Global Custody Pro - 11 July 2025

Proxy season insights, Euronext, BIS quantum risk paper, Ripple picks BNY, and more

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Global Custody Pro
July 10, 2025 • Reading Time: 11 minutes

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Welcome to Global Custody Pro. I'm Brennan McDonald, Managing Editor. I write about the global custody industry, having spent over 12 years in financial services, including working at a global custody bank. An AI voice reads the audio version of this newsletter. Have feedback? Just reply to this email or connect with us on LinkedIn.

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🌏 Global Custody News

Deutsche Börse Group plans to surrender unit banking licences

  • Why it matters: Deutsche Börse Group is preparing for its subsidiaries, Eurex Clearing AG and Clearstream Banking AG in Frankfurt, to return their respective banking licences, citing recent European regulatory changes as a way to reduce complexity and improve efficiency.

  • The move follows the European Central Bank's decision to grant Central Counterparties (CCPs) direct access to its overnight credit facility, making Eurex Clearing’s banking licence unnecessary. Concurrently, amendments to the CSD Regulation (CSDR Refit) allow Clearstream Banking AG to focus on its core Central Securities Depository (CSD) business.

  • The execution of these plans remains subject to the final terms and approvals from the relevant competent authorities. The Group's Luxembourg-based International CSD (ICSD), Clearstream Banking S.A., will retain its banking licence and function as the Group's Service CSD.

Proxy Season Shifts as E&S Support Wanes, SEC Rules Change

  • Driving the news: A recently published Freshfields report on the 2025 proxy season features a drastic reduction in the overall number of shareholder proposals, a trend partly attributed to the SEC’s increased willingness to grant no-action relief following the publication of Staff Legal Bulletin 14M. Concurrently, new SEC guidance on Schedule 13G eligibility has caused some institutional investors to alter their engagement practices.

  • The Implication: Following the new Schedule 13G guidance, many institutional investors have altered their engagement behaviour to be "less interactive and candid" to mitigate the risk of becoming a Schedule 13D filer. This shift leaves companies with less direct feedback on topics of interest, creating uncertainty for the upcoming corporate meetings season.

  • Fresh Outlook: Amid a more uncertain regulatory and global environment, investors have shown a "retreat to the relative safety of supporting traditional governance and compensation proposals" over environmental and social issues. Despite this shift and limited support for anti-ESG proposals, these considerations remain a significant topic for companies and their stakeholders.

Euronext launches multi-year European repo clearing expansion

  • Key Move: Euronext has launched the Repo Foundation, the first phase of its multi-year Repo Expansion Initiative, which aims to create a pan-European post-trade infrastructure for secured financing markets central to its “Innovate for Growth 2027” strategy.

  • The initiative immediately offers repo clearing for Spanish, Portuguese, and Irish government bonds alongside its established Italian service and, for the first time, opens platform access to international firms as repo-only participants to enhance capital efficiency and simplify operations.

  • A phased rollout will extend coverage to French, German, Dutch, and Belgian government bonds in Q3 2025, introduce a sponsored access model for buy-side firms in Q2 2026, and integrate with triparty agents Euroclear and Clearstream starting in Q3 2025.

$1.3 Trillion CCP Risk: Analysis of a new OFR Paper

New OFR research reveals that CCPs could demand 25.7% of banks' liquidity in a matter of hours. Analysis of $1.3 trillion risk affecting global custodians. 67% surge in 7 years.

www.globalcustody.pro/p/1-3-trillion-ccp-risk-analysis-of-a-new-ofr-paper-d7b1

BIS issues strategic roadmap for quantum-safe financial systems

  • Driving the news: The Bank for International Settlements has released a paper outlining a framework to support the financial system's transition to quantum-safe cryptographic infrastructures, urging organisations to begin preparations immediately. The paper, "Quantum-readiness for the financial system: a roadmap", was authored by a team from the BIS, Bank of Canada, Bank of France, and other institutions.

  • The big picture: Future quantum computers are expected to break widely used encryption methods, such as RSA and ECC, posing a significant threat to the security and resilience of the global financial system. The risk extends to data harvested today for future decryption, a scenario known as "harvest now, decrypt later," making the threat more imminent than the development horizon of a cryptographically relevant quantum computer (CRQC).

  • The Bottom Line: The authors caution that the transition is not a simple algorithm replacement; instead, it requires coordinated planning and implementation. It identifies post-quantum cryptography (PQC) as the most viable near-term solution, recommending a phased migration that incorporates cryptographic agility, defence in depth, and hybrid models to ensure future resilience.

CDSL and KPMG outline AI future for Indian capital markets

  • The big picture: KPMG India and Central Depository Services (India) Limited (CDSL) have published a joint report, "Reimagine CapTech and the future of capital markets," dated June 2025. The report analyses the role of emerging technologies, such as AI, in transforming India's market infrastructure and provides strategic recommendations for regulators, market infrastructure institutions (MIIs), intermediaries, and investors.

  • The report states that the fusion of technology and capital markets, which they describe as “CapTech”, is reshaping operations. It recommends that market infrastructure institutions utilise AI to enhance surveillance and risk management, as well as to streamline clearing and settlement operations, thereby increasing efficiency and reliability.

  • The stated objective is to foster a technologically advanced ecosystem that empowers a self-reliant investor, referred to as the 'Aatmanirbhar Investor'. The report's recommendations aim to guide stakeholders in harnessing these advancements to create a financial system aligned with the “Viksit Bharat @2047” vision.

CACEIS Details Strong 2025 Securities Finance Market

  • Why it matters: Securities lending revenues increased 7 per cent in the first five months of 2025 compared to the same period in 2024, driven by strong borrowing demand for ETFs, Asian equities, and government bonds, according to a CACEIS webinar.

  • The upcoming move to the T+1 settlement in 2027 presents significant complexity for European firms due to its combination with CSDR penalties, which are anticipated to increase.

  • Lending revenues for the full year 2025 are expected to exceed those of 2024, driven by sustained growth in demand for ETFs and increased activity in the Asian market. During the webinar, the impact of US versus EU regulatory differences was discussed, including the advantages accruing to US banks from shifts in regulatory posture. CACEIS also highlighted their recent MiCA license approval from French regulators.

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🚀 Digital Asset News

BNY Selected for Ripple USD Reserve Custody

  • Driving the news: Ripple has appointed BNY as the primary custodian for the reserves backing its new stablecoin, Ripple USD (RLUSD). BNY will also deliver transaction banking services to support the stablecoin's operations and provide integrated solutions.

  • The collaboration is positioned to provide institutional-grade infrastructure for digital assets. RLUSD is an enterprise-focused stablecoin issued under a New York Department of Financial Services Trust Company Charter, designed to improve the efficiency of cross-border payments.

  • According to Emily Portney, Global Head of Asset Servicing at BNY, the bank aims to "support the growth and adoption of RLUSD" and is working with Ripple to "continue propelling the future of the financial system."

CMU supports the first MENA digital bond issuance in Hong Kong

  • Driving the news: First Abu Dhabi Bank has issued US$100 million of 3-year digitally native notes in Hong Kong, supported by CMU OmniClear. The transaction represents the first digitally native issuance from a Middle East and North Africa (MENA) issuer and the first to be listed on the Abu Dhabi Securities Exchange (ADX).

  • The issuance was executed on the Central Moneymarkets Unit (CMU) DLT platform, which HSBC Orion enables. The structure facilitates access for international investors through CMU’s established linkages with international central securities depositories.

  • CMU OmniClear has stated its commitment to supporting global issuers with digital bond offerings in Hong Kong, aiming to contribute to the development of the digital securities market.

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