BNY Mellon live with cleared securities lending for clients via Eurex Clearing’s Lending CCP
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BNY Mellon live with cleared securities lending for clients via Eurex Clearing’s Lending CCP 18 June 2019New York Reporter: Becky Butcher
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BNY Mellon has become the first agent lender to centrally clear a securities lending transaction on behalf of a buy-side client through Eurex Clearing’s Lending Central Counterparty (CCP) platform.
Executed by BNY Mellon on behalf of an insurance company client, the trade originally faced Morgan Stanley as counterparty, and ultimately cleared with Eurex Clearing, a CCP.
The trade was matched and novated through Pirum’s CCP Gateway.
According to BNY Mellon, the transaction represents a “major new route” to the market for its clients.
Clients will now be able to capitalise on growing market demand to undertake securities finance within a centrally-cleared environment, without the obligations and responsibilities of traditional clearinghouse membership.
Commenting on the trade, James Slater, global head of securities finance, liquidity and segregation at BNY Mellon, said that the trade “marks a watershed in the development of the securities lending market”.
Slater explained: “Central clearing will add capacity to the market and provide new opportunities for our clients. Those clients who choose to participate in this new distribution channel should see increased utilisation and better pricing, all while facing a highly-rated clearinghouse as counterparty.”
Also speaking on the transaction, Marcel Naas, managing director of Eurex Repo, noted that in recent years the margin and operational efficiencies offered by central clearing “have the potential to add huge value to the global securities finance landscape”.
Naas said: “That’s why we are so pleased that BNY Mellon has completed their integration into Eurex Clearing’s Lending CCP platform and we welcome their first clients into the centrally cleared construct. This is just the beginning, and we anticipate much greater utilisation of our services going forward as the securities finance industry looks to realise the benefits of a CCP model.”
Arianne Collette, executive director from bank resource management at Morgan Stanley, added: “Morgan Stanley is committed to supporting central clearing solutions for securities finance transactions and is pleased to be executing the first agent lender transaction on the Eurex Clearing Lending CCP Platform. This marks a significant turning point for central clearing of securities finance transactions and adds another execution form in the SFT optimisation tool kit.”
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