Our free FinTech roundup also covers TeraExchange’s second chance as a Swap Execution Facility, more execs at Northern Trust Front Office Solutions & SGX's digital bond.
BNY Mellon Mum About 2021
Custody bank BNY Mellon is telling its approximately 48,000 staff members across the globe to continue to work remotely for the rest of 2020.
“Our top priority remains the health and safety of our employees and our clients,” a BNY Mellon spokesperson tells FTF News. “A majority of our global employee base continues to work remotely and they should expect to continue to do so through at least January 1, 2021. We remain operational and responsive to client needs during this time.”
Beyond the prepared statement, BNY officials decline to answer questions about when this issue will be revisited for 2021.
“As we look ahead to the remainder of 2020, downside risks remain from the economic uncertainty and the significant pressure from low interest rates,” says Todd Gibbons, the CEO of BNY Mellon, in prepared remarks for the firm’s second quarter results presentation.
“Despite this, our underlying business remains strong, benefiting from the improving quality and efficiency of our operations and the level of the client experience. This should provide opportunities to deepen our relationships with clients. I remain deeply proud of our 48,000+ employees and how they continue to adapt and deliver great client service during this challenging time,” Gibbons says.
The bank reported a net income of $901 million on total revenue of $4.0 billion during the second quarter, officials say. As of June 30, the firm reported total revenues of $8.1 billion, $37.3 trillion in assets under custody and/or administration, and $2.0 trillion in assets under management, officials say.
TeraExchange Reinstated as a SEF by CFTC
The Commodity Futures Trading Commission (CFTC) is restoring TeraExchange, LLC’s registration status as a swap execution facility (SEF)
“TeraExchange, which originally obtained its SEF registration from the CFTC in 2016, is a Delaware corporation and a wholly-owned subsidiary of Tera Group, Inc.,” according to the CFTC. “In July 2019, the CFTC deemed the exchange dormant under Part 40 of CFTC regulations because it had no trading for 36 consecutive months since its original Commission order of registration.
In response, TeraExchange applied for reinstatement of its SEF earlier this year, “which includes submissions dated December 2, 2019 through May 27, 2020,” according to the CFTC.
“SEFs are trading facilities that operate under the CFTC’s regulatory oversight for trading and processing swaps. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 authorized the creation of SEFs to provide greater pre-trade and post-trade transparency to the swaps market,” CFTC officials note.
With the TeraExchange reinstatement, the CFTC reports that there are 19 SEFs registered with it.
Northern Trust Front Office Solutions Adds Two Execs
Citing growth in the sector, Chicago-based Northern Trust has appointed Jane Western as chief operating officer (COO) of Front Office Solutions, and added Deirdre Cannell as senior business development executive for the same group, officials say.
The Front Office Solutions business of integrated digital and service solutions “has grown significantly since its launch in 2017,” say officials. The business has been focused on providing data integration, collaboration, and portfolio analysis to “complex asset owners such as endowments, pension funds and family offices.”
Western has been serving on the Front Office Solutions leadership team since August 2019 and serving as interim COO since December 2019, officials say. She worked in senior operations and risk management roles firms such as Wilshire Associates, Fidelity Investments, Ameritech, The Boeing Company and The American Red Cross before joining Northern Trust.
Cannell moved to Northern Trust after a stint at SS&C where she worked in business development and key account management, officials say. She has also worked at SimCorp and Bridgewater Associates.
For Northern Trust, Cannell will oversee new business development for Front Office Solutions across North America.
“Front Office Solutions caters to the evolving needs of asset owners and allocators across the globe, going far beyond traditional asset servicing offerings,” says Melanie Pickett, head of Front Office Solutions, in a prepared statement. “Our capability has been met with huge demand and we’ve been growing our skilled team to maximize the service that we provide to our clients.”
Northern Trust is provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals, officials say. As of June 30, 2020, Northern Trust had assets under custody/administration of $12.1 trillion, and assets under management of $1.3 trillion.
SGX, HSBC & Temasek Pilot Digital Bond for Olam
A collaboration among the Singapore Exchange (SGX), HSBC Singapore, and Temasek has resulted in the first digital, syndicated, public corporate bond in Asia.
The digital bond was issued via SGX’s digital asset issuance, depository and servicing platform, officials say.
The effort successfully replicates “a S$400 million 5.5-year public bond issue and a follow-on S$100 million tap of the same issue by Olam International,” officials add.
“An Asia first for a syndicated public corporate bond, this digital bond marks another milestone in SGX’s use of digital asset technology, by streamlining processes for issuers, underwriters, investors and ecosystem participants across primary issuance and asset servicing,” according to a prepared statement from SGX.
To create the digital bond, SGX used the Digital Asset Modeling Language (DAML) smart contract language created by vendor Digital Asset “to model the bond and its distributed workflows for issuance and asset servicing over the bond’s lifecycle,” officials say. “SGX’s solution uses smart contracts to capture the rights and obligations of parties involved in issuance and asset servicing, such as arrangers, depository agents, legal counsel and custodians.”
The digital bond also uses HSBC’s on-chain payments solution for settlement in multiple currencies “to facilitate transfer of proceeds between the issuer, arranger and investor custodian,” officials say.
“Key efficiencies observed within the pilot include timely ISIN (identifier) generation, elimination of settlement risk (for issuer, arranger and investors), reduction in primary issuance settlement (from five days to two days) as well as automation of coupon and redemption payments and registrar functionality,” officials add.
SGX officials say that they will build upon the initial digital issuance and will work with issuers, arrangers, custodian banks and investors “to digitalize bond issuance, depository and asset servicing, progressively growing the fixed income ecosystem.”
Distributed Ledger Technology (DLT) and smart contracts “are rapidly evolving technologies, and our vision is to fully digitalize the end-to-end corporate bond issuance and asset servicing process,” says Lee Beng Hong, senior managing director, head of Fixed Income, Currencies and Commodities (FICC) at SGX, in a prepared statement.
“The bond market is one of the last bastions of risk, holding on to paper and manual processes,” says Yuval Rooz, co-founder and CEO, Digital Asset. “Despite the growth in electronic bond trading, there are still many aspects that require manual intervention. SGX’s DAML smart contract solution solves a major pain point market participants have been working to fix for years. We look forward to our continued work with SGX as they move to digitize the end-to-end bond issuance process.”