BNY Mellon Expands Derivatives Collateral Servicing

Terry Flanagan

Provides window into collateral agreements, margin calls and settlements.

In concert with the growth and complexity of the derivatives collateral management process, major banks are providing clients real-time windows into reviewing and approving their collateral agreements, margin calls and settlements.

BNY Mellon has enhanced its derivatives collateral servicing platform for institutional clients with new margin management capabilities delivered through a secure web-based portal.

As part of DM Edge, the company’s derivatives margin management service – the enhancements provide clients with a fully automated system that facilitates the entire margin call and collateralization process, improves reporting capabilities and reduces operational risk.

“The automation is around our client-facing portal,” Scott Linden,
managing director and global product manager for DM Edge, told Markets Media. “We have designed a robust client-facing web portal, called DM Edge Connect, which allows for not only review and oversight by our clients, but also provides clients with the ability to actively participate in the margin and collateral workflow, if desired.”

With the new capabilities, BNY Mellon is well -positioned to accommodate the requirements that will emerge in a centrally cleared environment, as well as the changes resulting from global regulatory reforms.

“We are expanding our services to support our clients in the new regulatory environment,” Linden said.

For example, BNY Mellon launched BNY Mellon Clearing last year to clear to derivatives on behalf of institutional clients. It is also working closely with Algorithmics to expand services to include cleared derivatives. “We are working on future enhancements jointly to support the emerging needs of our clients,” said Linden.

BNY Mellon’s DM Edge service is part of the company’s Derivatives360 suite of services, which comprises a broad array of offerings for issuers and investors around the execution and processing of derivatives.

These include trading and execution, collateral management and other middle office outsourcing services, as well as custody, accounting and consolidated reporting.

“Regulatory and marketplace changes and proposals are strong factors impacting demand,” Patrick Tadie, executive vice president and global business head of BNY Mellon Derivatives360.

“Our pipeline is strong with many institutions because there is strong interest in what the future will hold and how it will impact the way clients operate,” he said. “Working with a service provider like BNY Mellon, which has unrivaled experience and history working with clients though market changes, is a logical way to navigate the uncertainty.

Other middle office services available through Derivatives360 on an outsourced basis include cash collateral reinvestment, OTC trade affirmation and confirmation, independent (third-party) valuation, counterparty and investment manager reconciliation and lifecycle event management.

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