August 07, 2013

BNY Mellon Asks Pension Plan Asset Managers: Are You Ready for Swap-Trading Requirements?

CFTC's new swap-trading requirements take effect on September 9, 2013

NEW YORK, August 7, 2013 — According to BNY Mellon and Davis Polk, regulatory complexities for pension plan asset managers will take on new urgency on September 9, 2013, when new swap-trading requirements take effect.

"Derivative reforms are well underway and significantly expanded, mandatory clearing, collateral and reporting standards come into force on September 9 for pension plan asset managers," said Kurt Woetzel, Chief Executive Officer, BNY Mellon's Global Collateral Services business. "Asset managers need to assess the implications of new reporting requirements, prepare for clearing specified interest-rate swaps and credit-default swaps, understand new modes of trade execution, and review their preparations with trading, clearing and custody partners."

According to a report jointly issued by BNY Mellon and Davis Polk, key steps asset managers should take to prepare for clearing and other regulatory requirements include:

  • Classifying financial instruments traded. New Dodd-Frank derivatives regulatory requirements apply only to "swaps," "security-based swaps" and "mixed swaps."
  • Determining the extent to which the regulations apply to the entity whose assets they trade as well as to the counterparties with whom they trade.
  • Considering the implications of reporting requirements as well as the public transparency of swap transaction data.
  • Preparing to clear specified swaps before the September 9, 2013 deadline. The Dodd-Frank Act requires market participants to clear standardized interest-rate and credit-default swaps through clearinghouses. Clearinghouses require initial margin (independent amounts) and variation margin (mark-to-market amounts).
  • Confirming that a pension plan has adhered to ISDA protocols.
  • Preparing for mandatory exchange trading of mandatory cleared swaps.
  • Reviewing preparations with trading, clearing and custody partners and advisors in advance of the September 9, 2013 deadline.

BNY Mellon and the global law firm Davis Polk partnered on the report available from, which is entitled "Are You Ready? New Swap-Trading Requirements for Pension Plan Asset Managers."

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of June 30, 2013, BNY Mellon had $26.2 trillion in assets under custody and/or administration, and $1.4 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on, or follow us on Twitter @BNYMellon.