BNY Mellon launches collateralisation through Stock Connect
BNY Mellon has announced it would be the first triparty agent which provides collateral services for securities settled through Hong Kong Stock Connect.
The move followed growing cross-border trade volumes into and out of China, given that after 1 June China A shares listed on the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) would be included in MSCI indices for the first time, the firm said.
According to BNY, its triparty collateral service would enable portfolio utilisation of China A-shares held through HK Stock Connect for market participants, particularly as the addition of new equities would be expected to grow portfolio allocation to China A shares.
MSCI predicted that the inclusion of China A shares would drive a flow of around US$20 billion to shift and track.
BNY’s head of collateral management, Asia Pacific for BNY Mellon, Natalie Wallder said: “BNY Mellon Markets is always looking for ways to increase liquidity for our clients.”
“Our Stock Connect solution does just that - by unlocking the ability to utilise these assets as collateral, bank and broker dealer clients now have an additional avenue to finance inventory and reduce funding costs via triparty collateral management.”
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