The Future of Wholesale Funding and Tri-Party Repurchase Agreements featuring Brian Ruane, CEO, Broker Dealer and Tri-Party Services, Bank of New York Mellon
October 22, 2015
On September 30, 2015, the Center for International Financial Markets and Services hosted a talk by Brian Ruane, CEO of Broker Services at BNY Mellon. Mr. Ruane’s presentation titled, “The Future of Wholesale Funding Markets: A Focus on Repo Markets Post Tri-Party Reform,” offered a fascinating look at collateralization in the repo market and recent innovative changes in this market that were spearheaded by BNY Mellon. BNY Mellon is the largest tri-party agent in the United States.
Mr. Ruane discussed the conclusion of a multi-year cooperative effort by BNY Mellon, its clients and other market participants to restructure the U.S. tri-party repo market as part of the recommendations of the Task Force for U.S. Tri-Party Repo Infrastructure. Brian described the pre-reform process of transferring and tracking collateral in the repo market. Further, he discussed the credit crunch that occurred in this market in 2008, at least in part due to antiquated methods of recording and monitoring collateral when repo ownership was transferred. Brian, and BNY Mellon, have re-organized, streamlined and computerized the process so that each party to a repo knows the nature of the securities used as collateral and where they are located. A key issue BNY Mellon faced when addressing changes recommended by the Task Force was to implement these recommendations without disrupting the market. Their new, highly innovative system to monitor collateral was put in place in the fall of this year.
In a wide-ranging question and answer session, Brian explained other recent changes in banking, including banks’ preference for not holding cash, except for their preferred customers. He told the audience that cash has too high an opportunity cost to hold. Further, he discussed BNY Mellon’s new policy of lending money on an intra-day basis, and computing interest charges by the minute.
Mr. Ruane, a graduate of Hofstra’s MBA program, also encouraged the audience to look forward to careers in what promised to be a new financial market.