Arlingclose launched iDealTrade.net on 8th November 2017.
iDealTrade is a platform for local authorities to borrow and lend to one another, a market which has grown massively in recent years due to the high credit quality of local authorities and the flexibility and affordability of the funding they can offer.
The website brings low transaction costs, transparency and efficiency to this ever growing market with automated matching, visibility of rates and an online log of trade confirmation slips.
At the time of writing iDealTrade has over 100 registered users, comprising both Arlingclose treasury advice clients and those advised elsewhere.
The first month of trading has provided us with market insight, which is displayed in the yield curve here.
The yield curve above shows the duration and rates of the last 30 transactions agreed on the platform:
• The average deal has been £2.6m, at 0.41% for 2 months.
• DMADF rates and average ‘all in’ T-bill rates are also displayed in the chart.
• Where liquidity permits, some authorities may find more value in LA investments than in MMFs, which are currently lagging the bank rate hike and averaging around 0.35%.
Using the line of best fit, we observe the following rates in different periods:
- Overnight: 0.37%
- 1 week: 0.37%
- 1 month: 0.39%
- 3 months: 0.44%
- 6 months: 0.51%
Some of the higher rates can be attributed to borrowers passing on their brokerage saving via higher “bids”; lower all in cost for borrowers, higher investment returns for lenders.
We hope that increased volume on iDealTrade should yield further benefits: greater market visibility, tighter spreads and more efficient transactions.
To register please click here. If you have any feedback, please email us at support@idealtrade.net.
