It’s been a busy six months for BNY Mellon’s (BNYM) Markets division. In January of this year, the banking giant announced its intention to launch an FX prime brokerage service and, last month, it confirmed that it had started offering clients access to FX options.
Since the start of the year, the firm has also made a number of hires, continuing a trend that started with the appointment of Michelle Neal, in late 2015, as President of Markets.
Most recent among these new hires is Harry Moumdjian. A former Executive Director in Morgan Stanley’s fixed-income division, BNYM announced that Moumdjian would be heading up its Markets FX sales division this Monday.
In the wake of his appointment, Finance Magnates caught up with the new BNYM man to get his thoughts on where the prime brokerage industry is headed and why he decided to leave Morgan Stanley.
“Moving up the FX ladder”
“It was an exciting opportunity for me,” said Moumdjian as we started the interview, “It was great to join a firm that’s moving up the FX ladder and investing in its FX products at a time when many other firms are pulling away from them.”
Just as important to Moumdjian was BNYM’s personnel. The firm’s hires over the past couple of years clearly made an impact on the former Morgan Stanley executive as he mulled over his move to BNYM.
“BNYM’s Markets division has undergone a big transformation over the past few years.” Noted Moumdjian, “That started with the appointment of Michelle Neal and then Adam Vos [BNYM’s Global Head of FX] two years ago. I had the privilege of looking on at Michelle’s career from afar and, when the chance to join her team arrived, I leapt at it.”
Expanding number of products
He may only be in his first week, but Moumdjian was already clued into what is expected of him at the new firm.
“BNY Mellon has historically been dominant in the custody businesses and as a result has a strong FX franchise,” Moumdjian told Finance Magnates. “These clients continue to be the mainstay of our business and our focus at the moment is to increase our relevance to them.”
To some this may seem like as a nod to ‘business as usual’ at BNYM but, Moumdjian assured me, that is not the case. The firm is expanding the number of products it can deliver to its existing customers.
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“We think the trend in the industry is towards firms wanting to shrink their counterparties,” said Moumdjian, “so from our perspective it makes sense to offer a broader suite of FX capabilities to the same set of clients.”
And what of the prime brokerage side of the business? Moumdjian noted that when the Swiss Central Bank unpegged the Swiss Franc from the Euro, there had been a downward shift in the prime brokerage space.
“Approaching this year there’s been a resurgence of prime brokerage businesses.” noted Moumdjian, “BNYM is one of the new entrants to the market but I don’t think, in the next few years, the number of entrants to the prime brokerage space will expand materially from where we are today.”
Being the curious soul that I am, I couldn’t let this go unanswered. “Why not?” Said I, waiting with bated breath for Moumdjian’s reply.
“For two reasons.” Replied Moumdjian astutely, “You have to have a strong balance sheet and you have to have the internal operations to handle a prime brokerage business. Those are two things that are strengths of BNYM Mellon but that’s not necessarily the case at other organisations.”
Non-bank market makers
As for other industry trends that could disrupt BNYM’s ‘modus operandi,’ Moumdjian remained confident. Non-bank market makers, it seems, do not keep BNYM’s FX team awake at night.
“We offer a full range of FX products,” said Moumdjian, “whereas non-bank organisations are generally focused on a very small part of the market. We are aware of what other people are doing but they are not a major focal point for our concerns.”
With regard to technological change, Moumdjian expects BNYM’s electronic trading processes to continue improving. Along with its competitors, the firm remains focused on bolstering its technological services.
“Electronic trading is a growth area for just about everybody in this industry.” Stated Moumdjian, “Whether it’s improving your own internal processes, how you deliver products, prices and execution to clients. We have a robust electronic trading offering that we push out to our clients and expect the trends towards electronification to continue.”
Staying the course
With a strong and experienced capital markets team in place, BNYM looks set to remain a strong service provider for those in the institutional space.
The firm has already started trading FX options, and its prime brokerage service looks very promising. It remains to be seen how things will pan out over the next few years but, at least for now, it seems Moumdjian made a wise move.