Focus On: Operations
Measuring Operational Risk: Part Science, Part Art | Licensing Ops Execs: Great Idea, Bad Execution? | Reducing Operational Errors With OTC Derivatives | A DAY IN THE BACK OFFICE:
Eliminating Operational Risk at a Transfer Agency | Giving a Single Name a Single Identity | TOP OPS EXEC: Timothy Doar, CME Clearing | TOP OPS EXEC: Mike Fish, SWIFT | TOP OPS EXEC: Patrick Kirby, DTCC | TOP OPS EXEC: John McCorvey, Gar Wood Securities | TOP OPS EXEC: Jeff Gooch, MarkitServ | TOP OPS EXEC: James Malgieri, BNY Mellon | TOP OPS EXEC: Hans Hufschmid, GlobeOp Financial Services | TOP OPS EXEC: Conrad Kozak, JPMorgan Chase
TOP OPS EXEC: James Malgieri, BNY Mellon
May 4, 2011
NAME: James Malgieri
TITLE: CEO, Broker-Dealer Services
COMPANY: Bank of New York Mellon
KEY FOCUS: Eliminating operational risks in handling of repurchase agreements.
For James (“Jim”) Malgieri, running a multi-faceted, dual-track business unit at Bank of New York Mellon is no big deal. It’s simply the everyday order of things.
Malgieri was appointed chief executive officer of broker-dealer services in April of last year, after joining the firm in 2002. Now, he oversees a global unit of approximately 360 people in ten loca- tions, not including a technology staff of 520. His team runs two lines of business.
One offers a suite of clearing prod- ucts and manages clearing for 16 of the 20 primary dealers, acting as a leading clearing agent for U.S. Government Securities. “We are one of the largest US government bond clearers in the world,” notes Malgieri.
The other division offers a suite of global collateral management services and operates as a leading collateral man- agement agent. This business services more than $1.8 trillion daily in tri-party repurchase or repo market balances and is a form of short-term lending that Wall Street investment banks actively employ to fund their balance sheets. In
a repo or repurchase agreement, one party lends money – frequently over- night – and receives securities pledged as collateral from the other party.
Indeed, Malgieri points out that the tri-party repo represents “at least 50% of what we do day in and day out” in the broker-dealer services unit.
A previously little-known aspect of financial markets, the tri-party repo market came into the spotlight during the time of the Bear Stearns collapse, when investors who fund repo agree- ments began to pull their money out and as a result, sparked a run on Bear Stearns.
According to Malgieri, as of 2011, currently “there is a tremendous amount of activity ” in the collateral management area of his business with growing numbers of buy-side and sell- side players ensuring that both players involved in a transaction are sufficiently collateralized.
“Because of the crisis, anyone who has a financial transaction with a counterparty that has exposure is now requiring collateral,” said Malgieri and as a result, that’s been good for BNY Mellon’s broker-dealer services.
“We saw the bottom of the market in the summer of last year but have seen steady increases in activity since September which we attribute to more trading activity, more position taking by large broker-dealers and new products in the marketplace,” Malgieri said.
