Goldman Sachs has chosen BNY Mellon to provide segregated sub-custody services to Goldman Sachs Internationals prime brokerage clients.
Goldman has become the second public broker/dealer to use BNY Mellons segregated prime custody solution. In December 2009, Deutsche Bank launched DB Integrated Prime Custody, a platform that allowed funds to move unencumbered assets from their prime brokerage account to a segregated custody account at BNY Mellon.
BNY Mellon will provide a segregated sub-custody service to GSIs prime brokerage clients through Montague Place Custody Services, a special purpose vehicle.
After the collapse of Bear Stearns and Lehman Brothers in 2008, combined with the Madoff fraud, hedge fund investors have been eager to keep their unencumbered assets safe. According to Staffan Ahlner, Managing Director, EMEA Broker Dealer Services, BNY Mellon, demand and breadth of prime custody is growing: One of the main topics of the recent RMA Securities Lending Conference in Berlin was prime custody and the segregation of assets. We are talking nearly all other prime brokers. If a broker/dealer goes into default, [our] structures are designed to hold custody outside.
Prime brokers are looking to trusted providers like BNY Mellon to deliver a seamless offering that will safeguard their clients assets and meet their needs in a changing market and regulatory environment, said James Malgieri, CEO of BNY Mellon Broker-Dealer Services. This is in direct response to hedge funds that are increasingly seeking to diversify counterparty risk while continuing to deal directly with their prime brokers.
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