March 21, 2016

Collateral Management service enhancement leverages Japanese debt expertise, experience

Facilitating the cross-border use of Japanese Government Debt in tri-party arrangements, service enhancement shows how client solutions are driving BNY Mellon's growth in collateral management


BNY Mellon has introduced an innovative and distinctively Japanese-flavored cross border solution that significantly enhances the company's service to collateral management clients. 

Leveraging in support of collateral management clients the benefit of recent changes in tax and market rules, the service enhancement enables Japanese and non-Japanese institutions to utilize JGBs and other forms of Japanese Government Debt as part of tri-party collateral arrangements.

"This enhanced support for clients using Japanese Government Debt in their collateral management programs showcases the strategy that's driving the growth of our business," said Jim Malgieri, Executive Vice President and Head of Collateral Management and Segregation for BNY Mellon Markets Group. "We're leveraging collateral-related strengths across BNY Mellon to provide innovative solutions that anticipate and respond to client needs in a changing market environment."

BNY Mellon's track record for innovation in the use of Japanese Government Securities as part of collateral management programs dates back to 2003, when BNY Mellon became the first agent to offer tri-party services for JGBs and Discount Treasury Bills as a form of collateral for offshore-to-offshore business. 

In 2007, BNY Mellon was selected to serve as collateral agent for the first domestic JGBs tri-party repo agreement in Japan. In 2013, BNY Mellon extended support for Japanese Government Securities to include agent lenders and intermediaries. In 2014, BNY Mellon further expanded its offerings to support the cross-border tri-party allocation of Japanese Treasury Discount Bills (T-Bills) as collateral; previously, support for such allocations was limited to tri-party arrangements between Japanese dealers and collateral receiver clients, or between non-Japanese dealers and collateral receivers.

In tandem with these service enhancements, BNY Mellon has significantly enlarged its program in terms of access to pools of liquidity. Focused initially on large global banks, the collateral management business has continually expanded its client base, and now services an extensive array of investors and financial institutions that includes intermediaries, agent lenders and investment trusts.

"With more than $100 billion in outstanding balances in Japanese Government Securities at the end of 2015, we were already a significant source of support for clients using JGBs as a form of collateral," said Tony Smith, head of Collateral Management product, Asia Pacific, for BNY Mellon Markets Group. "The new regulations that took effect this year have opened up additional opportunities, enabling us to further enhance the services we provide to investors interested in using Japanese Government Debt as part of their tri-party collateral management programs." 

"Led by Toru Hanakawa, our team of experienced collateral management experts in Tokyo has played an important role in the development and implementation of our service enhancement.  This successful innovation shows how we're leveraging our growing strength as a global provider to provide even better support to our clients," Smith said.

The BNY Mellon Markets Group combines the capabilities of BNY Mellon's collateral management & segregation, foreign exchange, securities finance, liquidity services, capital markets and prime brokerage businesses to provide clients with a comprehensive array of products to enable their investment process. The Markets Group has $2.9 trillion of lendable assets and $332 billion average daily loans outstanding; $634 billion in global tri-party collateral management balances; $67.4 billion in assets under currency administration; $23 billion FX gross US dollar equivalent average daily client volume; and $185.9 billion average balances invested via the Liquidity DIRECTSM portal as of Dec 31, 2015.

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