BNY expands short-term investment options as investors chase yields

By Laura Matthews

NEW YORK (Reuters) – BNY Mellon (NYSE:) is expanding its offering of short-term investment products as investors chase higher yields, the bank announced on Monday.

The bank is now offering access to mutual funds, interest-bearing deposits and sponsored cleared repurchase agreement sweep products through its LiquidityDirect platform, a portal for institutional investors. The offerings are geared at corporate treasurers seeking to maximize liquidity and mitigate counterparty credit risk in an uncertain economic environment.

BNY currently oversees $1.3 trillion of cash investments across deposits, money market funds and other instruments. It manages $15 trillion in money-market transactions a year.

Investors are navigating the impact of rapid U.S. interest-rate increases, the regional banking crisis, and debt ceiling negotiations, said George Maganas, global head of liquidity services at BNY Mellon.

“Safety and capital preservation is front of mind with some of the market issues that we’re seeing,” he said. “Clients are trying to deal with all these different dynamics … and manage their liquidity based on some of the market conditions.”

Cash management is quickly becoming a top priority for finance executives as some regional banks, a key source of market liquidity, undergo stress as rates rise. It also shows how BNY, which touches 20% of the world’s investable assets, is building its platform into a one-stop shop for clients to manage their cash.

The failures of three U.S. regional banks since March shook confidence in the industry, prompting customers to move their deposits to larger banks in search of safety, or to money market funds to seek higher yields.

LiquidityDirect saw a 16% increase in money-market funds flows in mid-March, BNY data showed.