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April 29, 2014updated 04 Apr 2017 2:19pm

BNY Mellon automates cash collateral calculation in ETF markets

BNY Mellon, an investment management and investment services major, has enhanced exchange-traded funds (ETF) markets by introducing an automated system to calculate collateral requirements in a bid to reduce errors in ETF transactions.

By Verdict Staff

BNY Mellon has enhanced exchange-traded funds (ETF) markets by introducing an automated system to calculate collateral requirements in a bid to reduce errors in ETF transactions.

In addition, the service is also expected to enhance the management and allocation of by Authorized Participants (APs), according to The Asset.

Following the calculation of collateral requirements, BNY Mellon will report them to the APs on a daily basis, removing the earlier process of notifying them through a manual process

Rex Wong, managing director at BNY Mellon’s Asia Asset Servicing business said that ETF providers in Asia-Pacific typically manage cash collateral in-house, and the process tends to be manual.

"Through our new automated capability we are now able to provide an efficient and risk-controlled process which is important to ensure a timely settlement of the ETF creation and redemption transactions with the Aps," added Wong.

APs are also provided with an option of delivering a basket of securities or cash collateral to an ETF servicer while creating new ETF fund shares.

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