BNY Mellon & Deutsche Bank Jointly Develop Digital FX Solution

Zacks Equity Research

The Bank of New York Mellon Corporation BK has developed a new foreign-exchange (FX) solution enabled by application programming interface (API) in collaboration with Deutsche Bank DB. This solution aims to reduce the confirmation times for restricted emerging-market currency trades.

The digital solution will also reduce the pre-trade time in emerging-market custody FX considerably, along with lowering operational burden and manual intervention.

The solution is already live in Korea and is being applied to custody FX transactions in Korean Won. The digital solution is likely to be used for the Indonesian Rupiah and the Indian Rupee next. Eventually, it will be launched in other restricted emerging market currencies, which has equity or fixed-income transactions as its underlying.

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Further, the solution is expected to facilitate immediate communication between existing bots of the two banks and can likely bring trade remediation closer to the time of execution. It is also expected to decrease price slippage for “clients between the FX leg of a transaction and the equity or fixed-income security trade.”

Jason Vitale, global head of FX at BNY Mellon said, "With this partnership, we are not only seizing an opportunity to alter back-office processing in restricted markets, but more importantly, we are providing front-office users with faster execution and enhanced workflow transparency."

David Lynne, APAC head of Fixed Income & Currencies, and Corporate Bank, at Deutsche Bank noted, "This demonstrates our commitment to market leading execution, at a time when investor participation and focus on costs in these markets are increasing. The collaboration between the two organizations leverages our strengths and expertise in emerging markets, custodial FX, as well as digital work-flow and innovation."

BNY Mellon already has an FX presence in Asia, with a dedicated FX custody trading desk set up last year in Singapore. This June, the company announced plans to set up an FX pricing and trading engine in Singapore in partnership with the Monetary Authority of Singapore (MAS). Likewise, Deutsche Bank is set to launch an electronic FX in Singapore in collaboration with the MAS.

Apart from these, several other global banks like Morgan Stanley MS, Goldman Sachs GS and JPMorgan are strengthening their operations in Asia by either increasing their stakes in the respective joint ventures in the region or by bolstering the FX trading platforms among other things.

Over the past year, shares of Deutsche Bank have rallied 34.8%, while the BNY Mellon stock has lost 13%.

Deutsche Bank currently carries a Zacks Rank #2 (Buy), while BNY Mellon has a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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