State Street in Custody Battle

The merger of Bank of New York(BK Quote) and Mellon Financial(MEL Quote) may force the hands of its main competitors in the custodial and securities processing business.

The union of Bank of NY and Mellon will create the world's largest securities servicing and asset management firm. Wall Street is applauding the $16.5 billion stock swap because it creates a more scalable business and in the fee-driven custody and processing business, size is everything.

Shares of the two companies soared after the news. Bank of New York rose $4.11 or 11.6%, to $39.59, while Mellon rose $2.51 or 6.3%, to $42.56. ...