BNY Mellon introduces Chinese bonds as collateral on its triparty platform
13 April 2021 Hong Kong
Image: Dmitry Rukhlenko/adobe.stock.com
BNY Mellon has introduced Chinese bonds as eligible collateral on its triparty platform through Hong Kong’s Bond Connect to enable investors to utilise their Chinese fixed income assets.
Bond Connect allows international investors to access the $13.9 trillion China Interbank Bond Market (CIBM) through a market infrastructure linkage in Hong Kong.
Once the assets are within BNY Mellon’s triparty platform, clients can mobilise and optimise the securities as collateral in transactions with counterparties across the globe.
The platform is also entirely custody agnostic, which means that clients are able to use BNY Mellon as a triparty agent without the firm having custody of their assets.
In the first trade a broker-dealer client was able to collateralise Chinese government securities through BNY Mellon's triparty solution.
Under the transaction, BNY Mellon accessed the client's bonds, which were under custody at HSBC, and reflected the assets in BNY Mellon triparty, enabling the client to use the collateral for financing and other purposes.
"Enabling clients to collateralise Chinese bonds through triparty is a service that has the potential to revolutionize the global collateral landscape," says Natalie Wallder, Asia Pacific head of clearance and collateral management at BNY Mellon.
"China is a hugely important market and one that will only become more integral to investors in the years ahead. Having the ability to utilise Chinese stocks, and now bonds, as collateral promises to be transformative for clients,” Wallder notes.
Nigel Rangel, senior product manager for banks and broker dealers within markets and securities services at HSBC, comments: "Supporting a solution enabling clients to utilise a triparty agent such as BNY Mellon for assets not held within their custody chain will have significant utility."
"Bond Connect was the first market in which this was achieved and we anticipate this will have practical applications in other markets,” adds Rangel.
Last week, BNY Mellon announced that it is set to provide exchange-traded funds (ETF) basket operations, order taking and fund accounting to the First Trust SkyBridge Bitcoin ETF Trust.
Bond Connect allows international investors to access the $13.9 trillion China Interbank Bond Market (CIBM) through a market infrastructure linkage in Hong Kong.
Once the assets are within BNY Mellon’s triparty platform, clients can mobilise and optimise the securities as collateral in transactions with counterparties across the globe.
The platform is also entirely custody agnostic, which means that clients are able to use BNY Mellon as a triparty agent without the firm having custody of their assets.
In the first trade a broker-dealer client was able to collateralise Chinese government securities through BNY Mellon's triparty solution.
Under the transaction, BNY Mellon accessed the client's bonds, which were under custody at HSBC, and reflected the assets in BNY Mellon triparty, enabling the client to use the collateral for financing and other purposes.
"Enabling clients to collateralise Chinese bonds through triparty is a service that has the potential to revolutionize the global collateral landscape," says Natalie Wallder, Asia Pacific head of clearance and collateral management at BNY Mellon.
"China is a hugely important market and one that will only become more integral to investors in the years ahead. Having the ability to utilise Chinese stocks, and now bonds, as collateral promises to be transformative for clients,” Wallder notes.
Nigel Rangel, senior product manager for banks and broker dealers within markets and securities services at HSBC, comments: "Supporting a solution enabling clients to utilise a triparty agent such as BNY Mellon for assets not held within their custody chain will have significant utility."
"Bond Connect was the first market in which this was achieved and we anticipate this will have practical applications in other markets,” adds Rangel.
Last week, BNY Mellon announced that it is set to provide exchange-traded funds (ETF) basket operations, order taking and fund accounting to the First Trust SkyBridge Bitcoin ETF Trust.
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