The Bank of New York Mellon has made a strategic minority investment in International Derivatives Clearing Group (IDCG). IDCG is a majority owned, independently operated Nasdaq OMX subsidiary that serves as a designated clearing organisation for clearing and settling interest rate swap contracts and other fixed income derivatives contracts. Financial terms of the deal were not disclosed.

In addition to the equity stake, IDCG will utilise the Bank of New York Mellon’s securities servicing products, including margin and collateral management. This will provide clients of both firms with immediate solutions that meet their end to end OTC derivatives clearing and processing needs, which are critical to addressing current regulatory and infrastructure challenges.

“This strategic partnership with Nadaq OMX provides our buy side and sell side clients with a flexible platform that meets their derivatives trading, clearing and servicing needs,” says Gerald Hassell, president of the Bank of New York Mellon. “We will continue to support the development of market infrastructure that enhances the transparency and stability of the global financial markets by addressing counterparty and systemic risk concerns.”

Bob Greifeld, CEO of Nadaq OMX, says: “Nadaq OMX is pleased to have partnered with a global institution such as The Bank of New York Mellon that shares our vision to provide efficient derivatives clearing using a central counterparty system, one that reduces credit risk in the large OTC interest rate swap market. The timing of this strategic investment reinforces the strength of our clearinghouse model. It also lends support to President Obama’s proposed reforms of the OTC derivatives market.”

As part of the investment, Art Certosimo, senior executive vice president and CEO of Broker-Dealer Services and Alternative Investment Services for the Bank of New York Mellon, will join the board of IDCG.