AgentLenderPLUS, LLC (ALP) is a riskless principal trading firm which only executes "Closed" U.S. Treasury Repurchase Agreements with institutional counterparties and buys and sells U.S. Treasury securities with Street Dealers. As a proprietary trading firm, AgentLenderPLUS trades with the firms' own capital and has no third-party assets under management.
Institutional counterparties who execute "Closed Repo" transactions benefit in many ways: Beneficial Owners are (1) always in possession of their securities and cash, (2) because the Repo transaction is closed and satisfied, counterparty risk is eliminated, (3) there is no need for indemnification because once again the Repo terms are satisfied, (4) portfolio enhancement, (5) liquidity and safety of initial investment is not affected and (6) Beneficial Owners who engage in securities lending are subject to cash collateral reinvestment risk, this is not the case with executing a "Closed Repo" as AgentLenderPLUS is never in possession of your cash, thus this risk is eliminated as well.
U.S. Treasury Beneficial Owners who execute U.S. Treasury Spread Lock IORP receive all these benefits.
U.S. Treasury Spread Lock IORP Program
What is the U.S. Treasury Spread Lock IORP Program?
The U.S. Treasury Spread Lock IORP Program is a Repo based transaction whereby U.S. Treasury Beneficial Owners simultaneously buy and sell Identical Off-Setting Repurchase Agreements (IORP) with the same counterparty, using the same securities. Both buy and sell Repos have annexes attached to the SIFMA Master Repurchase Agreement which allows collateral substitutions under strict guidelines. The Counterparty pays the Beneficial Owner a premium for allowing unlimited collateral substitutions as stipulated in the Repo Annex. Beneficial Owners can terminate both Repos at will without penalty, providing liquidity when needed.
The U.S. Treasury Spread Lock IORP Program allows U.S. Treasury Beneficial Owners the ability to "Lock-In" additional basis points of yield enhancement per annum on 100% of their portfolio holdings while eliminating the risks inherent in traditional securities lending. In return for "Locking-In" a known portfolio enhancement, Beneficial Owners agree to allow their portfolio's current weighted average maturity to differ by no more than 5 days. The weighted average maturity differential can occur when the Beneficial Owners Repo Counterparty makes collateral substitutions.
What Beneficial Owners of U.S. Treasury Securities need in order to partake in the U.S. Treasury Spread Lock IORP Program?
1. A portfolio of U.S. Treasury Securities maturing under 2-years.
2. Sign and return Spread Locks SIFMA Master Repurchase Agreements and Annexes.
3. Agree to be indifferent if your portfolio's current weighted average maturity is no more than 5 days longer or shorter.
4. Maintain a cash sweep account at your custodial bank.
5. Allow your repo counterparty to make unlimited collateral substitutions at an equal yield.
6. Abide by the language within the annex when a Treasury security is substituted, sold, or matures.
Advantages of U.S. Treasury Spread Lock IORP Program versus traditional securities lending of U.S. Treasury Securities:
Counterparty Risk: Spread Lock users are always in possession of their securities and cash eliminating this risk.
Cash Collateral Reinvestment Risk: Beneficial Owners Counterparty is never in possession of your cash eliminating this risk.
Indemnification: Spread Lock users have no need for indemnification because they are not exposed to Counterparty and Cash Collateral Reinvestment Risks.
Who should use the U.S. Treasury Spread Lock IORP Program?
U.S. Treasury Spread Lock IORP Program can be used by any Beneficial Owner of U.S. Treasury T-Bills, Notes, or Bonds maturing in less than 2-years or any entity who is holding cash and wishes to build their own money market fund alternative with short-dated Treasury securities eliminating the majority of fund fees. Users of U.S. Treasury Spread Lock can be but are not limited to: Insurance Companies, Central Banks/Sovereign Wealth Funds, Mutual Funds, Pension Funds, Municipalities, Government Pool Accounts, Corporations, Banks, Hedge Funds, SPACs, Endowments, Broker-Dealers, Registered Investment Advisors, and Agent Lenders.
For additional information regarding Goldman Landow Capital's U.S. Treasury Spread Lock IORP Program, or any of their other U.S. Treasury based strategies (Black Swan Option), or consultative opportunities, please contact Lew Goldman at email@example.com or call 516-223-3932
U.S. Treasury Liquidity Pools
Is your U.S. Treasury Money Market Fund only paying 1 bp or just a few basis points in yield over the past 7 days? Are you considering moving your cash out of stable NAV Money Market Funds? Have you tried Private Liquidity Funds and still aren’t satisfied with the performance? If yes to all of the above, then let Goldman Landow Capital introduce you to a simple and easy way to maximize the return on your cash, outperform all the alternatives mentioned above, all while being devoid of the risks (other than the risks associated with U.S. Treasury security ownership), and maintaining the same liquidity features that your Money Market Fund offers. The Goldman Landow Capital U.S. Treasury Liquidity Pool approach to cash management allows you to save the fees associated with investing in Money Market Funds and enables you to build a portfolio of U.S. Treasury securities mirroring the Weighted Average Maturity (WAM) of your current Money Market Fund (or create your own WAM).
Since you are in the money management business, building a U.S. Treasury Liquidity Pool the Goldman Landow Capital way shouldn’t be difficult. In fact, you can tailor your portfolio any way you desire depending on your need for readably available cash. Our U.S. Treasury Liquidity Pool Program should yield our clients an additional 10 to 12 basis points of yield above the risk-free rate of return on your U.S. Treasury Portfolio.
Whether you're a Corporate or Bank Treasurer, CEO or CIO of a Money Management Firm, a Hedge Fund, a Family Office, or you just raised a few billion dollars from the proceeds towards your new SPAC, the math is simple:
As an example for comparison purposes only:
Your U.S. Treasury MMF Portfolio 48 Day WAM Portfolio Yield minus the Funds Net Expense Ratio of 14 bps equals 1 bps.
Assuming the exact same U.S. Treasury 48 Day WAM Portfolio will yield 10 bps if managed by your own traders eliminating the need to pay any Expense Ratio Fees (savings of 14 bps. in our example), and then execute the Goldman Landow Capital U.S. Treasury Spread Lock IORP adding an additional yield enhancement of 10 to 12 bps, netting a pickup ranging from 19 to 21 bps of additional revenue above your 1 bps current alternative.
To learn more about creating your own U.S. Treasury Liquidity Pool using Goldman Landow's Spread Lock IORP please contact your Goldman Landow Relationship Manager or call 516-223-3932
Black Swan Option
Black Swan events were introduced by Nassim Nicholas Taleb in his 2001 book “Fooled by Randomness”, which concerned financial events. His 2007 book “The Black Swan” extended the metaphor to events outside of financial markets. Identifying and Recognizing Black Swan Events according to Mr. Taleb:
The event is a surprise (to the observer).
The event has a major impact on markets.
After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs. The same is true for the personal perception by individuals.
The Goldman Landow Capital Black Swan Value Proposition:
To derive and capture value from a spread widening event in the U.S. Treasury Term Repo market upon either a Black Swan event or as a result of general market conditions. If you are interested in how you can benefit from being long an option at zero cost and risk, and would like to do so;
Without undertaking any risk
Without incurring any upfront transactional costs
Without paying any upfront premium cost
Without using any of your own cash or U.S. Treasury collateral
For a moment, turn back the clock to the time when the market was dealing with the Lehman bankruptcy. For those professionals involved in the Treasury Repo market, Repo spreads widened considerably. Spreads widened 200 basis points, and on a $10 billion, 270 day weighted average maturity (WAM) Repo, the value of the option was worth (the widening spread) $150,000,000. This profit may cover some, all, or more, than the loss the CIO might have suffered on other assets during this time period. If you are concerned about portfolio exposure, then why not learn more about the Goldman Landow Capital Black Swan Option. For more information, please contact your Goldman Landow Capital Relationship Manager or call 516-223-3932.