1 - 10 employees
Collar takes ancient financial technology and streamlines it for global usage. Top wealth advisory firms help high net worth individuals with large, concentrated single stock positions avoid liquidation using various tools, the most notorious of which, among numerous others, is the “prepaid variable forward” or PVF on a regular basis. These involve an agreement between an individual and an investment bank where the individual agrees to sell the shares to the bank in the future within a variable price range. This is typically done to access liquidity without triggering capital gains or risking liquidation. If the price of the asset increases, the individual can renegotiate the range higher, unlocking a bigger loan. They can even elect to use other shares they hold to “net share settle” or post cash in lieu of shares in order to roll and maintain the position for as long as possible. Collar is essentially a codified, non-custodial wrapper for such an arrangement that leverages passive liquidity to hedge the trade upfront. Previously, these trades were only accessible to high net worth individuals with 10mm+ in assets. They were also highly manual and bespoke, requiring significant legal documentation to ensure complexities were met by each party. Even so, it could take months to execute one of these trades, and it was very costly to do so in terms of legal, operational, compliance, and other costs.Something looks off?