Global Custody Pro - 11 June 2025

DeFi Exemption? LSEG, A5X, LCH, CMU OmniClear, IBKR, CME Group and more

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Global Custody Pro
June 10, 2025 • Reading Time: 9 minutes

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📰 Welcome to the Newsletter

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

📠 Editor’s Comment

This week, I’m interested in how digital asset regulation continues to play out in the USA. What I wrote about earlier in the year is happening: the US is going down a path where its home firms will have a regulatory advantage over firms based in the EU or Asia Pacific once the final regulatory settings are on the Federal Register or passed into law.

This is a complex issue that I’ll keep an eye on because it’s clear that some response will be needed regarding the potential simplification of MiCA in the years ahead. The UK may have to recalibrate its current trajectory, lest it end up in the same position.

Table of Contents

🌏 Global Custody News

LSEG to Power Brazil's New Derivatives Exchange A5X

  • Key Move: LSEG has entered a strategic agreement to provide its comprehensive market infrastructure technology suite to A5X, Brazil's new derivatives and futures exchange. The deal covers an end-to-end platform, including pre-trade risk, an ultra-low latency matching engine, market data distribution, real-time surveillance, clearing, settlement, and risk management systems tailored for the Brazilian market following joint design efforts.

  • The stated goal of the partnership is to create a more efficient and innovative market in Brazil. The integrated technology stack is designed to streamline operational risk across the trade lifecycle, accelerate product innovation, and enhance price discovery, with the potential to "significantly reshape Brazil’s financial landscape," according to the announcement.

  • A5X targets readiness for regulatory testing by Q4 2025. The exchange plans to launch the new LSEG-powered platform commercially in the first half of 2026, aiming to establish a seamless derivatives and futures ecosystem in Brazil.

CMU OmniClear, LCH partner on CNH clearing and collateral

  • Key Move: CMU OmniClear, owned by the Exchange Fund of Hong Kong, and LCH have signed a Memorandum of Understanding to develop clearing solutions for offshore Renminbi (CNH) derivatives and to facilitate the acceptance of CNH-denominated Chinese government bonds (CGBs) held in Hong Kong's central securities depository as eligible collateral for LCH clearing members.

  • The collaboration aims to increase liquidity and capital efficiency for international investors by allowing them to manage CNH bond holdings more effectively. According to the announcement, this marks the first time CGBs held in Hong Kong’s central securities depository infrastructure will be accepted as eligible collateral outside of Hong Kong.

  • Subject to regulatory approvals, the service offerings are expected to be available in the first half of 2026. LCH stated that the APAC region continues to be a strategic focus, and the partnership will expand services for market participants trading and settling deliverable CNH derivatives.

IBKR projects 24-hour trading to reach 30% of volume

  • On the Radar: Interactive Brokers expects overnight trading to expand significantly, projecting it will rise from 2.2% of its volume in May to 25% and 30% over the next two decades. At the Global Exchange and Trading Conference, Chairman Thomas Peterffy anticipated overnight sessions will become "just as liquid as markets currently are between 11 AM and 1 PM" within three to five years, noting that volumes are already "rising extremely fast."

  • This expansion of trading hours is directly linked to servicing accelerating demand from international clients, with the firm identifying the trend as "very important to many people in the Far Middle and Near East" who are seeking access to US markets.

  • The operational focus is underpinned by a belief that sustained global capital flows will continue into the country. Peterffy forecasts that "investors from all over the world will keep on investing their excess funds in the United States," making extended-hours access a strategic necessity.

Nasdaq establishes Dallas hub, backing Texas market reforms

  • Driving the news: Nasdaq is establishing a regional headquarters in Dallas to support its 900 existing clients in Texas. CEO Adena Friedman cites the state’s “pro-business environment” and a “concerted effort” by its government to create a new capital markets hub.

  • The move positions Nasdaq to service a growing client base and influence the development of a business-friendly market centre. Friedman stated that Texan clients will “connect into a global market” via Nasdaq's infrastructure, which includes investor relations and anti-financial crime solutions for listed and non-listed entities.

  • Looking ahead, Nasdaq is actively working with the Texas legislature on corporate reforms, which Friedman noted are consistent with the exchange's blueprint to make the public company experience “less onerous and more constructive.” The Dallas presence initiative is described as “very much in motion.”

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🚀 Digital Asset News

SEC signals new DeFi framework, potential exemption

  • Driving the news: US SEC Chairman Paul Atkins has directed staff to develop a new regulatory approach for decentralised finance, including exploring an "innovation exemption" to help firms bring on-chain products to market. The move is part of an effort to fulfil a vision to make America the "crypto capital of the planet," according to remarks made by the Chairman.

  • The directives signal a potential shift toward enabling registered entities, such as custodians and intermediaries, to transact with on-chain software systems and administer their own on-chain financial systems. Chairman Atkins stated he has asked staff to explore whether "further guidance or rulemaking may be helpful" and to consider rule amendments to provide "needed accommodation" for these activities.

  • A key proposal under consideration is a "conditional exemptive relief framework" intended to allow market participants to launch new products and services more expeditiously. The Chairman also stressed the need to move beyond staff-level clarifications on activities like staking and establish a "duly promulgated rule with the force of law."

CME pilots tokenised payments on Google Cloud

  • Under the Hood: CME Group is piloting solutions for wholesale payments and tokenisation on the Google Cloud universal ledger, an initiative with which CEO Terry Duffy is personally involved. The goal is to create marketplace efficiencies and eliminate friction, with Duffy noting, "I need to take a dollar, make it look like $5 and take the risk to 75¢."

  • Why it matters: The initiative is directly linked to the developing framework for stablecoins, which Duffy believes must be "done right the first time" to avoid setting the industry back. He described discussions with the House Financial Services Committee chair, highlighting the regulatory and systemic importance of correctly implementing such new infrastructure.

  • On the Radar: CME's approach to this new technology will be cautious and deliberate, with Duffy stating, "like Bitcoin, I will not rush into it. I will do it properly." He also signalled a preference for a market structure where systemically important banks and financial institutions are the primary issuers of stablecoins.

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