BNY Mellon will provide tri-party collateral management services for CME Clearing Europe, the European multi-asset class clearing house.
The clearinghouse previously received regulatory approval of the new tri-party agreement for clearing members businesses; members now can manage collateral through BNY Mellon. The agreement comes a handful of days after Euroclear announced it also would offer collateral management services for CME Clearing Europe.
The BNY Mellon services will be provided through MarginEdge, the custodians comprehensive derivatives margin management service for listed, OTC and bilateral OTC derivatives. MarginEdge offers clients, clearing members and central counterparties (CCPs) access to real-time views on location and positions of margins and collateral.
Financial institutions are facing enormous challenges brought about by the EMIR and Dodd-Frank regulatory schemes and rapidly evolving regulatory structure in Europe and the U.S., says James Malgieri, executive vice president for Global Collateral Services at BNY Mellon. Central clearing is a cornerstone of those changes and has seen attention increasingly focused on collateral needs.
Andrew Lamb, CEO of CME Clearing Europe, says the requirements to clear OTC derivatives centrally is a key focus for both sell-side and buy-side firms, and BNY Mellons tri-party collateral management service offers those elements. CME Clearing Europe is pleased to have worked with BNY Mellon to introduce this new feature of our clearing arrangements, he says.
Malgieri adds: Collateral is a critical part of the risk mitigation framework of these new regulations. However, it brings its own challenges around selection, valuation and time-sensitive collateral delivery. BNY Mellon has for many years provided tri-party collateral management services for traditional repo transactions and has continued to evolve our model to meet changing requirements in the new CCP environment.
(CG)