BNY Mellon has upgraded its collateral management portal to include a link to Pirum's tri-party automation service in a move it says will minimise post-trade and operational risks.
The upgraded AccessEdge system will let clients update their collateral requirements as part of a broader project to improve connectivity between the bank's system, lenders and borrowers. AccessEdge, its portal into collateral management offering RepoEdge, hosts collateral transfers for repo, securities lending, OTC and CCP transactions.
"It may sound simple but [the portal is] running multiple lending from multiple underlying principals," said global collateral services managing director Staffan Ahlner. "You could be dealing with 50 or 100 numbers from one borrower and seven different borrowers - as well as intra-day calls from some lenders submitting loan values several times through the day."
According to the bank, the new link will improve intraday visibility of proposed trades, accelerate trade resolution management, and streamline the process for agreeing and communicating trades. "You have to be quick with the information," said Ahlner.
He pointed to technical challenges involved with integrating the upgraded portal with EquiLend and, on the repo side, Bloomberg. "From a technical perspective there are issues with data mapping and ensuring the systems speak the same language - loan values have to match up with those provided by counterparties," he said.
He added the industry was moving towards automating "as much as possible" the routine work involved in value-added services. But in the meantime "my remit is to ensure the flow is efficient - that the right collateral is available at the right time".
Global shifts in regulation of OTC derivatives, driven by a G-20 initiative to reduce opacity in the swaps market after the 2008 collapse of Lehman Brothers has caused growing concerns of a collateral shortfall.
OTC derivatives trades, except very exotic types, will be centrally cleared in the US under Title VII rules of the Dodd-Frank Act, which have begun coming into force this year. In Europe, the European markets infrastructure regulation (EMIR) will drive the same change, although details will vary from US rules. This means swaps trades will have to be collateralised, pushing up overall trading costs, but reducing risk across the industry.