Institutional clients are now able to seamlessly invest cash in cleared repo through LiquidityDirectSM, BNY Mellon’s market-leading short-end investment portal.
The addition of cleared repo represents the next step in BNY Mellon’s continuing plans to enhance the LiquidityDirect platform and its services to enable clients to invest in a wide variety of short-end investment products.
Cleared repo through the Fixed Income Clearing Corporation (FICC) has emerged as an important short-term investment option for liquidity providers, particularly since 2017 when changes in entry requirements increased the community of investors eligible to utilize the product, many of whom use LiquidityDirect today.
Sponsored membership enables sponsoring firms like BNY Mellon to provide cleared repo to end users that would otherwise be ineligible to access the FICC clearing house, enabling clients to invest and raise cash in cleared repo without the financial obligations of full clearing house membership.
Since BNY Mellon launched its sponsored member program at FICC in June 2017, the sponsored cleared repo sector has enjoyed strong growth, climbing from approximately $30 billion in daily volume in early 2017 to peak at over $525 billion in March 2019. Daily volumes have remained consistently above $200 billion in recent months.
The addition of cleared repo to LiquidityDirect broadens the range of short-term investments on the platform to include a secured, centrally cleared alternative that provides counterparty diversity and potentially enhances yields.
“LiquidityDirect is one of the world’s largest digital portals for investing in money market funds. With the addition of cleared repo – and with other vehicles still to come – we are demonstrating our ambition to build the venue into the market’s leading short-end investment platform,” says George Maganas, Head of Liquidity Services at BNY Mellon.
“Today, clients are looking for a single point of contact that both grants access to a wide variety of investment instruments as well as collateral management, treasury services and asset servicing capabilities. LiquidityDirect is that access point, and we are committed to connecting the dots for clients,” Maganas concludes.
Mark Haas, Head of Principal Securities Finance at BNY Mellon, adds: “We have attained a leading position in sponsored repo since the product was rolled out, and we see increased interest and enrollment from entities that are common users of treasury workstations such as municipalities, corporates and insurance companies. The ability to transact via LiquidityDirect is the latest in a series of cleared repo enhancements we’ve introduced to benefit clients, such as dynamic margining, term trading and expanding into additional jurisdictions.”
Since its launch in 1997, LiquidityDirect has established itself as one of the market’s leading portals for investing in all types of money market funds, including treasury funds, government funds, prime funds, taxable and tax-exempt funds, as well as offshore money funds.
As of year-end 2020, the platform supported almost $9 trillion in transaction flow annually for more than 700 of the world’s largest corporations and institutional investors. Through integration into leading cash management systems such as GTreasury and Hazeltree, LiquidityDirect is embedded within clients’ trading ecosystems, enabling them to seamlessly combine their treasury, back office, cash management and short-end investing activities.