BNY Mellon Wins Custody Mandate in Hawaii

BNY Mellon has won a five-year custody mandate and onboarded the more than $12 billion in assets of Employees’ Retirement System of the State of Hawaii (HIERS).

In addition to providing global custody, the mandate extends to securities lending, foreign exchange, cash management, and global risk solutions services. Northern Trust previously served as global custodian for the HIERS fund, which serves over 112,000 members.

The contract stipulates that HIERS will pay BNY Mellon $1.55 million in base custodial fees over the course of the five years. These fees cover areas such as administrative costs for keeping the assets under custody and/or administration, along with other services such as proxy voting and monthly performance reporting. Enhanced services such as daily performance reporting have separate fees.

For foreign exchange, a service for which BNY Mellon has been sued by other states for overcharging, the custodian will charge a five-basis-point spread for exchanging developed market currencies and ten basis points for emerging and other market currencies. For securities lending, there will be an annual $100,000 fee per agent. Additionally, HIERS will pay $100,000 annually for cash management and eight basis points in fees for its Short Term Investment Fund.

“BNY Mellon is a market leader whose team can help us implement best practices that enable us to be more efficient,” says Wesley Machida, HIERS executive director. “This appointment extends our existing relationship with BNY Mellon’s investment management and corporate trust businesses. As global custodian, we’ll get a partner with a robust set of products we can leverage both now, such as securities lending, and in the future.”

In addition to winning the mandate in Hawaii, BNY Mellon also recently replaced Northern Trust as the custodian for Kentucky’s state retirement fund.