BNY Mellon will introduce a new FX pricing model based on ‘agreed fixed margin‘ over benchmark fixing for custodian client FX transactions, according to reports.
This move to greater transparency is a logical response to the legal action from The State and City of New York, who sued BNY Mellon for using “fraudulent rates” in collecting $2 billion of fees from public and private pension funds in foreign currency transactions, as discussed in Another Leading Custodian Bank sued over FX rates.
BNY had till now executed FX trades based on standard instructions as detailed here.
Whilst FX falls outside the Dodd Frank regulations, the general regulatory move towards greater pre-trade transparency, and the buy-side requirement to ‘demonstrate’ performance, should be viewed by banks as an opportunity to differentiate their service offerings to clients by incorporating TCA tools within their SDP, as discussed in Single-dealer platforms and TCA and further in my review of the EuroMoney 2011 FX Poll – some thoughts.
Filed under: FX, Regulation, Single-Dealer Platforms, Web trading technology |
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[…] However, BNY has since done much to rectify this, by providing more transparent pricing, and introducing benchmark pricing for custody clients. […]