The Bank of New YorkMellon has unveiled a new unit that will clear futures and derivatives trades on behalf of institutional clients.
The company, BNY Mellon Clearing, is a US registered futures commission merchant and a member of the National Futures Association. It plans to become a clearing member on major exchanges and central clearinghouses on a global basis to support the trading activities of its clients.
The division will clear customer transactions in both listed futures on exchanges and the more customised swap transactions, which are arranged between dealers and investors and traded over-the-counter.
BNY Mellon has named Sanjay Kannambadi as chief executive of the venture. Kannambadi previously headed BNY Mellon’s office of innovation.
“BNY Mellon Clearing will provide clients with our extensive operations, technology, risk, finance and compliance capabilities, along with access to exchanges and clearinghouses around the world,” says Kannambadi.
“The company’s formation is designed to anticipate the rapid changes occurring in the clearing and settlement process for derivatives and the need for institutional investors to have a capable, stable partner as the market grows and evolves,” he says.
BNY Mellon is launching the company as the US Congress’ efforts to overhaul financial regulation look likely to push more OTC derivatives to be centrally cleared or traded through exchanges.