BNY Mellon brings collateral services to Stock Connect

Hong Kong Stock ExchangeBNY Mellon says it is the first triparty agent to offer collateral services for equities settled through the Stock Connect system linking Hong Kong with mainland China. The “bespoke solution” will allow Hong Kong investors who buy mainland-listed A-shares to optimise their portfolios in a manner that was not possible before. "BNY Mellon Markets is always looking for ways to increase liquidity for our clients,” said Natalie Wallder, head of collateral management, Asia Pacific for BNY Mellon. “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.” Although triparty collateral solutions are common in major equity markets, the service has proved challenging to implement for A-shares bought through Stock Connect. “This was because collateralizing Shanghai and Shenzhen-listed A-shares required considerable adjustments to collateralization models to integrate with local legal and market infrastructure,” said BNY Mellon, in a statement. ©2018 funds global asia

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