutions and clients to bring the repo and collateralised secured deposit service to institutions that have not previously enjoyed access."

Marton Szigeti, Global Head of Collateral Lending & Liability Solutions at Clearstream stated that, "Clearstream's best-in-class custody solution adds the highest liquidity and security for stable cash to help our bank clients better manage their regulatory liquidity requirements. We are", he said, "delighted to be working closely with the Consort1 team to deliver the benefits of tri-party to a segment of clients that would previously have been excluded from the market." 

Ed Donald, global head of repo & collateral trading at Standard Chartered Bank added: "Along with our global partners, Standard Chartered Bank is very excited to be at the forefront of this innovation in the securities finance industry, which broadens the reach of the repo product whilst reinforcing our commitment to providing progressive solutions for our clients."

Aidan McAvinue, chief executive of BankClarity said: "We are incredibly proud to be a contributor to such an innovative and relevant solution in this market - the cross-collaboration across a wide range of expert parties has been particularly striking. We are very excited about the future for the solution."

Consort1 was incorporated in Jersey in 2017 and established to provide quick and easy access to the wholesale repurchase agreement and securities lending market. The Company does not act as principal and arranges the secured deposit service (‘SDS') on behalf of its clients.

Consort1 has the required infrastructure, contacts, and agreements to enable institutional clients with cash sums of more than £10m to access the wholesale repo market. The Company has partnered with numerous global institutions, each of which recognises the enormity of the untapped opportunity.

A fintech business, Consort1 has established a trade platform to support the SDS trading process.