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BNY Mellon is set to leverage Google Cloud's data analytics, artificial intelligence (AI) and machine learning (ML) technologies to develop a “first-of-its-kind” collateral management and liquidity solution to reduce settlement fails.
The partnership aims to help market participants better predict billions of dollars in daily settlement failures, generate significant capital and liquidity savings, and unlock operational efficiencies.
The bank says the Google Cloud-powered tools could help clients forecast 40 per cent of daily settlement failures in the US treasury market to improve overall market liquidity.
The US treasury market is the largest and the most liquid market in the world but on a typical day, approximately 2 per cent of transactions fail to settle.
The deal comes as part of BNY Mellon’s “open-architecture approach” of exploring emerging technologies including AI, ML and blockchain, to reframe common trading and settlement challenges through a technology-focused lens.
In addition to creating use cases for the US treasury market, BNY Mellon is developing AI-powered solutions for securities lending, liquidity forecasting, dynamic controls for pricing, anomaly detection for transactions, and automated document processing.
“We are excited to work with Google Cloud to develop a first-of-its-kind solution to help our clients predict approximately 40 per cent of settlement failures in Fed-eligible securities with 90 per cent accuracy,” says Brian Ruane, CEO, BNY Mellon Clearance and Collateral Management.
“This prediction model could be a game-changer for market participants and is a tremendous showcase of how we are leveraging emerging technologies, such as the public cloud, to accelerate the delivery of meaningful solutions for our clients.”
Elsewhere, BNY Mellon is driving the adoption of emerging technologies through the Risk Management Association, where Charles Post, head of legal data management and advisory, is co-chairing the trade body’s financial technology and automation committee.
The committee was formed in 2019 and works to reduce risk in financial markets by leveraging technologies that assist securities lending, trading, collateral management, funding, clearance and settlement.
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