Bank of New York Mellon Corp., accused by state and federal officials of defrauding public pension funds on foreign-exchange trades, is offering some of those customers a new pricing model.

The bank has proposed applying fixed margins over benchmark currency rates when automatically executing currency trades for custody clients, said Mary Jane Wardlow, a spokeswoman for the Employees Retirement System of Texas. The bank would price the trades at specific times, rather than pick a rate that's favorable for the bank at the end of the day.

BNY Mellon, the world's largest custody bank, was sued last month by New York Attorney General Eric T. Schneiderman and the U.S. Attorney's Office in Manhattan, who said it made more than $2 billion over 10 years on fraudulent foreign-exchange transactions at the expense of clients including New York City pension funds. BNY Mellon, which has denied the accusations, is in early stage talks with federal prosecutors to settle, according to a person briefed on the discussions.