BNY Mellon is to begin allowing futures commission merchants (FCMs) to post a wide range of collateral, including corporate bonds, for futures and cleared swaps margins at CME Clearing.
FCMs can post the collateral via the CME IEF4 program using MarginEdgeSM, BNY Mellon’s global derivatives margin management service.
CME Clearing now accepts corporate bonds along with cash, government bonds, agency and mortgage backed bonds, money market funds, letters-of-credit, physical gold, equities, and bank deposits to collateralize transactions in the futures and the over-the-counter derivatives market. Through MarginEdge, market participants use BNY Mellon’s technology and expertise to post margins at CME Clearing while reducing risks and increasing efficiencies in the complex derivatives margin management process.
“As demand for non-traditional collateral grows at clearinghouses in the wake of regulatory reforms, it is critical that market participants have access to superior operational solutions and support to post and track their collateral,” says James Malgieri (pictured), head of Global Collateral Management and Securities Clearance Services at BNY Mellon Broker-Dealer Services. “BNY Mellon has for many years provided tri-party collateral management services for traditional repo transactions and has expanded the model to meet the requirements of the centralized clearing environment.”
“CME Clearing’s expanded collateral program will help create efficiencies for our customers who are migrating their OTC interest rate swaps into CME Clearing,” says CME Clearing President Kim Taylor. “By extending the range of collateral accepted, CME Clearing reduces the costs of clearing and creates further efficiencies for our customers and clearing members.”
BNY Mellon is one of the largest providers of outsourced derivatives collateral management services globally. It is a leading provider of tri-party collateral management services, servicing more than $1.8 trillion in tri-party balances worldwide.
