To help reduce counter-party and systemic risk, BNY Mellon's DM Edge now boasts expanded bilateral margining capabilities, including forward-settling of mortgage-backed securities.
These new capabilities will help clients using DM Edge meet the recommendations of the Treasury Market Practices Group (TMPG) sponsored by the Federal Reserve Bank of New York.
‘This enhancement to DM Edge helps clients manage their counter-party exposure,’ said Nadine Chakar, head of product and strategy for BNY Mellon's global collateral services business, in a release.
Through DM Edge, MBS trading counter-parties can reduce the credit risk inherent in forward transactions by exchanging collateral, or margin, as protection against loss in the event of default.
‘Unmargined, bilateral agency MBS trades can pose counter-party risk to market participants, which is why TMPG recommends that exposures from forward-settling transactions, inclusive of agency MBS transactions, be margined beginning in early June 2013 and substantially completed by the end of the year,’ said Chakar.