New hedging tools from BNY Mellon and CME
27 November 2014 New York
Image: Shutterstock
BNY Mellon and CME Group have collaborated to provide investors with new interest rate hedging tools.
BNY Mellon's role in the collaboration will be to prepare and provide daily US triparty repo indices that reflect overnight interest rates on transactions collateralised by US treasuries, agency mortgage backed securities, and US agency debt.
CME Group futures related to these indices will allow investors to hedge risk on short-term collateralised loans and other “nearly risk-free” interest rate exposures.
The futures products are scheduled to launch in 2015, pending regulatory review, and will be listed by and subject to the rules of the Chicago Board of Trade.
Based on the approximately $400 billion per day of overnight repo transactions in the specific index asset classes processed daily on BNY Mellon's triparty repo platform, the new BNY Mellon US triparty repo indices will provide investors with “an entirely new, highly transparent, transactional-based benchmark”.
John Vinci, managing director and head of BNY Mellon’s broker-dealer services product management and strategy, said: "This collaboration promises to provide investors with great new tools to help hedge interest rate exposure—we'll be giving investors access in a world-class derivatives marketplace to products that reflect our unmatched ability to track and report on activity in the triparty repo space."
Currently representing approximately 85 percent of the US triparty repo market, transactions on the BNY Mellon platform reflect the investment activities of a diverse array of market participants.
Sean Tully, senior managing director of financials and over-the-counter at CME Group, commented: “CME Group is a natural home for futures related to BNY Mellon’s triparty repo indices because of our unique ability to offer portfolio margining with one of the world’s largest interest rates futures open interest pools, including eurodollars, fed funds, and US treasury note and bond futures.”
BNY Mellon's role in the collaboration will be to prepare and provide daily US triparty repo indices that reflect overnight interest rates on transactions collateralised by US treasuries, agency mortgage backed securities, and US agency debt.
CME Group futures related to these indices will allow investors to hedge risk on short-term collateralised loans and other “nearly risk-free” interest rate exposures.
The futures products are scheduled to launch in 2015, pending regulatory review, and will be listed by and subject to the rules of the Chicago Board of Trade.
Based on the approximately $400 billion per day of overnight repo transactions in the specific index asset classes processed daily on BNY Mellon's triparty repo platform, the new BNY Mellon US triparty repo indices will provide investors with “an entirely new, highly transparent, transactional-based benchmark”.
John Vinci, managing director and head of BNY Mellon’s broker-dealer services product management and strategy, said: "This collaboration promises to provide investors with great new tools to help hedge interest rate exposure—we'll be giving investors access in a world-class derivatives marketplace to products that reflect our unmatched ability to track and report on activity in the triparty repo space."
Currently representing approximately 85 percent of the US triparty repo market, transactions on the BNY Mellon platform reflect the investment activities of a diverse array of market participants.
Sean Tully, senior managing director of financials and over-the-counter at CME Group, commented: “CME Group is a natural home for futures related to BNY Mellon’s triparty repo indices because of our unique ability to offer portfolio margining with one of the world’s largest interest rates futures open interest pools, including eurodollars, fed funds, and US treasury note and bond futures.”
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