HONG KONG, April 12, 2021 /PRNewswire/ -- Investors are now
able to better utilize their Chinese fixed income assets following
the introduction of the bonds as eligible collateral on BNY
Mellon's triparty platform through Hong
Kong's Bond Connect.
Bond Connect allows international investors to access the
$13.9 trillion China Interbank Bond Market (CIBM) through a
market infrastructure linkage in Hong
Kong. BNY Mellon's new solution enables clients to utilize
these assets as collateral. Once the assets are within our triparty
platform, clients can mobilize and optimize the securities as
collateral in transactions with counterparties across the
globe.
Until now, there has been no mechanism to allow participants to
use Bond Connect assets as collateral, however, with the Chinese
fixed income market only expected to grow, demand has been mounting
for such a solution.
BNY Mellon triparty solves this problem, enabling investors to
use Chinese bonds as collateral for a variety of purposes. Further,
the platform is entirely custody agnostic meaning that clients are
able to utilize BNY Mellon as triparty agent without custodying
assets at the firm.
In the first trade, which printed last week, a broker-dealer
client was able to collateralize 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 collateralize 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 & 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
utilize Chinese stocks, and now bonds, as collateral promises to be
transformative for clients."
"Supporting a solution enabling clients to utilize a triparty
agent such as BNY Mellon for assets not held within their custody
chain will have significant utility," says Nigel Rangel, Senior Product Manager for Banks
and Broker Dealers within Markets and Securities Services at HSBC.
"Bond Connect was the first market in which this was achieved and
we anticipate this will have practical applications in other
markets."
BNY Mellon's Bond Connect solution follows in the wake of our
Stock Connect product, a similarly groundbreaking collateralization
service for Chinese stocks. Launched in early 2018, BNY Mellon's
triparty solution for Stock Connect enables clients outside of
mainland China to collateralize A-shares traded on the Shanghai and Shenzhen Stock Exchanges through
triparty in Hong Kong. Since the
launch of the service, BNY Mellon's Stock Connect solution has
become an important element in the global collateral ecosystem for
institutional investors across the world.
ABOUT BNY MELLON
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 and
wealth management and investment services in 35 countries. As of
Dec. 31, 2020, BNY Mellon had
$41.1 trillion in assets under
custody and/or administration, and $2.2
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). Additional information is available on
www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our
newsroom at www.bnymellon.com/newsroom for the latest company
news.
Contact:
Peter Madigan
peter.madigan@bnymellon.com
+1 212 815 2308
Nina Truman
nina.truman@bnymellon.com
+1 212 815 2006
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SOURCE BNY Mellon