BNY Mellon, Google Cloud technology to predict Treasury settlement failures
Reuters
Published Feb 04, 2021 12:46PM ET
Updated Feb 04, 2021 02:15PM ET
(Reuters) - The Bank of New York Mellon (NYSE:BK) Corp said on Thursday it has partnered with Google (NASDAQ:GOOGL) Cloud on technology that uses artificial intelligence and machine learning to predict when BNY Mellon's clients' U.S. Treasury transactions will fail to settle.
Settlement failures occur when two parties buying and selling bonds fail to exchange the cash and securities on time. A large increase in failures can signal market liquidity problems.
The $22 trillion U.S. Treasury market is the largest and most liquid market in the world. Around 2% of transactions fail to settle each day, which can create liquidity shortfalls for clients, BNY Mellon said in a release.
BNY Mellon said its new technology predicts the likelihood that clients, such as banks, will face settlement failure on a trade. The model can predict around 40% of settlement failures for trades that are eligible to be settled on the Federal Reserve’s FedWire Securities Service, with an accuracy of 90%, it said.
The technology analyzes supply and demand and the velocity of trading in specific securities, and it models specific counterparty activity, among other factors, BNY Mellon said.
(Refiles to change references to BNY Mellon throughout, from BNY)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.