1.ALP's Trading Strategy

AgentLenderPLUS (ALP) is a proprietary trading firm focused on short-dated U.S. Treasury securities (maturing under 2 years). Its traders, known as 'Spread Traders', specialize in identifying yield spread relationships between securities. They analyze when one security is cheap or rich relative to another, using market intelligence and supply-demand dynamics to take long or short positions aimed at profiting from spread convergence or divergence.

 

2.Historical Context Post-2008

Before the 2008 financial crisis, spread traders relied on dealer balance sheets to finance trades. They borrowed money to fund positions, profiting when spread income exceeded borrowing costs. Post-crisis, access to dealer financing diminished significantly, leaving spread traders without affordable leverage.

 

3.Structure of the Fully Closed Repo (FCR) Trade

ALP created FCR by approaching buy-and-hold U.S. Treasury beneficial owners—such as pension funds, money market funds, banks, custodians, sec lenders, municipalities, stablecoin issuers and other types of institutional investors—who prioritize safety and liquidity. Using repo documentation, ALP executes a closed-loop, offsetting repo trade. This allows the beneficial owner to earn a fixed 12 basis points annually on 100% of their holdings, while ALP gains access to the specific Treasury issues it wants via collateral substitutions. The bonds remain in the owner's custody, and the structure avoids counterparty and custodial risk.

 

4.Benefits to Beneficial Owners and ALP

For beneficial owners: they receive a safe, liquid yield enhancement while always being in possession of their collateral. For ALP: they obtain access to desired Treasury issues for spread trading without relying on dealer financing. This structure revives the spread trading model in a post-crisis world by aligning incentives and preserving assets.

 

For additional information regarding “Fully Closed Repo”, please reach out to Lew Goldman at 516-223-3932 or lgoldman@AgentLenderPLUS.com