YOUR COLLATERAL UNIVERSE

Dear Clients,

As we reach the mid-point of 2023, BNY Mellon remains committed to building an integrated collateral universe centered on the three pillars of mobility, collateral optimization, and resiliency.

The year started with increased optimism as markets stabilized, inflationary pressures receded, and the usage of the Fed Reserve Repo facility began to fall from its 2022-year end peak of 2.55T. We saw early signs of movement from the Fed Reserve Repo Facility returning to traditional triparty and outright purchases of treasury bills and short notes by money market funds. Despite these positive signs, uncertainty quickly followed with higher inflation numbers, increased rate volatility, bank failures, geopolitical risk from the war in Ukraine, heighted tensions with China, and U.S. debt ceiling negotiations, all leading to elevated market concerns at the start of Q2.

In this environment, clients have a need for increased collateral mobility, connectivity, and optimization across multiple collateral requirements. We have listened and acted, connecting our clients to new markets and pools of collateral, witnessing growth in FICC Sponsored GC, China Stock Connect, South Korea and Malaysia. We are committed to expanding our offerings, as we explore expansion in opening new markets and pools of collateral, in addition to:

• Participation as the global market infrastructure for United Nations’ Liquidity and Sustainability Facility
• Collaboration with clients on our joint ECPOConnect service with Pirum, offering cross triparty & bilateral optimization, allowing users to achieve whole portfolio optimization
• An announcement with Baton Systems to optimize CCP margin movements, allowing the opportunity to reduce cash collateral, increase collateral velocity, & automate business process
• Launch of the combined Fed Fails Indicator & Securities Auto-Borrow Service
• Buildout of our new Repo Spread Indicator to forecast bilateral treasury repo rates to accompany the SOFR Indicative Rate Service
• Development of a new Round Robin Service, an automated solution to settle a complete circuit of Fed-eligible transactions among two or more counterparties, which start and end with the same firm
• Continuing to look for opportunities to improve efficiencies in the Treasury market

As a result of client feedback, we are supporting new trade types on our platform, with several planned for 2023, including the Principal Leg of Securities Lending Transactions in Triparty, Intraday Repo enabling Triparty Pledge transactions to settle against cash, and Record Date Allocations via Pledge. These new offerings expand our clients’ capabilities, allowing better utilization of their collateral. In addition, we continue to invest in our AccessEdge? platform and BNY Mellon RULE? digital collateral schedule manager.

We have also convened a “Voice of the Client” forum comprising a weekly review of the feedback we receive on the AccessEdge? interface, covering training sessions, the NEXEN feedback tool, and client conversations. With the aim of continuous improvement, we directly address any areas we can make clearer and more intuitive.

BNY Mellon’s ability to operate through challenging market conditions remains the cornerstone of our business. It is especially important as our clients look to us to reduce friction that they experience in their day-to-day collateral use during times of crisis. As we look towards the second half of 2023, we recognize the importance of our role at the center of capital markets infrastructure and continue to invest in technology, resiliency, and cybersecurity; we remain committed to meeting our clients’ needs.

Thank you for your business. We look forward to continuing the conversation as we further develop your collateral universe.

All my best,

Brian A. Ruane