Treasury adviser Arlingclose has launched the first trading platform enabling inter-authority lending and borrowing to be fully completed online.
With the launch of iDealTrade.net, Arlingclose has beaten a clutch of rivals to market in providing execution-only, “local-to-local” trading for council treasurers.
Mark Pickering, founding director of Arlingclose, told Room151: “We have put this out as a tool to provide a solution that local authorities have been asking us for.
“This system will offer local authorities extra choice and ties in with our strategic objectives of providing enhanced transparency and efficiency.”
Competitors who have also been developing council-to-council lending platforms include the Municipal Bonds Agency, which turned to the idea following its failure to issue a collective municipal bond.
A source close to the project said that the MBA platform, a collaboration with fintech company NEX, is set to launch in the coming months.
In early 2016, investment firm TradeRisks announced that it was in partnership with Warrington Borough Council to create a platform allowing councils to execute transactions with their peers online.
However, it is understood the project has been put on the back burner as the two parties explore other work.
In addition, software developer PSLive is believed to have developed a local-to-local lending platform, for both councils and brokers, but is yet to launch it.
Some brokerage firms also provide web-based offerings which allow councils to place orders, although execution is completed offline.
Paul Turner, director of public sector at one of these—dealing and custody firm King and Shaxson—said: “The trend from 100% voice broking to a mixture of voice and electronic broking is well underway in the money and capital markets. This is merely part of that process.”
Mark Pickering said that he was confident that the firm could avoid any conflicts of interest between its treasury advice and desire to make a success of the iDealTrade platform.
He said: “We have spoken with a lot of clients about these issues. Fundamentally we are providing a tool that they can choose to use.
“Ideally, we like their portfolios to be as clean as possible with as little borrowing as they are able. This platform is not there to try to usurp our advisory business.”
Turner said he was “sure that Arlingclose will manage the inherent conflicts of interest appropriately”.
More than 80 authorities have already signed up to the platform following an introductory free offer, Pickering said. It has a visible order book, showing available cash offered by council peers and includes; a trade history log, complete with the trade confirmations; and interest payment schedules, a counterparty restriction feature, and risk controls.
Orders are posted anonymously, with counterparties revealed once a match is made. The service is free for lenders with borrowers picking up a 3 basis points fee.
Room151 contacted Link Asset Services (formerly Capita Asset Services), Arlingclose’s main rival in the treasury advice market, to ask whether it would be recommending the new platform to its clients, but nobody was available for comment.
