The Bank of New York Mellon, a global leader in asset management and asset servicing, has developed a new, first-of-its-kind netting service for derivatives dealers. Called Derivatives Collateral Net, the service utilizes a patent-pending technology that enables derivatives dealers to post only their net obligations against all other participants in the system, greatly reducing their gross collateral requirements.
This innovative service, which the company is currently enrolling participants in, automatically aggregates and nets overall collateral obligations, minimizing the collateral dealers are required to post and reducing the risks and costs associated with derivative transactions.
“Derivatives Collateral Net represents the implementation of the International Swaps and Derivative Association’s strategic vision for dramatically reducing the operational challenges associated with the margin process between counterparties. We’re making the process more efficient without affecting the fundamental bilateral nature of the credit relationship between the parties,” said Art Certosimo, executive vice president and head of Broker-Dealer Services at The Bank of New York Mellon. “This service spotlights our unique ability to utilize our collateral management expertise and technology to anticipate and serve the emerging needs of our derivatives dealer clients.”
The new service represents a collaborative effort between The Bank of New York Mellon’s Office of Innovation and its Broker-Dealer Services business. The Office of Innovation provides the framework and resources necessary to accelerate the development of promising new products and services that support client needs.
“As the global capital markets expand and evolve, our commitment to researching and developing innovative services will provide significant benefits to our clients and strengthen our competitive position around the world,”, said Kurt Woetzel, senior executive vice president and chief information officer at The Bank of New York Mellon. “Derivatives Collateral Net is the latest example of a new service developed in-house that improves our ability to service our clients.”
The Bank of New York Mellon is the leading provider of tri-party collateral management services, servicing more than $1.8 trillion in tri-party balances worldwide.