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Global Custody Pro - 16 May 2025

Global Custody Pro - 16 May 2025

Deep dives on Euroclear, Euronext, Macquarie & digital-asset rails

Global Custody Pro
May 15, 2025 • Reading Time: 10 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. The audio version of this newsletter is read by an AI voice. Have feedback? Just reply to this email or connect with us on LinkedIn.

📠 Editor’s Comment

In a LinkedIn post about Deutsche Börse's AGM on Wednesday, CEO Stephan Leithner described his 16,000 employees as "capital markets engineers". I love that phrase. It perfectly captures what a business this complex yet crucial to financial markets must achieve within its operational boundaries.

It's tackling a sophisticated engineering challenge – delivering what customers need at a profitable level of quality and safety while navigating a maze of regulatory requirements across countless jurisdictions and managing a sprawling network of sub-custodians and correspondent banks.

The global custody industry battles massive challenges from accurate asset servicing to meeting ballooning regulatory demands. Tech investments must ramp up across the board if the industry is to genuinely embrace this "capital markets engineering" mindset.

I think the massive platform investments at global custody banks will demand far more "cost engineering" in this emerging AI landscape. Clients will expect more for less as they streamline their own operations – this industry needs to shift gears quickly to keep pace.

📠 Editor’s Comment
🌏 Global Custody News
🚀 Digital Asset News

🌏 Global Custody News

Euroclear Q1: Business Income Rises 10%

Driving the news: Euroclear reported record Q1 2025 underlying business income of €466 million, a 10% year-on-year increase driven by strong fixed income issuance, equity quotations, and settlement activity. This performance, which improved the business income operating margin to 27.1%, offset an anticipated 10% decline in interest income to €255 million amidst falling rates.
Why it matters: These results showcase "the strength of our diversified, resilient business model," according to Valérie Urbain, Chief Executive Officer, with assets under custody surpassing €41 trillion and turnover increasing 23% compared to Q1 2024. Euroclear affirmed its systems "continue to perform highly efficiently and securely during periods of elevated trading volumes."
Go deeper: Strategic initiatives include acquiring 49% of Inversis to expand its European funds offering, opening a new Singapore branch, and launching a US Treasury DVP repo service. A seven-year Microsoft partnership aims to "transform Euroclear clients’ experience and drive new opportunities for business growth." Concurrently, Euroclear detailed €1.47 billion in Q1 interest from Russian sanctioned assets, provisioned €944 million for an EU windfall levy, and noted ongoing Russian legal challenges with a "high" probability of unfavourable rulings.

Euronext Q1 Growth Bolstered By Non-Volume Fees

Why it matters: Euronext reported a 14.1% year-on-year increase in Q1 2025 revenue and income to €458.5 million, with non-volume-related activities contributing 57% of this total. Securities Services revenue reached €83.4 million, up 6.8%, reflecting underlying strength in custody and settlement operations.
The growth in Securities Services was primarily driven by an increase in Assets under Custody to €7.1 trillion and dynamic settlement instructions. Additionally, Net Treasury Income significantly rose by 58.8% to €18.6 million, benefiting from the Euronext Clearing expansion and the internalisation of treasury income following a derivatives clearing migration.
Euronext's performance signals a continued strategic emphasis on diversifying revenue, with acquisitions like Acupay supporting double-digit growth in value-added services within the post-trade segment. The successful internalisation of clearing-related income further underscores this focus.

ASIC Alleges Failures At Macquarie Securities

Driving the news: The Australian Securities and Investments Commission (ASIC) has commenced legal proceedings in the Supreme Court of New South Wales against Macquarie Securities (Australia) Limited (MSAL), alleging numerous and significant breaches of short sale reporting obligations and regulatory data reporting duties over an extended period.
The alleged failures, spanning from as early as December 2009 to February 2024 for short sale reporting issues and from November 2022 to March 2023 for specific AFSL number reporting issues, are attributed by ASIC to deficiencies in MSAL's systems, processes, and controls, including inadequate IT logic, change management, and testing procedures. These issues led to the alleged submission of inaccurate reports and alleged failure to report correct data to market operators.
ASIC's statement of claim indicates that MSAL had previously reported historical incidents relating to its short sale reporting to ASIC in 2015 and 2019, and had received a Market Disciplinary Panel infringement notice in 2019 for incorrect or omitted regulatory data in orders and trade reports between 2014 and 2018. MSAL has since implemented additional controls to address the identified issues.

ISDA Emphasises Standards at 40th AGM

Why it matters: At its 40th Annual General Meeting, the International Swaps and Derivatives Association (ISDA) highlighted its enduring commitment to establishing robust legal and digital standards to enhance efficiency and reduce risk in derivatives markets, announcing the upcoming launch of its ISDA Notices Hub in July.
The explicit aim of ISDA's standardisation initiatives, including the Digital Regulatory Reporting (DRR) and the Common Domain Model (CDM), is to transform manual processes, thereby delivering cost efficiencies and reducing risk for market participants, as stated by CEO Scott O’Malia.
ISDA intends to leverage the CDM to accelerate the derivatives markets towards an end-to-end digital solution, facilitating the application of artificial intelligence and tokenisation to processes like document analysis and collateral delivery, while also continuing to advocate for risk-sensitive and consistent regulatory frameworks, including proposed adjustments to US capital rules impacting Treasury clearing.

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🚀 Digital Asset News

Broadridge DLR Volume Climbs Past $100B Daily

Driving the news: Speaking at a JPMorgan event, Broadridge CEO Tim Gokey clarified that recently lowered closed sales guidance stems from client decision delays due to macro uncertainty, not deal cancellations. He stated this is "really not material in terms of our near term growth and I think not in our long term growth either," and reaffirmed the company's expectation to meet its three-year financial goals (7-9% recurring revenue growth, 8-12% adjusted earnings growth) by June 2026.
Go deeper: Broadridge's Distributed Ledger Repo (DLR) platform now processes daily volumes exceeding "$100,000,000,000 a day," indicating significant market adoption. This DLR success is a key component of Broadridge's strategy to innovate in capital markets via tokenised securities, a development Gokey anticipates will scale over "a ten year thing."
Why it matters: Broadridge is integrating Artificial Intelligence (AI) throughout its product suite and internal operations to enhance platform value and develop new data analytics offerings from its unique market data. A core internal AI focus is achieving substantial cost reductions, with Gokey mentioning an internal goal to "take half of the cost of that [BPO operations] over the next three to five years" by applying AI.

Coinbase Anticipates Tailwinds to Boost Demand

Driving the news: Speaking at the same JPMorgan event, following their company's recent inclusion in the S&P 500, Coinbase executives expressed optimism for US crypto legislative progress, predicting stablecoin and market structure bills could "unleash a lot more demand," as stated by President and COO Emily Choi. She noted the ecosystem has been "hampered" by "regulation by enforcement."
Why it matters: Coinbase anticipates clearer regulations will foster "new startups and innovation" by allowing entities to "build without fear of enforcement," according to CFO Alesia Haas. Key aspects of the market structure bill include establishing CFTC spot authority and defining digital securities versus commodities, which Choi said will provide "clear rules of the road."
Go deeper: Enactment of such legislation is seen as crucial for the US to maintain dollar dominance and crypto innovation, with Coinbase actively lobbying for these changes. Choi stated that clear rules would allow companies "to just operate freely and to be able to ship things more quickly," which would also support the rollout of new offerings, such as potential US derivatives products following acquisitions like Derabit.

FalconX, Standard Chartered Partner Up

Driving the news: FalconX, an institutional digital asset prime broker, and Standard Chartered, an international banking group, have announced a strategic partnership. In its first phase, Standard Chartered will provide FalconX with comprehensive banking services globally.
This collaboration will enable FalconX to integrate Standard Chartered's banking infrastructure and access its extensive range of currency pairs, a development stated in the release to enhance the speed, scale, and reliability of cross-border settlement for FalconX's institutional clients.
The partnership is anticipated to broaden beyond initial banking services, with plans to encompass additional products and services for institutional clients, including asset managers, hedge funds, token issuers, and payment platforms, as outlined in the announcement.