Poor transition transparency is our opportunity: BNY Mellon

Some Australian transition managers are getting away with pricing practices absent from overseas markets for years, according to BNY Mellon as it prepares to enter the local fray.

The US giant is exporting David Hanlon, a sales executive from its Boston office, to Sydney as the first on-the-ground presence for Mellon Transition Management Services (Mellon TMS) in Australia. A chief operating officer, who’ll report to Hanlon, will be announced in the next couple of weeks. Mellon TMS has already performed three transitions for Australian clients of its parent. The Australian managing director for BNY Mellon Asset Management, James Gruver, said Mellon TMS would offer a “;holistic and transparent”; transition service which focused on choice for the customer. “;BNY Mellon is the world’s largest custodian so of course we can offer off-market crossing, but we wouldn’t do that automatically because it’s not always in every client’s best interests – crossing means you’re out of the market a couple of days and there’s a cost to that,”; he said. Gruver had observed pricing policies among some transition providers in the Australian market which “;haven’t been seen in the US or UK markets for years”;. He said the level of pricing transparency differed markedly among the transition providers offering investment bank, custodian or index manager models. “;We know of one major NSW institution which recently got three quotes for an Australian equities transition – the cheapest quote was $250,000, the high tender was $1.2 million,”; he said. “;That tells you that some players out there are creaming transaction profits behind a low ‘headline’ fee…frankly, we’re looking forward to competing with them,”; Gruver said.