BNY Mellon teaches collateral eligibility
11 March 2014 New York
Image: Shutterstock
BNY Mellon is implementing an enhanced collateral management programme for BofA Merrill Lynch to expand collateral eligibility.
The programme also aims to create greater collateral management efficiencies for depositing eligible margins at CME Clearing.
Through the IEF4 programme, clearing firms will be able to post eligible securities into a CME Clearing-controlled segregated tri-party account at BNY Mellon to receive margin credit for listed futures and OTC-cleared interest rate swaps.
The service has the ultimate aim of expanding the eligible collateral inventory, increasing transparency, and creating greater collateral allocation efficiencies.
The US Dodd-Frank Act and other financial regulation will pave the way for a new environment whereby OTC derivatives will be centrally cleared.
"Triparty custody is an important service CME Clearing offers its member firms because posting collateral through an efficient platform, such as BNY Mellon's, is both market- and customer-friendly," said Kim Taylor, president of CME Clearing.
"Recognising the fact that key buy-side clients have eligible CCP collateral and allowing that collateral to be put to use is a vital value-added service we will continue to work to provide with clearing members like BofA Merrill Lynch."
"By working with the CME to expand the range of eligible collateral, we're supporting our clients' overall investment strategies, while helping the wider industry better navigate the risks, challenges, costs and operational complexities linked to regulatory changes," said Kurt Woetzel, CEO of BNY Mellon's global collateral services business.
"This opportunity to work with BofA Merrill Lynch and assist them with all their collateral management requirements is at the forefront of industry efforts to increase collateral efficiency and transparency."
The programme also aims to create greater collateral management efficiencies for depositing eligible margins at CME Clearing.
Through the IEF4 programme, clearing firms will be able to post eligible securities into a CME Clearing-controlled segregated tri-party account at BNY Mellon to receive margin credit for listed futures and OTC-cleared interest rate swaps.
The service has the ultimate aim of expanding the eligible collateral inventory, increasing transparency, and creating greater collateral allocation efficiencies.
The US Dodd-Frank Act and other financial regulation will pave the way for a new environment whereby OTC derivatives will be centrally cleared.
"Triparty custody is an important service CME Clearing offers its member firms because posting collateral through an efficient platform, such as BNY Mellon's, is both market- and customer-friendly," said Kim Taylor, president of CME Clearing.
"Recognising the fact that key buy-side clients have eligible CCP collateral and allowing that collateral to be put to use is a vital value-added service we will continue to work to provide with clearing members like BofA Merrill Lynch."
"By working with the CME to expand the range of eligible collateral, we're supporting our clients' overall investment strategies, while helping the wider industry better navigate the risks, challenges, costs and operational complexities linked to regulatory changes," said Kurt Woetzel, CEO of BNY Mellon's global collateral services business.
"This opportunity to work with BofA Merrill Lynch and assist them with all their collateral management requirements is at the forefront of industry efforts to increase collateral efficiency and transparency."
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