In similar developments, Appway will join the FNZ fold, the LSEG will acquire Quantile, and DLT plays a key role in an FX forward transaction.
Other BNY Mellon Units to Get Direct Indexing Too
The Pershing clearing and custody services business of BNY Mellon is acquiring Optimal Asset Management, a direct indexing solutions provider, and will offer Optimal’s capabilities to advisory clients within Pershing, and to institutional and retail clients within BNY Mellon’s Investment Management business.
If the acquisition is approved, it will be a key addition to the new Pershing X offering, a business unit for developing solutions for the advisory industry, officials add.
The Optimal Asset Management software offer “customizable direct indexing solutions to investors seeking personalized portfolios that are aligned to their values,” according to BNY Mellon officials. The Optimal service also encompasses options for customizing portfolios for sustainable investments.
“The direct indexing market is expected to grow from $350 billion in assets under management (AUM) in 2020 to $1.5 trillion in AUM by 2025,” BNY Mellon officials say.
Officials add that the acquisition, expected to conclude by the end of this year, will include the following benefits:
- Personalized portfolios that reflect the values and tax optimization preferences of investors;
- And better acquisition and retention efforts for advisors via more personalized investment planning
The acquisition will mean that Optimal’s founder Dr. Vijay Vaidyanathan and his team of software architects will be joining Pershing X, officials say.
PJT Partners is serving as financial advisor and Cooley LLP is serving as legal advisor to Optimal Asset Management, officials say. Sullivan & Cromwell LLP is serving as legal advisor to BNY Mellon’s Pershing.
FX Forward Trade Gets Help via DLT Platform
State Street, Vanguard, and Symbiont have successfully used distributed ledger technology (DLT) to complete a margin calculation process “for a live trade of a 30-day foreign exchange forward contract,” officials say.
“The firms have been actively exploring the innovative application of blockchain technology to undertake margin processing for foreign-exchange forwards and swaps, with the goal of bringing post trade workflow automation and efficiencies while significantly reducing counterparty credit risk in the over-the-counter currency market,” according to the official statement from all three. Symbiont provided the DLT-based Assembly platform.
The innovation is an effort to apply blockchain/DLT to the “largely manual currency forwards market” and facilitate the underlying contracts to “be instantiated, signed, executed and documented on a single unalterable record, digitally securing the trades and allowing for automation over their duration,” according to officials.
The deployment of these contracts on DLT “facilitates more frequent and automated valuations, while also enabling parties in the network to move and settle collateral instantaneously — significantly reducing counterparty risk and streamlining processes for those forwards that are non-cleared and subject to margining,” officials say.
Appway to Become Part of FNZ
Wealth management platform provider FNZ Group will be acquiring client onboarding and servicing vendor Appway as a way to help financial institutions speed up their digital transformations, officials say.
With the acquisition, FNZ will be acquiring “enterprise-grade low-code no-code workflow automation” and deep domain expertise across the wealth management value chain, officials say.
Appway’s CEO and founder Hanspeter Wolf will become chief technology officer (CTO) of the FNZ Group and will become part of the senior leadership team, once the acquisition closes, officials say. Appway is based in Zurich.
The acquisition is due to be completed by the first quarter of 2022. Officials decline to disclose the terms of the agreement.
LSEG to Acquire Quantile Group
The London Stock Exchange Group has announced that it will acquire portfolio optimization services vendor Quantile Group and will add it as a standalone entity to the LSEG’s Post Trade division, officials say.
With the support the LSEG, Quantile can hasten product development, launch new services, and grow its network, officials say.
As part of the LSEG, Quantile staff will report to Daniel Maguire, group head of Post Trade at LSEG. “Quantile will continue to be led by its CEO and co-founder, Andrew Williams,” officials add.
Quantile was formed in 2015, and has grown to more than 80 employees, with offices in London, New York and Amsterdam, officials say.
“In January 2021, the company received $51 million in growth investment from Spectrum Equity, a leading growth equity firm focused on internet-enabled software and information services companies,” officials add. Quantile’s optimization services help firms cut risk, notional, and capital requirements for market participants trading in over-the-counter (OTC) derivatives.
Officials say that the transaction is slated to close in 2022 following antitrust and other regulatory approvals.
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