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BNY Mellon has formed MarginConnect to enable buy-side investment managers to take full control over the collateralisation of non-cleared derivatives.
The new margin messaging capability is the result of a collaboration between BNY Mellon’s collateral segregation business and the margin messaging utility AcadiaSoft.
MarginConnect allows clients that have the capability to make their own margin calculations to use BNY Mellon’s SWIFT membership to issue margin calls on their own behalf and automatically deliver collateral instructions.
Managers who wish to retain control over the collateralisation of their non-cleared derivatives activity can now do so, leveraging a direct connection between AcadiaSoft and BNY Mellon.
BNY Mellon notes that the vast majority of buy-side entities do not have a SWIFT network membership, meaning they have to build and maintain their own connectivity to their custodian or outsource the messaging component instructing the actual movement of collateral to a SWIFT member.
MarginConnect aims to address this gap in the workflow by enabling managers to bypass the costs associated with the SWIFT network by sending messages via BNY Mellon's MarginConnect offering, which is fully integrated into the AcadiaSoft platform.
Elsewhere, MarginConnect complements an earlier comprehensive collateral administration service BNY Mellon jointly rolled out with AcadiaSoft in May 2019 which seeks to helps clients meet the non-cleared margin rules by outsourcing the entire collateral workflow.
The partners say the solution allows clients to access AcadiaSoft's initial margin (IM) risk suite for margin calculation, reconciliation and messaging as part of BNY Mellon's collateral service offering. This collaboration, in conjunction with BNY Mellon's existing bilateral margin capabilities, enables clients to meet their obligations under phases four and five of the non-cleared margin rules, all in one place.
Dominick Falco, head of collateral segregation at BNY Mellon, says: "MarginConnect will enable those newly in-scope clients that wish to keep control of their own collateral management under the next two phases of the non-cleared margin rules to do precisely that: maintain control."
"Being the first collateral manager to fully integrate our messaging with AcadiaSoft means that our clients will be able to seamlessly communicate with BNY Mellon and trade counterparties without having to rely on an intermediary."
Meanwhile, Mark Demo, head of community development at AcadiaSoft, adds: "AcadiaSoft is continually striving for workflow automation and cost efficiency; integrating our industry-standard messaging platform into MarginConnect provides the next step on this journey toward zero-touch processing.”
