NEW YORK, Sept. 7, 2021 /PRNewswire/ -- Institutional
investors are now able to accept Agency Mortgage-Backed Securities
(AMBS) as collateral on overnight cleared repo transactions via
Fixed Income Clearing Corporation's (FICC's) new Sponsored General
Collateral (GC) Service through BNY Mellon's market-leading
sponsored member program (SMP).
In a market first, buy-side clients seeking to invest cash via
repo facing the central counterparty can now do so using AMBS —
commonly referred to as general collateral (GC) — enjoying the
benefits of central clearing without the requirement of
full-service FICC membership.
While full-service clearing members of FICC were previously able
to clear AMBS repo, the expansion of BNY Mellon's SMP represents
the first time that sponsored members have been able to access
cleared repo backed by these securities, opening up an $11.4 trillion asset class1 and
significantly enhancing the collateralized investment financing
potential for buy-side investors.
"BNY Mellon has been a market leader in developing US
Treasury-backed sponsored cleared repo, so it is fitting that we
are one of the first sponsors to offer GC cleared repo to clients
via FICC's Sponsored GC Service," says Mark
Haas, Head of Principal Securities Finance at BNY Mellon.
"Agency MBS is one of the largest fixed-income asset classes in the
world, so bringing these securities into the realm of cleared repo
is yet another significant enhancement to our sponsored member
program, following previous refinements such as dynamic margining,
term and forward-settling repo and the ability to access cleared
repo via our market-leading LiquidityDirect portal."
Beyond its role as a sponsor, BNY Mellon will also provide the
underlying clearance infrastructure for the new FICC Sponsored GC
Service. All Sponsored GC repo transactions cleared at FICC will
settle on BNY Mellon's triparty platform, in a similar fashion to
how triparty repo transactions are handled outside of central
clearing today. By enabling sponsored members to access FICC
through the triparty repo platform, clients will enjoy operational
efficiency in clearing their overnight and term repo
transactions.
"Triparty sits at the heart of BNY Mellon's collateral
management offering, providing operational efficiencies and
promoting collateral optimization and mobilization for more than
$3.6 trillion in balances on our
platform," adds Andrea Pfenning,
President & COO of BNY Mellon Government Securities Services
Corp. "In addition to our existing settlement role for FICC's
Sponsored Service where trades settle bilaterally, BNY Mellon will
now provide settlement for FICC's Sponsored GC Service transactions
via triparty. We are pleased to be playing an integral role
supporting this product for FICC and the broader market."
Since BNY Mellon launched its sponsored member program at FICC
in June 2017, the sponsored cleared
repo market has gone from strength to strength. As of August 2021, there were 29 sponsors covering over
1,810 FICC-approved counterparts with peak sponsored notional of
over $564 billion. Despite the growth
in the number of competitors, BNY Mellon retains approximately 30%
overall sponsored market share2 and approximately 45% of
sponsored repo market share within the money market fund
community.3
BNY Mellon's sponsorship activities cover a broad range of
counterparty types across many regions. These include hedge funds,
regulated funds including 40 Act and Irish and Luxembourg UCITs
funds, sovereign wealth funds, central banks, public sector
entities, insurance companies, international banks and more.
FICC is a subsidiary of The Depository Trust & Clearing
Corporation (DTCC).
ABOUT BNY MELLON
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 and
wealth management and investment services in 35 countries. As of
June 30, 2021, BNY Mellon had
$45.0 trillion in assets under
custody and/or administration and $2.3
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
www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our
newsroom at www.bnymellon.com/newsroom for the latest company
news.
Contact:
Peter
Madigan
peter.madigan@bnymellon.com
+1 212 815 2308
Nina
Truman
nina.truman@bnymellon.com
+1 212 815 2006
1 Source: SIFMA US Mortgage Backed Securities
Statistics, Q1 2021
2 Source: Crane Data, as of July
2021
3 Source: BNY Mellon Finance, FICC
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SOURCE BNY Mellon