Transport fuel suppliers in the UK must meet an annual obligation to provide sustainable, low carbon fuel through the Renewable Transport Fuel Obligation (RTFO) scheme.
The scheme is mandated by the UK government to reduce greenhouse gas emissions from road transport and is made of a certificate trading mechanism.
Renewable Transport Fuel Certificates (RTFCs) are issued for the supply of eligible carbon fuels used in road vehicles, non-road transports (including non-road mobile machinery), and maritime transport – provided the fuel is renewable and of non-biological origin.
Through close communication with one of our clients, Marex identified an opportunity to provide an innovative solution to help them efficiently manage a large inventory of RTFCs.
As the certificates were not required by the client until later in the year, we collaborated with them to creatively structure a synthetic sale and repurchase transaction for an underlying asset that is not futures/screen traded. This allowed the client to monetise their existing inventory, with an obligation to repurchase the RTFCs at a later date.
This complex transaction was assembled within a short timeframe to effectively meet the client’s needs. The trade was made possible only through collaboration across multiple teams, led by our environmental trading and hedging solutions teams.
This demonstrates the capabilities of Marex’s derivatives engine to create a truly bespoke solution, which was achieved by successfully bringing together our Solutions’ trading capabilities and the CSC environmental trading team’s expertise in handling transactions in this niche market.
Ultimately, this creative solution delivered the desired outcome for the client:
“The speed at which Marex were able to bring a solution to the table for us on RTFC financing was particularly impressive. We have a close working relationship with the team, which stood out for their hands-on co-ordination. This made a real difference for us in navigating the opportunity from start to finish. As our partnership continues to evolve, we are excited to explore new opportunities and expand the range of products we work on with Marex.”
David Cohen, Head of Marex Hedging Solutions, said, “This is yet another example of cross-team brainstorming and collaboration with a ‘one-stop-shop’ mindset. It led to an innovative solution for our corporate clients, all whilst positioning Marex as a leader in the environmental market space.”
Bastien Declercq, CEO of CSC Commodities and Head of Marex Environmental, said, “Very proud and pleased to see the Marex platform in action – deep expertise in product specifications from market making coming together with first class financial engineering from solutions, for the ultimate benefit of the firm’s customers.”
