BNY Mellon confirms interest in repo trading platform

The US bank eyes European expansion in collateral services, as Tradition plans its own repo trading platform.

BNY Mellon has confirmed it is in talks over a potential deal to acquire DBV-X, an electronic repo platform, following the venue’s split with interdealer broker Tradition.

DBV-X, an electronic peer-to-peer platform for exchanging collateral and founded by ex-Newedge clearing head John Wilson, was initially intended to launch at the end of last year. According to a report from the Financial Times, it failed to reach commercial terms with Tradition.

“BNY Mellon confirms that it is currently conducting due diligence and in talks with DBV-X, the electronic peer-to-peer market for secured deposits and collateral transactions,” according to a statement from the bank.

BNY Mellon is one of the biggest players in the tri-party space for sell-side clients. However, speaking on its first quarter earnings call Gerald Hassell, the bank’s chairman and CEO, indicated it will expand to offering collateral services to the buy-side.

“We’re also seeing increasing interest on the buy side and we’re adjusting our algorithms to help the buy side better utilize our capabilities as they have to post collateral, and also as they invest in tri-party repo programs. So we see a pretty significant opportunity for us to do this, not only in the U.S. but around the world,” said Hassell.

A statement from Tradition confirmed it is no longer working with Wilson’s DBV-X, and instead will develop its own regulated multilateral trading facility (MTF) for trading collateral and secured deposits called Elixium.

“Elixium is open to corporates, central banks, sovereign wealth funds, asset managers, pension funds, insurance companies, government institutions, hedge funds, brokers, dealers and bank,” a statement from Tradition said.

Elixium will most likely rival DBV-X, which also aims to match treasurers and asset managers with hedge funds and pension funds in need of short-term financing.

Tradition has named Nick McCall, a long-time fixed income trader for the interdealer broker, as CEO of Elixium. He will be joined by Roberto Verrillo who will serve as chief strategy officer, and Gabriele Frediani as chief business development officer.