Ground-breaking Secured Deposit Service provides repo market access to Corporates
We are proud to announce that we have successfully supported the delivery of the Secured Deposits offering in collaboration with the innovative fintech Consort1, along with Clearstream, Standard Chartered Bank, NatWest, Alpha Group, and Arlingclose, with Gloucestershire County Council being among the first UK local authorities to utilise the new service.
Thanks to this collaboration, the wholesale repurchase agreement (repo) and securities lending market can now be accessed by local authorities, corporates, fund managers, and other institutions who have not had access in the past.
This is a significant milestone in the financial industry, as it provides more opportunities for institutions to diversify their investment portfolios, lower the risk profile of cash deposits, continue to work with mainstream banks across the usual tenors, and potentially earn higher returns on their cash.
Secured Deposits offer many benefits, one of which is the cash deposit can be fully collateralised with government bonds, corporate bonds, or other securities to mitigate the financial risk of a bank failure. This means, even if the bank were to fail, the cash lender’s funds would be secured by the collateral held securely with Clearstream. Additionally, lenders of cash 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, our partner Consort1 is the coordinator and facilitator of this service having implemented tri-party trading contracts, on behalf of clients to allow for a simple cash deposit placed with the client’s chosen bank to be fully collateralised for the duration of the deposit.
Aidan McAvinue, Chief Executive of BankClarity commented:
“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.”