Marex announced today that Business Manex Financial Products’ structured products issued the first structured “Cash and Transport” note connected to the cobalt.
This innovative “Cash and Transport” product was executed thanks to Marex’s ability to access a natural cobalt on the spot market, hold it and sell the future cobalt contracts at the Chicago Mercantile Exchange. The derivative price was packaged in a structured investment product with a guaranteed coupon over a fixed tenor.
Historically, the market for future cobblestone fulfillment has been negotiated in a steep ‘Contango’, where the price of future fulfillment is significantly higher than the price of points and the tacit cost of transporting (storage, funding and insurance). This is due to the fact that most cobalt consumers, such as electric vehicle manufacturers (EV), cannot easily keep the natural metal. They buy the natural metal to immediately build and offset the risk of cobalt prices, holding long positions on future cobalt contracts.
Using the ability of the business to keep natural cobalt, Marex financial products were able to pack an attractive structured note that would benefit from the price difference between the point and the future in the form of a guaranteed coupon.
Martin Kummer, executive director of Marex Financial Products, said:
“This innovative structured note was built to provide an exciting performance for our customer, thanks to Marex’s differentiated capabilities throughout the business, promoting the improved value we can deliver through our interconnected platform, dividing us into the industry.”