Collateral Management System Launched

Terry Flanagan

BNY Mellon’s MarginEdge covers listed and OTC derivatives.

The combination of initial margin requirements on cleared swaps along with demands by CCPs that clients post high-quality collateral, will lead market participants to seek out efficient clearing and collateral management solutions

BNY Mellon has launched MarginEdge, a global derivatives margin management service that allows financial institutions, clearing members and central counterparties (CCPs) to manage margin collateral efficiently while balancing trading costs and capital requirements associated with listed, cleared over-the-counter (OTC) and bilateral OTC derivatives.

“MarginEdge consolidates margin management across collateral locations and providers via our collateral management, custody and administration services, and simplifies connectivity among market participants for margin movements as end clients, clearing members and CCP can all leverage BNY Mellon as their underlying collateral custodian,” John Vinci, global head of product management and strategy at BNY Mellon Broker-Dealer Services, told Markets Media.

By optimizing the use and allocation of collateral via tri-party collateral management services, MarginEdge helps segregate assets through BNY Mellon’s custody and collateral management capabilities, the company said.

Global regulatory reforms are driving profound changes in the derivatives markets, making operational efficiencies, risk reduction and increased transparency the critical components in any derivatives margin process.

“The impact of reforms like Dodd Frank, EMIR, and Basel III is driving the need for collateral services for all counterparties in the market,” said Vinci. “Not only are they focused on the securities and cash settlement risks, but they also value having a clear picture of where collateral is and what its value is at any given point in the transaction cycle. They are seeking independent third parties like BNY Mellon with the operational and market expertise to handle such duties.”

BNY Mellon currently provides a suite of derivatives-related services through Derivatives360, 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.

“MarginEdge is a standalone service for financial institutions, clearing members and central counterparties, but it is also one of the many derivative-related services we offer through Derivatives360,” said Vinci.

Related articles

  1. CEDX is planning to expand its range of products in 2023, subject to regulatory approvals.

  2. The CFTC regulated derivatives market and clearer was not included in FTX's bankruptcy filing.

  3. Schroders cleared NDF trades across a Asian and Latam currency pairs via Citi.

  4. The derivatives venue owned by FTX wanted to offer products that were not fully collateralized.

  5. Trading Europe From ‘Across the Pond’

    Cboe acquired EuroCCP on 1 July 2020.