Designed to help buy-side clients manage the impact of regulatory change on their investment processes, the universe combines the company’s range of collateral management and related solutions with hoped-for benefits provided by both its central securities depositary and its new collateral aggregator.
“For market participants, the current and future regulatory reforms pertaining to derivatives and capital are expected to contribute to collateral and liquidity shortfalls, as well as increased funding costs and operational complexity. These challenges have prompted the buy-side to explore new ideas, tools and partners,” said Woetzel.
Chakar added that BNY Mellon has transformed its business model, investing in new capabilities specifically to address the new challenges facing market participants.
“Our universe provides the next generation of collateral solutions and demonstrates BNY Mellon’s leadership and innovation.”
BNY Mellon's Collateral Universe encompasses collateral management solutions including segregation, optimisation, aggregation, securities financing, liquidity management, consulting, derivatives lifecycle management and reporting.
Established to help clients address new regulations including Basel III, European Market Infrastructure Regulation (EMIR), The Alternative Investment Fund Managers Directive (AIFMD) and Markets in Financial Instruments Directive (MiFID) as well as the advent of TARGET2-Securities (T2S), BNY Mellon’s Brussels-based central securities depository (CSD) has received a Belgian royal decree granting it securities settlement system (SSS) status.
As an SSS, BNY Mellon CSD is formally recognised to be an appropriate system under EMIR Article 47.3 for the holding of financial instruments as margins or as default fund contributions for central counterparties (CCPs), an important component in assisting clients to reduce their risk in line with the EU Settlement Finality Directive.
In May, the CSD signed a framework agreement with the Eurosystem to allow it to outsource settlement to the T2S settlement platform. As a direct T2S participant, the CSD will have the opportunity to leverage the settlement system’s auto collateralisation programme for central bank money and its collateral pooling facilities, among other capabilities, to help speed up the velocity of collateral within global markets.
Another key feature of the universe will be the new collateral aggregator, a platform that aims to offer clients a consolidated and transparent view of all their available collateral, and all their collateral positions and related activities, held with BNY Mellon.
Through the aggregator, buy-side clients will be able to enhance their ability to manage their collateral and counterparty exposures via a single portal. Clients will be able to easily identify, manage, assess and forecast their global collateral holdings.