BofA Merrill Lynch Selects BNY Mellon for Participation in CME Clearing's Enhanced IEF4 Program

Solution Expands Eligible Collateral Inventory, Increases Transparency and Creates Collateral Allocation Efficiencies

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Mar 11, 2014, 08:30 ET

NEW YORK, March 11, 2014 /PRNewswire/ -- BNY Mellon, a global leader in investment management and investment services, has implemented an enhanced collateral management program for BofA Merrill Lynch that expands collateral eligibility and creates greater collateral management efficiencies for depositing eligible margins at CME Clearing. BofA Merrill Lynch, a leading Futures Commission Merchant and IEF4 pioneer is now using the service to meet margin requirements for cleared derivatives by utilizing corporate bonds as collateral.

Through the IEF4 program, clearing firms will be able to post eligible securities into a CME Clearing-controlled segregated tri-party account at BNY Mellon to receive margin credit for listed Futures and OTC cleared interest rate swaps. Ultimately, this service expands the eligible collateral inventory, increases transparency and creates greater collateral allocation efficiencies.

With the passage of the Dodd-Frank Act and other financial reforms, it is anticipated that a significant portion of the OTC derivatives markets will continue to move to a centralized clearing environment. Derivatives positions that were once under-collateralized or not collateralized at all – will now be margined in a cleared environment.

"We continually strive to adopt leading-edge industry solutions to help us best serve our clients, and being an early adopter of IEF4 enables us to offer them increased efficiencies with collateral management and clearing," said Peter Johnson, global head of Futures & Options, OTC Clearing and Foreign Exchange Prime Brokerage, BofA Merrill Lynch.

"Tri-party custody is an important service CME Clearing offers its member firms because posting collateral through an efficient platform, such as BNY Mellon's, is both market- and customer-friendly," said Kim Taylor, President, CME Clearing. "Recognizing the fact that key buy-side clients have eligible CCP collateral and allowing that collateral to be put to use is a vital value-added service we will continue to work to provide with clearing members like BofA Merrill Lynch."

"By working with the CME to expand the range of eligible collateral, we're supporting our clients' overall investment strategies while helping the wider industry better navigate the risks, challenges, costs and operational complexities linked to regulatory changes," said Kurt Woetzel chief executive officer of BNY Mellon's Global Collateral Services business. "This opportunity to work with BofA Merrill Lynch and assist them with all their collateral management requirements is at the forefront of industry efforts to increase collateral efficiency and transparency."

Global Collateral Services offers a comprehensive suite of services to help its clients address their collateral, liquidity and securities financing needs. As they face evolving global regulations and rapidly changing market requirements, clients can leverage BNY Mellon's products and services to better manage counterparty and market risk in their collateral transactions, engage in more investment opportunities to help maximize their investment returns and access new financing alternatives.

BNY Mellon currently services $2 trillion in tri-party repo collateral globally and approximately $100 billion in assets through its Liquidity DIRECT^(SM) investment portal, and operates one of the industry's largest securities lending programs, with $3 trillion in lendable assets.

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 management and investment services in 35 countries and more than 100 markets. As of Dec. 31, 2013, BNY Mellon had $27.6 trillion in assets under custody and/or administration, and $1.6 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). Learn more at www.bnymellon.com, or follow us on Twitter @BNYMellon.

Contact: Lane Cigna
+1 412 234 0575
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SOURCE BNY Mellon