In other news, DTCC extends the reach of MTU, TD Bank buys Cowen & short-term ETFs can be used to meet initial margining requirements.
Bank of London Expands in North Carolina
The Bank of London, a global clearing, agency, and transaction bank, reports that it will “expand its United States footprint by opening its U.S. Global Platform and Services headquarters in Charlotte, North Carolina,” in a move that will create 350 jobs in multiple disciplines by 2026.
“New positions at the U.S. Global Platform and Services division will include software development, compliance and risk, technology operations, infrastructure engineering, and business operations,” according to the bank’s announcement. “Mecklenburg and surrounding counties can expect an annual payroll impact of nearly $33 million when fully staffed.”
Bank of London officials say that the firm has taken an 11-year lease on a 40,000-square-foot floor of One Independence Center at the intersection of Trade and Tryon in Charlotte’s Central Business District.
“Charlotte is the second largest banking city in the U.S. after New York, where The Bank of London has its U.S. headquarters,” officials say.
The Bank of London was launched Nov. 30, 2021 “as the sixth principal clearing bank of the United Kingdom, and only the second clearing bank in 250 years,” officials say. The firm has headquarters in London and offices in New York, Charlotte and Belfast.
DTCC Links MTU to Major Triparty Agents
The DTCC has connected its Margin Transit Utility (MTU) to all the major triparty agents of the securities industry such as the Bank of New York (BNY) Mellon, BNP Paribas Securities Services, Clearstream, Euroclear, JP Morgan, SIX, and State Street, and has advanced collateral management processes for the industry, officials say.
MTU helps firms settle, monitor and report matched collateral calls, and share information with multiple counterparties including automated instructions for major triparty agents, officials add.
The MTU Triparty Messaging Service offers sell-side dealers and buy-side firms a single interface to triparty agents, “eliminating multiple connectivity builds,” officials say. The connectivity is intended to help firms comply with the upcoming regulatory reforms known as BCBS-IOSCO’s Uncleared Margin Rules (UMR).
“A number of clients impacted by UMR Phases 4 and 5, as well as many firms that will fall into scope under UMR Phase 6, have or are planning to implement MTU,” according to DTCC officials. “UMR Phase 6 is anticipated to bring approximately 700 – 900 firms into scope.”
TD Bank Group Buys Cowen for $1.3 Billion
TD Bank Group will acquire investment bank Cowen Inc. in an all-cash transaction valued at $1.3 billion, or US$39 for each share of Cowen common stock, officials say.
The acquisition will boost TD Securities’ “long-term growth strategy in the United States” via the “outstanding talent and highly complementary products and services” of Cowen, officials add.
“Cowen is a leading independent dealer with a premier U.S. equities business and a strong, diversified investment bank that, when combined with TD Securities, will allow us to accelerate our strategic U.S. growth plans,” says Bharat Masrani, group president and CEO of TD Bank Group, in a prepared statement.
TD Securities will add “Cowen’s 1,700 talented colleagues and its exceptional leadership team” to its staff roster, officials say.
“Once the transaction closes, Jeffrey Solomon, chair and CEO of Cowen, will join the senior leadership of TD Securities, reporting to Riaz Ahmed, president and CEO, TD Securities and group head, wholesale banking, TD Bank Group,” officials say. “To leverage the strength of Cowen’s brand, post-closing, parts of the combined business will be known as TD Cowen, a division of TD Securities, and will be headed by Mr. Solomon.”
“Together, we will have more than 6,500 professionals in 40 cities across the globe, extending our reach into new industry coverage areas and building even deeper, long-term client relationships,” Ahmed says.
The Toronto-Dominion Bank reports that it is the fifth largest bank in North America by assets and serves more than 26 million customers in three key businesses operating in several locations, officials say.
Based in New York City, Cowen Inc. offers investment banking, research, sales and trading, prime brokerage, outsourced trading, global clearing, and commission management services, officials say. Cowen also has an investment management division offering actively managed alternative investment products.
Short-Term ETFs Can Be Used for IM: CME Group
An exchanges company for derivatives trading, CME Group has will permit clearing members to deposit Short-Term U.S. Treasury Exchange Traded Funds (ETFs) to meet initial margin requirements, officials say.
“The addition of short-term ETFs gives clearing members and their clients greater flexibility and increased efficiency in managing their collateral costs,” according to the CME Group. “In particular, the ETFs pay a dividend, which is more operationally efficient and mitigates the need for clients to re-invest maturity proceeds for individual U.S. Treasury securities.”
“We’ve worked closely with ETF sponsors to ensure that this new collateral both meets our rigorous risk management standards and offers a broader range of collateral choices for clearing members,” says Suzanne Sprague, senior managing director and global head of clearing and post-trade services, in a prepared statement.
“Margin and collateral are a new use case for bond ETFs like SGOV and SHV, which further demonstrates how they are useful, resilient investment tools that can improve outcomes for individuals and large institutions alike,” says Carolyn Weinberg, global head of product for ETF and Index Investments, BlackRock, in a statement.
“The short-term ETFs invest in U.S. Treasury securities with less than one-year to maturity and are portable instruments held at the Depository Trust Company (DTC),” according to CME Group officials.
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