Case Study: Market conformity check at BNY Mellon

Fully automated price control in accordance with KARBV

SIX Financial Information has implemented at The Bank of New York Mellon SA/NV, Frankfurt am Main branch, a solution to perform an automated market conformity check in accordance with the Capital Asset Accounting and Valuation Ordinance. Thanks to this price control service the depositary benefits not only from compliance with current statutory requirements, but also from the nearly complete automation of the process.

Challenge for depositaries

The Capital Asset Accounting and Valuation Ordinance (KARBV) entered into force on 22 July 2013 and replaces the previous Investment Accounting and Valuation Ordinance (InvRBV). In accordance with KARBV, depositaries must ensure that they execute their transactions only within the high-/low price spread of the corresponding trading day. This is intended to ensure that a fund does not conduct any transactions at prices either above the daily high or below the daily low.

Price control service from SIX

The expanded requirements of KARBV posed a challenge for BNY Mellon, one of the world’s largest depositaries, namely how to efficiently fulfil the new requirements to check all transactions for market conformity. When searching for a new solution, BNY Mellon selected the price control service of SIX Financial Information.

The price control service from SIX makes possible a daily price control of delivered prices against qualified high-low spreads for equities, funds, annuities, bonds, currencies, derivatives and FX spots/forwards. This market conformity check makes it clear whether a transaction at the time of trading was in compliance with the current market conditions. As part of the check, SIX also creates auditable control reports that ensure the verifiability of the price-spread determination and the price check.

“For us it is important that the new solution fulfils all of the statutory requirements of KARBV,” comments Lars Hella, Managing Director at The Bank of New York Mellon.

“The solution from SIX helps our bank to determine price spreads and enables us to almost completely automate the market conformity check“

Lars Hella, Managing Director, BNY Mellon SA/NV

Added value for BNY Mellon

As part of the overall project, the price control service of SIX was customized to meet the individual needs of BNY Mellon and connected to XENTIS, the local fund accounting system. In a second step, production went live in IAS, the global accounting system.

With the price control service BNY Mellon now benefits from a nearly fully-automated solution to check

the market conformity of equities, bonds, certificates, exchange-traded derivatives and forward currency transactions. The daily delivery of the requirement file is generated directly from XENTIS or IAS.

The price control service of SIX enables BNY Mellon to reduce its manual processing effort and thereby significantly decrease the costs of processing. At the same time, the depositary was able to raise the quality and transparency of its review process.

Benefits for the client:

Fully mapped IRS entity identifiers (GIIN)Legally compliant market conformity check in accordance with KARBV

Nearly complete automation of the process

Reduction in manual processing effort and corresponding costs
Increase in the quality and transparency of the review process
Auditability through control reports to verify price determination and price control
Rapid and cost-effective integration into the client’s own systems
Price control in 5 steps

Price control in 5 steps

View this case study in PDF