BNY Mellon Patents Management Process
Recently a global investment management and services business known as BNY Mellon obtained a patent for a new management system that it calls Margin DIRECT. Rather than a product or technology, Margin DIRECT appears to be an idea or system that allowed BNY Mellon to enable the secure management of collateral between counterparties by providing liquidity services for posted margin collateral. This is a highly technical way of saying that Margin DIRECT takes ownership collateral and allows it to move around more freely, thus allowing parties involved in monetary transactions to have a greater degree of security in their financial exchanges, ultimately mitigating some of the inherent risk that comes with collateral trading. Jonathan Spirgel, an executive officer at BNY Mellon and named inventor of the patented Margin DIRECT, proclaimed that the “process helps our clients achieve their investment goals, while also helping to minimize counterparty exposure.” This means that a party can offer up collateral for an investment but be exposed to minimal risk thanks to the system, which will protect investors. This system represents a potential breakthrough in investment services as it will allow for greater investment with greatly reduced risk. Theoretically, such a system will free up greater capital for future spending though there is also the possibility that the significantly reduced risk of investment will result in a sharp increase of unwise investments being made, which could ultimately lead to the creation of an investment bubble. It’s well known that economic bubbles are frequently the cause of economic downturns and some skeptics are already worried that BNY Mellon’s system could be misused in the same way that the housing markets bundling of derivative investments were misused and contributed greatly to the global depression that began in 2008. For the time being however, there is no need to panic about the new management system, which Spirgel says “demonstrates both innovation and the powerful combination of BNY Mellon’s expertise and its market-leading practices.”
Additionally, BNY Mellon CEO, Kurt Woetzel, assures the industry that this product will be vastly more helpful than any previous model and went on to dismiss fears that it could contribute to a future economic problem saying, “One of the most important lessons learned from the financial crisis is that institutions require capabilities that help maximize liquidity and access to collateral.” He went on to imply that the Margin DIRECT system could in fact be used to directly combat financial tendencies that led to the 2008 financial collapse by pointing out that this system emphasizes the necessity of having proper collateral as an important step in the investment process where previous systems would often downplay or marginalize the importance of collateral, leaving some investors to feel that they could invest more than they could ever reasonably afford. While the Margin DIRECT system does reduce risk for the investor, it apparently does not reduce the risk to the dangerously low levels that would inspire the sort of devil-may-care investment practices critics of the system are afraid will be caused by this process.
As of the writing of this article, no more information has been made available. We will update as new information arises.
Kevin James
Intern
JAFARI LAW GROUP®, INC.