Clearstream and Consort1 expand repo market access with secured deposit service
Clearstream, together with repo and securities lending-specialised fintech Consort1, enabled the placement of secured deposits as tri-party custody agent. The placement was done in collaboration with Standard Chartered Bank, NatWest, Alpha Group, BankClarity, and Arlingclose, with Gloucestershire County Council being among the first UK local authorities to utilise the new service.
This placement of secured deposits highlights how the wholesale repurchase agreement (repo) and securities lending market can now be accessed by UK local authorities, corporates, fund managers, and other institutions who have not had the ability to do so in the past.
Secured deposits offer many benefits, such as opportunities to diversify investment portfolios as well as full collateralisation of the cash deposit with government bonds, corporate bonds, or other securities to mitigate the financial risk during a bank failure. This means, even if the bank were to fail, the cash depositors' funds would be secured up to the value of collateral held with Clearstream as tri-party custody agent for the depositor.
Marton Szigeti, Head of Collateral, Lending and Liquidity Solutions at Clearstream, stated: “Clearstream’s best-in-class custody solution adds highest liquidity and security for stable cash to help our bank clients better manage their regulatory liquidity requirements. We are 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.”
Justin Clapham, co-founder and CEO of Consort1, stated: “We are proud and truly honoured to be working with Clearstream to bring the repo and collateralised secured deposit service to institutions that have not been able to access this before. Along with our global partners, we are thrilled to be at the forefront of this innovation in the financial industry.”