BNY Mellon was selected to provide derivatives collateral management services to Sjunde AP-fonden (AP7), the Swedish state pension fund with more than 8.5 billion under management.
Services are being provided via DM Edge, BNY Mellon’s comprehensive derivatives margin management platform. BNY Mellon is using DM Edge in conjunction with its tri-party collateral management and Money Funds platforms to support AP7’s equity OTC derivatives trading, assisting with raising cash as collateral, reinvesting cash collateral and calculating margin call amounts. This is the first time three of the platforms have been combined, offering a collateral management service tailored to the fund’s complex requirements.
“BNY Mellon has created a solution for AP7 which enables it to maximize the use of its equity collateral, says Andrew Demko, EMEA business manager for Broker Dealer Services at BNY Mellon. The pension fund has previously found that many market participants will not accept equity as collateral under ISDA agreements. Our solution enables long equity positions to be turned into cash at short notice for use as margin, facilitating the business and avoiding extra costs.”
Svante Linder, COO at AP7, adds: “BNY Mellon has helped us solve the problem of collateralizing OTC Derivatives when using an equity based portfolio. The market is not favorable to using equities as collateral at the moment and working with BNY Mellon on a combined solution has helped us to overcome operational and legal hurdles.”
(CG)