Global custody: BoNY Takes Stake In Financial Models

BNY Capital Corp., a Bank of New York subsidiary, acquired a minority interest in Toronto, Ontario-based Financial Models Co., Inc. (FMC), in mid-December to buttress Bank of New York's main security processing and global custody business, says BoNY's Fred Ricciardi, evp for custody services. FMC provides software for portfolio and trade order-management; performance measurement and attribution; trade confirmation and settlement; client reporting; and securities data. Terms of the deal and how much of FMC was acquired were not disclosed.

BoNY will integrate FMC's product line with its custody product, which is delivered through the bank's intranet browser product, Inform, and will appear as a button on the Inform desktop. "What this does for us is really extend our current and future customer base on our processing products," he says, an activity BoNY has pursued for some time. It has $11 trillion in global custody assets under management.

What this particular product line offers are solutions for investment managers for application development that they have historically done "in their own shops connected with securities transactions," Ricciardi says.

FMC's product line has ten tools that together manage securities transactions, including a pre-trade product called Pivot and an order- management system called Vortex, that Ricciardi hopes will strengthen BoNY's ties with its global custody customers. At the same time, the joint marketing agreement between the firms was forged to expand that custody universe for BoNY since FMC, which dates to the 1970s, has a healthy stable of potential custody customers.

BoNY's competitive advantage: Under the agreement, the bank can market FMC's products to its customers, but FMC can only market its services to other custodians for exclusive use by that custodian, and not that custodian's customers, says Ricciardi. FB

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