BoNY introduces derivatives margin management service

Source: Bank of New York

The Bank of New York has introduced a derivatives margin management service that facilitates for clients the administrative, processing, reinvestment and valuation activities associated with posting and receiving collateral in connection with over-the-counter (OTC) derivatives trades.

With this new service, the Bank will handle a variety of complex operational and administrative activities for clients, such as maintaining derivatives trades and values on its systems, monitoring margin parameters, calculating margin status, and reconciling trades. All of these activities will be performed in connection with trades under ISDA Master Agreements, the legal documents that are widely used to govern such trades.

In addition, the service provides Web-based reporting capabilities and workflow management tools designed to help clients reduce risk and enhance access control.

These new capabilities will be integrated into the Bank's existing derivatives collateral management services, which include collateral allocation, rehypothecation (or other collateral re-use) and valuation, collateral substitutions, cash collateral reinvestment, settlement and clearing. The Bank currently provides such services in connection with over 600 ISDA Master Agreements for existing clients. The Bank also offers independent valuations of OTC derivatives trades.

"Our buyside clients - whether they be corporate treasurers, asset managers, hedge funds or banks - have witnessed explosive growth of derivatives trading and the use of collateral to support such trading," said Art Certosimo, executive vice president at The Bank of New York. "This new service represents a natural extension of our collateral management capabilities and demonstrates our firm commitment to investing in this rapidly growing business and servicing the increasingly complex administrative and operational needs of our clients."

The Bank has joined with Lombard Risk, a provider of risk management, regulatory and valuation software, to offer these expanded capabilities through Lombard Risk's Colline(R) application.

The Bank of New York is a proven innovator in the collateral management market. It recently surpassed the $1 trillion mark in its daily servicing of tri-party balances in the United States, making it the first tri-party collateral management provider to have reached that milestone. Assets serviced by the Bank have increased by more than $500 billion in the last five years.

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