Bank of New York Mellon Clearing has joined CME Group as a clearing member firm to clear over-the-counter interest rate swaps on behalf of its institutional clients.
In a press release issued today in New York, BNY Mellon Clearing said it was making the move in light of recent regulatory changes.
It's expected that a large percentage of derivatives transactions will be cleared through central clearinghouses to comply with the Dodd-Frank Act mandating clearing of "standardized" OTC derivatives.
The company says it expects to continue to expand the roster of exchanges it clears through, as well as to grow its operations globally.
"The standardization of OTC derivatives and migration to central clearing should reduce counterparty credit risk and allow better regulatory oversight," said Sanjay Kannambadi, CEO of BNY Mellon Clearing.
"While it appears that a large percentage of OTC derivatives transactions will become centrally cleared, we believe the near term interest among the industry will be focused on interest rate swaps," Kannambadi added. "Our clearing membership with CME Group represents a significant step forward in providing reliable and efficient clearing pathways for our global client base."
BNY Mellon Clearing already provides direct clearing services with major exchanges and central clearinghouses, including the New York Mercantile Exchange and Chicago Board of Trade, which are operated by CME Group, and International Derivatives Clearing Group.
BNY Mellon Cl;earing is a wholly owned non-bank subsidiary of the Bank of New York Mellon Corporation, a global financial services company with $26.3 trillion in assets under custody and administration and $1.3 trillion in assets under management. It services $11.8 trillion in outstanding debt and processes global payments averaging $1.7 trillion per day.