Marex today announced that its structured products business Marex Financial Products issued its first structured ‘cash-and-carry’ note linked to cobalt.

This innovative ‘cash-and-carry’ product was executed thanks to Marex’s ability to access physical cobalt in the spot market, hold it, and simultaneously sell cobalt futures on the Chicago Mercantile Exchange. The derived value was packaged into a structured investable product with a guaranteed coupon over a fixed tenor.

Historically the cobalt futures market has traded in steep ‘contango’, where the futures price is significantly higher than both the spot price and the implied carry costs (storage, financing, and insurance costs). That’s because most cobalt consumers, such as electric vehicle (EV) makers, cannot easily hold the physical metal. They buy the physical metal to manufacture straight away and hedge their cobalt consumption price risk by holding long positions in cobalt futures.

Using the firm’s ability to hold physical cobalt, Marex Financial Products was able to package an attractive structured note that will benefit from the price difference between the spot and future in the form of a guaranteed coupon.

Martin Kummer, Executive Director at Marex Financial Products, said:

“This innovative structured note was manufactured to offer a compelling return for our client, thanks to Marex’s diversified capabilities across the firm, showcasing the enhanced value we can deliver through our interconnected platform, setting us apart in the industry.”