🔐Loan Collateral

Learn more about the collateral used for Fixed Term Vaults.

Loan Collateral

Every Loan made via the Treasury Management & YieldProduct is fully collateralised by eligible loan collateral.

At all stages of the transaction, loans are fully collateralized. At no point are loans under or uncollateralized. The Borrower is legally restricted to use loan proceeds solely to acquire the applicable collateral and to have acquired the collateral before or on the Loan Commencement Date.

Eligible Loan Collateral by Vault Type

	Eligible Loan Collateral
Fixed Term USD Vaults	USD, USDC, US Treasury Bills
Flexbile Term USD Vault	USD, USDC, US Treasury Bills, Reverse Repo Agreements Secured by US Treasury Bills
Fixed Term EUR Vault	EUR, EURC, French, German, Italian 1 Month Bonds
Flexible Term EUR Vault	EUR, EURC, French, German, Italian 1 Month Bonds

Purchase and Sale of Collateral

OpenTrade SPC, as advised by the Investment Advisor (Five Sigma Finance Ltd), engages in trading activity including the purchase and sale of loan collateral to ensure all loans are fully backed with eligible collateral and that withdrawal requests are processed according to the Lender's instructions.

The purchase and sale of loan collateral is done through a network of regulated financial institutions and broker/dealers based in the United Kingdom and Switzerland. OpenTrade SPC pays a fee to the financial institutions and broker/dealers based on the amount of collateral purchased and sold through them.

Custody of Collateral

All collateral is held in segregated accounts in the name of OpenTrade SPC, Treasury Management Segregated Portfolio 1 at regulated custodians in the United Kingdom and Switzerland. OpenTrade SPC pays a fee to these regulated custodians based on the value of the collateral held with them.

Lender's Security Interest over Collateral

The Borrower has granted a valid and fully perfected security interest in the accounts in which the collateral will be held pursuant to the Security Trust Deed.

The Security Trust Deed is a legal agreement that arranges for a Security Trustee to hold a master security interest in the collateral held in the Borrower's accounts on behalf of the Lenders.

In a default event, each Lender can enforce their individual right to the collateral securing their loans through the Security Trustee and instruct the Security Trustee to either liquidate the collateral or hold the collateral to maturity. The proceeds of either would be then used to repay lenders for loans in default.

US Treasury Bills

US Treasury Bills (“T-Bills”) are short-term debt obligations of the United States Department of the Treasury that mature in one year or less.

How do they work?

Treasury Bills are zero coupon debt obligations which are purchased at a discount to their par value and pay the holder par value on the Maturity Date. The discount rate is determined at an auction held by the Treasury Department where investors submit a bid to purchase a set dollar amount of bills. The yield investors receive is based on the average auction price from all bidders.

Example

Purchase Price	Discount Rate	Tenor	Par Value
$9,961,643.84	5.00% per annum	4 weeks	$10,000,000
$9,875,342.47	5.00% per annum	13 weeks	$10,000,000
$9,836,986.30	5.00% per annum	17 weeks	$10,000,000
$9,750,684.93	5.00% per annum	26 weeks	$10,000,000
$9,501,369.86	5.00% per annum	52 weeks	$10,000,000

The purchase price is what the investor pays to purchase the Treasury Bills. The discount rate determines the discount to par value, where par value is what the bills will pay at maturity. The tenor is the number of weeks before the Treasury Department will pay the holder the par value.

Term	Details
Issued In	Electronic form only
Issued By	United States Department of the Treasury
Matures In	4, 8, 13, 17, 26, and 52 Weeks
Interest Rate	Fixed at auction. For bills, "interest" is the difference between what you paid and the face value you get when the bill matures. See Results of Recent Bill Auctions. Also see Understanding Pricing and Interest Rates.
Minimum Purchase	$100
In Increments Of	$100
Maximum Purchase	$10 million (non-competitive bid) 35% of offering amount (competitive bid) (See Buying a Treasury marketable security for information on types of bids.)
Auction Frequency	Every four weeks for 52-week bills. Weekly for 4, 8, 13, 17, 26-week bills. See the Auction Calendar for specific dates.
Taxes	Dependent on jurisdiction

Why Treasury Bills?

They are among the most secure and liquid financial assets in the world, with the Issuer (US Department of the Treasury) holding Aaa/AA+/AA+ ratings by Moodys/Fitch/S&P and over $500B in daily trading volume.