Bank of New York Mellon Exits Derivatives Business

September 30th, 2014 8:06 pm | by John Jansen |

In another body blow to those in the fixed income trading and sales business (from which I departed one year ago today) Bank of New York Mellon announced that it will exit the business of selling and trading derivatives. The bank will focus on its custody and collateral businesses which are its core businesses.

Via Bloomberg:

Bank of New York Mellon to Shut Derivatives Sales, Trading Group
2014-09-30 20:25:53.0 GMT

By Kelly Bit
Sept. 30 (Bloomberg) — Bank of New York Mellon Corp. told
a group of employees today that it’s shutting its derivatives
sales and trading business.
The decision affects about 50 people, almost all in New
York, according to a person with knowledge of the matter, who
asked not to be named because it’s private. Employees were told
in a meeting earlier this month to expect changes so that BNY
Mellon could focus on its core business of custody and
collateral services, said the person.
“BNY Mellon has decided to exit the derivatives sales and
trading business that operates as part of the company’s Global
Markets group,” spokesman Ron Sommer said in an e-mail.
“Global Markets will offer a modified version of its cash rates
offering to support BNY Mellon’s investment services clients.”
The custody bank, which came under pressure this year from
Trian Fund Management LP to lift its share price, has struggled
as low interest rates have cut income from its investment
portfolio and held down revenue from securities lending. BNY
Mellon Chief Executive Officer Gerald Hassell has been selling
assets and cutting costs to boost profitability.
Trian, the activist investment firm founded by Nelson
Peltz, Peter May, and Ed Garden in 2005, said in June that it
acquired a 2.5 percent stake and was seeking talks with
management. Trian stepped in after BNY Mellon’s pretax margin
was smaller than rivals State Street Corp. and Northern Trust
Corp. in four of the past five fiscal years, according to data
compiled by Bloomberg.


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