Matt Levine, Columnist

Bank of New York Mellon's Best FX Execution Was Pretty Bad

The trick is, if you can match buyers and sellers, and give them each the worst price of the day, you can make a lot of spread.

March 19, 2015 at 10:42 PM UTC

By Matt Levine

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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Bank of New York Mellon provides custody services to a lot of big investor clients, pensions, endowments, etc. When those custody clients have foreign exchange needs -- to buy or sell foreign securities, for instance -- they come to BoNY Mellon. This creates a nice opportunity for efficiency: BoNY Mellon has a lot of clients who want to exchange dollars for foreign currency, and a lot of clients who want to exchange foreign currency for dollars, so it can pair them off against each other, operating its own little internal foreign-exchange trading venue.

Or it could do this: