BNY Mellon
Brian Ruane
5 August 2022
Brian Ruane, CEO of BNY Mellon Government Íø±¬³Ô¹Ï Services Corporation and Clearance & Collateral Management, recently met with Justin Lawson to discuss the firm’s growing collateral business and the first phase of the new user interface for their flagship application, AccessEdge
Image: Brian Ruane
This new redesigned user interface will include enhanced inventory and trade management capabilities, and a unified portal that simplifies the client experience. BNY Mellon has invested in, and is focused on, enhanced resiliency, improved operational workflow and increased collateral efficiency.
Brian, please tell us about BNY Mellon’s collateral management services?
BNY Mellon provides clearance and collateral management solutions to a wide spectrum of client types, including banks, broker-dealers, investment managers and other buy-side market participants. Total global collateral balances on our platform are US$5.5 trillion, representing repo, derivatives and other secured financing transactions.
We are encouraged by the market’s move to managing more collateral balances via a tri-party structure and continuing to connect to new markets and pools of collateral, including central counterparties. In 2022, we launched a new version of our AccessEdge User Interface, which provides clients with visibility into total collateral sources and uses across regions and legal entities on our platform. We have also introduced Your Collateral Universe, where users can access those solutions in a single state-of-the-art ecosystem, bringing to life all our market-leading capabilities.
What is new in the collateral management space at BNY Mellon?
We are enhancing our platform to enable clients to utilise assets as collateral against trading liabilities in a variety of venues. As such, we are focused on three key areas, namely resiliency, digital enablement and market connectivity.
We have made significant investment in resiliency. Our modernised platform is secure, scalable, recoverable and we run our production environment in multiple data centres simultaneously.
Our new digital tools leverage data and create insights to help to grow our clients’ business and improve their margins. Collateral optimisation continues to be a key focus and we are helping clients to optimise for the market’s most complex regulatory objectives. We have built a suite of customisable solutions, allowing clients to simulate collateral eligibility and optimise very large portfolios within minutes, including the ability to run what-if scenarios on assets held on and outside our platform.
Building on the strength of our collateral optimisation solutions, we are delivering advanced analytics that will help clients to forecast bilateral treasury repo rates and bilateral settlement fails. Clients will be able to mitigate these fails in an automated manner that will deliver material benefit to the market, improving liquidity and reducing their costs.
We have implemented RULE, a flexible and intelligent self-service application for the creation and management of collateral schedules, allowing clients to book new trades more efficiently as well as to manage the modification of existing trades, all without manual intervention.
Digital assets and distributed ledger technology continue to mature and we are in the early stages of working with clients to tokenise US treasury securities to enhance collateral mobility and liquidity. Additionally, BNYM Íø±¬³Ô¹Ï Lending recently led the market with a trade booked on the HQLAX platform.
Our platform was developed to support open architecture, promoting connectivity to other market infrastructure providers. Recent examples include our first-to-market solutions supporting the use of offshore Chinese assets for both Stock and Bond Connect on our platform. It is critical that we continue to develop new markets for our clients and enhance their ability to finance assets globally. In addition, we are enhancing our central counterparty (CCP) connectivity, making it easier for clients to move collateral to meet margin requirements and support collateral substitutions.
What trends are you seeing in the industry?
Collateral management has moved up the value chain from primarily driving back-office efficiencies to being an integral part of our clients’ funding and trading models. Three trends that clients continue to look for in the marketplace are increased flexibility, improved connectivity and better utilisation of data.
Clients want the flexibility to optimise their portfolio across a broad range of metrics in a central funding model and to minimise costs by using the right asset to support the right obligation in the right legal entity at the right time. This includes greater integration and interoperability between settlement locations, leading to increased velocity of collateral.
Clients are looking for increased connectivity to other market infrastructure, technology partners and clients via modern methods such as application programming interfaces (APIs), while continuing to support standards such as SWIFT. In addition, our open platform allows for CCP connectivity, making it easier for clients to move margin collateral and make substitutions.
Given our position in the marketplace, clients look to BNY Mellon to leverage our data view to provide efficiencies to clients. A key example of this is our recent investment in our front-office analytics portal. Imagine a front-office trader who logs into their own view of BNY Mellon’s platform to identify Fed-eligible securities settlement fails multiple hours before they occur in near real-time throughout the day. The trader can then source a security to mitigate the fail via a push-button solution in real-time, ensuring settlement finality right up against the Fedwire cutoff. We feel the market could save multi-millions in Treasury Market Practices Group (TMPG) fails charges, while improving counterparty relationships and market liquidity.
It is evident that, as the market moves, we adapt to provide services for our clients’ demand. BNY Mellon is a leader in global collateral management and active in the entire lifecycle of collateral management. The investment in our core technology and user interface is improving the client experience and simplifying doing business on our platform. We continue to invest in the business and explore new technologies to ensure that our platform supports our clients’ collateral management needs and the increased demand for decision-making tools. We are excited about the future.
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