This Week: Brown Brothers Harriman, BNY Mellon/Nvidia, Cboe, Eurex, and more

BBH taps Pirum for securities lending recalls automation

New York-based custodian bank Brown Brothers Harriman’s BBH Global Securities Lending division has begun testing post-trade technology vendor Pirum’s Recalls Manager solution, which aims to reduce fails and create efficiencies in their securities lending workflows as the firm prepares for the move to T+1 settlement.

BBH began using Recalls Manager in a parallel production environment alongside its existing manual email notifications late last year and is now using it to communicate recall notices to a subset of clients who are already Pirum users. It will move into production for all clients once the firm has had conversations with its counterparties, says Tony Camarota, managing director and global head of securities lending operations at BBH.

A recall is when a fund or asset owner who has lent securities to another party terminates that loan and demands the return of the securities. Automating the recall notifications and returns process is critical as securities lending, along with other asset classes, moves to T+1 settlement in May. The faster this process can be performed, the more time the borrower and firms like BBH have to source securities—especially if those are illiquid, hard-to-source stock—to repay the loan, and the more likely that the transaction will settle within the T+1 deadline.

“Any extra time they have to source the stock … will reduce the risk of the trade failing. If a stock is out on loan, it needs to come back before it can settle,” Camarota says.

In the securities lending division, “we’ve put a lot of time and effort into identifying choke points. Recalls and returns were the first two we looked at,” Camarota says, adding that the firm is also looking at how to automate real-time notifications of sales of securities by clients and real-time inventory calculations.

BBH was already a client of several other post-trade solutions from Pirum, including its Billing Compare and Delivery service, which highlights differences in monthly statements that might delay payment of fees and rebates, and its Auto Returns service, which automates the process of returning loaned securities from borrower to lender.

Camarota says BBH takes a multi-vendor approach, but had previously used an in-house manual process of issuing recall notifications via email. Because Pirum’s Recalls Manager is already integrated with its Returns feature, he says using it will help avoid delays and manual re-keying errors, allowing the firm to focus on managing exceptions, dealing with more complex items, and providing better client service.

While declining to disclose metrics about the resulting efficiencies, Camarota says, “We expect this to make a significant impact on productivity. But it’s also about risk mitigation. You’re always going to have some errors, so reducing our error rate is one of the strongest drivers for us adopting Pirum.”

BNY Mellon deploys Nvidia’s AI supercomputer

BNY Mellon became the first major bank to deploy an Nvidia DGX SuperPOD with DGX H100 systems. The bank plans to use Nvidia AI enterprise software to build and deploy AI applications and infrastructure. BNY Mellon was able to install and configure the DGX SuperPOD ahead of usual timelines, according to the press release. The system represents a level of computer processing performance not yet seen at BNY Mellon. 

At present, the bank is using AI to support predictive analytics, automation, and anomaly detection among other solutions. DGX SuperPOD is being used within the bank for deposit forecasting, payment automation, predictive trade analytics, and end-of day cash balances.

The bank is also aiming to expand its on-premises AI infrastructure. “By deploying Nvidia’s AI supercomputer, we can accelerate our processing capacity to innovate and launch AI-enabled capabilities that help us manage, move, and keep our clients’ assets safe,” says Bridget Engle, chief information officer at BNY Mellon.

S&P Global now exclusive provider of Baird aftermarket research

S&P Global Market Intelligence announced that research from US-based investment research provider Baird will be available exclusively on an embargoed basis to S&P Global Market Intelligence’s clients. 

Baird’s research provides industry overviews, company-specific forecasts and recommendations, and thematic insights from more than 40 senior analysts covering over 700 companies.

Baird research has been available on S&P Global Market Intelligence’s Capital IQ and Capital IQ Pro platforms to approved clients since 2014, with more than 75,000 reports available. The entire collection is now accessible to S&P Global clients with an Aftermarket Research license.

Baird enhances S&P Global Market Intelligence’s Aftermarket Research collection, which contains more than 35 million reports from over 1,800 investment banks and independent research providers, including JP Morgan, UBS, Barclays, Citigroup, and now Baird, making it the only Aftermarket Research library to feature Baird’s content.

Cboe Global Markets changes margin rule for cash-settled index options

Cboe Global Markets has introduced enhanced margin treatment for cash-settled index options. The exchange operator’s margin relief rule aims to give greater capital efficiencies to traders when writing cash-settled index options against ETFs based on the same index. The rule change is expected to allow traders to adopt overwriting options strategies at a potentially lower cost than is currently possible under the existing margin requirement. 

Under the previous framework, there was no margin requirement for a short call that qualified as “covered.” Citing the comparable risk/return profiles of writing an index call option against a long ETF position and writing a covered call, the new rule treats these index options as protected for margin purposes, and not subject to uncovered option margin requirements. For example, an investor could write a call option on the Mini S&P 500 Index option while having a long position in a corresponding ETF to potentially enhance returns on their ETF. 

Cboe is the exclusive home for S&P Dow Jones, FTSE Russell and MSCI index options, along with options on the Cboe Volatility Index (VIX). Cboe’s proprietary suite of index options are cash-settled (no transfer of the actual underlying asset; instead, any profit or loss is exchanged in cash upon expiration) and European-style (options can only be exercised at expiration, removing call-away risk and facilitating easier management of positions).

Cboe’s rule applies to any index call or put option written against a position in a non-leveraged index mutual fund or non-leveraged ETF that is based on the same index underlying the index option and held in the same margin account. Finra recently adopted a similar margin relief rule that conforms to Cboe’s rule.

Eurex releases futures contract on semiconductor industry

European derivatives exchange Eurex expanded its collection of sector index futures with a contract based on the semiconductor industry. Eurex and Deutsche Börse’s derivatives arm have both launched futures contracts based on a semiconductor index. Eurex worked with Deutsche Börse ’s index provider, ISS Stoxx, to develop an index that covers 30 of the largest international semiconductor companies listed on US exchanges. 

The index, which includes Nvidia and other major companies, is a USD-based price return index. Stoxx Semiconductor 30 Index Futures will be trading around the clock from 1 am Central European Time to 10:15 pm CET.

Ion Markets, Sigma Broking extend partnership

Ion Markets and Sigma Broking have extended their partnership, after Sigma deployed Ion’s XTP Execution to allow institutional customers to trade listed derivatives on the London Metal Exchange (LME). Sigma is a privately owned international brokerage that uses Ion’s post-trade solutions to automate its middle- and back-office operations. 

Under the new agreement, Sigma will now also leverage the XTP Execution (XTP-E) suite to offer customers the capability to trade listed derivatives on the LME.

Ion has seen an uptick in demand for software that routes orders to LME, as the exchange has experienced an increase in trading volumes this quarter. 

Aegon Asset Management enlists Clearwater Prism for reporting

Aegon Asset Management has implemented Clearwater Prism for its global client reporting needs. Aegon AM is a global investment firm with $330 billion under management as of December 2023. 

Clearwater Prism is a client reporting platform for asset managers, designed for firms that want a comprehensive view of their portfolios that span multiple platforms. The platform enables firms to consolidate information across multiple accounting engines, analytic platforms, and data sources for an all-in-one client reporting solution.

“We are pleased to strengthen our relationship with Clearwater and accelerate our digital transformation with a state-of-the-art data hub. Clearwater Prism will enable our client services team to quickly access high-quality portfolio data and respond to on-demand client inquiries,” Aegon COO Mike Tumility said in the announcement.

Forge Global launches private markets OEMS

Forge Global has launched Forge Pro, an advanced order execution management system (OEMS) for private markets investors. The OEMS provides private market data and execution technology, similar to OEMS solutions offered in other asset classes. The trade order management system helps to monitor secondary transaction activity, manage live bids or asks on private shares, and execute transactions. 

Forge, a provider in private markets tech, has onboarded 15 institutional trading clients to Forge Pro during its pre-launch phase. 

Aubrey Capital Management formalizes partnership with LarrainVial

Aubrey Capital Management, an asset manager based in London and Edinburgh with more than $1 billion in client assets, formalized its partnership with LarrainVial, a financial services group in Chile. 

Both businesses are members of the Group of Boutique Asset Managers (GBAM). In January, both companies organized an inaugural roadshow in Latin America to introduce Aubrey’s investment team to LarrainVial’s clients.

The partnership provides Aubrey with access to LarrainVial’s extensive experience of investing in Latin America, while LarrainVial will receive the combined knowledge of Aubrey’s investment team, including its founding partners, Sharon Bentley-Hamlyn and Andrew Dalrymple.

ANZ Banking Group goes live on CobaltFX credit platform

Australia and New Zealand Banking Group have joined CobaltFX’s Dynamic Credit platform. The platform is used to manage credit exposure for FX trades on interbank trading venues. 

CobaltFX, part of United Fintech, provides automated pre- and post-trade infrastructure to help financial institutions access liquidity while using less credit and reducing operational risk.