Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

BNY Mellon, State Street Say Rule Changes Safeguard Managers

June 25 (Bloomberg) -- Bank of New York Mellon Corp. and State Street Corp., the two largest independent custody banks, said they are satisfied with last-minute changes by U.S. lawmakers to a financial-regulatory overhaul that protect their investment-management businesses.

The so-called Volcker Rule was softened early today after an all-night session on Capitol Hill to merge House and Senate versions of the legislation. The provision, which is intended to curb risk-taking by financial companies, limits rather than prohibits federally insured banks’ ability to invest in private-equity or hedge funds.

“The Volcker Rule as adopted by the conferees achieves the important goal of reining in risky behavior while preserving the ability of asset managers to continue to develop and offer appropriate investment opportunities for their clients,” Ron Gruendl, a BNY Mellon spokesman, said in an e-mailed statement.

The Volcker Rule, named for former U.S. Federal Reserve Chairman Paul Volcker, was proposed in the wake of the 2008 financial crisis. New York-based BNY Mellon and Boston’s State Street lobbied against a private-equity and hedge-fund ban, saying it would put them at a competitive disadvantage to other asset managers.

State Street and BNY Mellon said institutional clients they advise, such as pension funds, expect their money manager to invest alongside them so that their interests are aligned. The companies also often put “seed money” into new funds to help get them started.

‘Good Balance’

“Although we’re still assessing the bill, it appears to strike a good balance between reducing systemic risk while still allowing banks to provide solutions for customers,” Carolyn Cichon, a State Street spokeswoman, said in an e-mailed statement.

The legislation still needs to be approved by the full House and Senate. Lawmakers hope to send the bill to President Barack Obama for his signature by July 4.

Custody banks earn fees from keeping records, tracking performance and lending securities to institutional investors including mutual funds, pensions and hedge funds. Their asset-management units invest money for retail and institutional customers.

BNY Mellon oversaw $22.4 trillion in assets under custody as of March 31, and managed $1.1 trillion in client investments. State Street held $14.1 trillion in custody assets and $1.93 trillion in investment assets.

Top fund stories: {TFUND <GO>} Most-read fund stories: {MNI FND <GO>} Fund screening: {FSRC <GO>} Fund look-up: {FL <GO>} Fund performance chart: {FPC <GO>}

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.