BNY Mellon, AcadiaSoft Team for Margin Calculations
Buy-side derivatives market participants are now able to fully outsource their entire non-cleared margin workflow, via the market’s first end-to-end collateral solution developed by BNY Mellon.
Going forward, clients can access AcadiaSoft’s Initial Margin (IM) Risk Suite of low-touch tools for margin calculation, reconciliation and messaging as part of BNY Mellon’s collateral service offering.
This collaboration, in conjunction with BNY Mellon’s existing bilateral margin capabilities from post-trade and settlement through to collateral segregation and ongoing position monitoring, enables clients to meet their obligations under Phases 4 and 5 of the non-cleared margin rules, all in one place.
Under the rules, counterparties are required to calculate IM on non-cleared derivatives trades. Depending on the portfolio in question, these calculations may be numerous and complex, and they are required to be computed daily.
AcadiaSoft acts as a central repository for calculating IM, enabling market participants to use the utility as a single point of contact through which to conduct their messaging and calculations.
While already utilizing AcadiaSoft for margin messaging, BNY Mellon now becomes the first collateral outsource provider to support the IM calculation and reconciliation needs of clients that fall within the scope of the non-cleared margin rules.
“Our aim is to streamline the collateral workflow for clients, making it easier for them to meet their regulatory requirements. Adding the AcadiaSoft functionality means they’ll only need to share their derivatives portfolio with us once daily: thereafter, we’ll calculate their IM and instruct the movement of the collateral required accordingly,” explains Jonathan Spirgel, Global Head of Liquidity and Segregation Services at BNY Mellon.
“We’re thrilled to be able to offer buy-side derivatives market participants access to AcadiaSoft’s IM calculation and reconciliation services for the very first time through BNY Mellon,” says Chris Walsh, CEO of AcadiaSoft.
BNY Mellon provides comprehensive collateral management for clients, including a range of segregation options, collateral administration, collateral transformation and other services.
Margin calls increased due to volatility caused by the Covid-19 pandemic.
Daily margin calls increased during the March volatility.
The industry spends more than $20bn a year processing trades.
They aim to help mutual clients reduce the cost of margin management.
Covid-19 has delayed bilateral margin requirements by one year.