Global Custody Pro - 19 September 2025

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Welcome to Global Custody Pro, read by custody professionals like you. 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.

Table of Contents

• 🌏 Global Custody News

  • CFTC Approves U.S. Access to Yen Swaps

  • Northern Trust Names Asset Servicing Product Head

  • ISDA Outlines Treasury Clearing, Basel III Priorit …

  • JTC Reports 17% Revenue Growth Amid Takeover Inter …

  • Firms Embrace Self-Clearing Amid Margin Pressures

  • State Street Adds Ex-Scotiabank CEO Porter to Boar …

• 🚀 Digital Asset News

  • Hex Trust Adds stETH Custody and Staking

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🌏 Global Custody News

CFTC Approves U.S. Access to Yen Swaps

Japan Securities Clearing Corporation announced it received an amended exemption order from the U.S. Commodity Futures Trading Commission on September 12, 2025, expanding its JPY interest rate swap clearing services to U.S. customers. The exemptive relief allows JSCC to offer clearing services without registering as a Derivatives Clearing Organization and exempts its clearing members from FCM or CTA registration requirements under certain conditions.

The approval comes with specific requirements for clearing members serving U.S. customers. These include limiting services to eligible contract participants, prohibiting FCM-registered or U.S.-incorporated entities from directly clearing, requiring clearing members to be affiliates of registered FCMs, and mandating detailed disclosures about bankruptcy protections under Japanese versus U.S. law. JSCC must also ensure proper custody of U.S. customer funds according to Japanese regulations.

The regulatory approval positions JSCC to capture increased demand from U.S. institutional investors seeking to hedge yen rate risks in what the company describes as the deepest liquidity pool for JPY interest rate swaps. JSCC has previously obtained authorizations in Europe, Australia, Hong Kong, Switzerland, and Canada, and plans to enhance its risk management practices while collaborating with trading facilities and third-party vendors to expand the yen derivative ecosystem.

Northern Trust Names Asset Servicing Product Head

Northern Trust announced the appointment of Jessica Donohue as head of Product Management for Asset Servicing, where she will lead a global team delivering custody, administration, fiduciary and data solutions for institutional clients. Donohue will report directly to Asset Servicing President Teresa Parker and oversee strategy to ensure products align with the company's growth priorities.

Donohue joins from State Street, where she spent nearly 25 years in senior leadership positions. Her most recent roles included global head for the Asset Owner segment and head of Global Investment Insights, Sustainability and Impact. She also held senior global positions in innovation, advisory and information solutions, and served as head of performance and analytics for institutional and asset manager clients.

The appointment comes as Northern Trust continues to expand its asset servicing business, which offers solutions ranging from alternative asset services to banking, liquidity, capital markets, and retirement solutions. The company currently serves nearly 3,000 institutional clients across 53 countries, with assets under custody/administration totalling US$18.1 trillion and assets under management of US$1.7 trillion as of 30 June 2025.

ISDA Outlines Treasury Clearing, Basel III Priorities

ISDA CEO Scott O'Malia outlined critical implementation challenges facing the derivatives market at the ISDA Trading and Treasury Forum in London, emphasising the tight timeline for US Treasury clearing mandates and fragmented Basel III implementation across jurisdictions. O'Malia warned that firms have just over 15 months to prepare for mandatory clearing of certain cash Treasury transactions, with thousands of counterparties needing documentation and netting opinions across multiple jurisdictions.

The industry faces significant capital headwinds as Treasury clearing approaches, with ISDA analysis showing that proposed Basel III endgame rules combined with G-SIB surcharges would increase capital requirements for client clearing by more than 80%. O'Malia highlighted three specific issues requiring urgent regulatory attention: the enhanced supplementary leverage ratio acting as a binding constraint, inadequate recognition of cross-product netting benefits under SA-CCR, and the economic viability of client clearing services under proposed capital rules.

Looking ahead, O'Malia warned that divergent Basel III implementation timelines between the EU (2027), UK (potentially 2028 for internal models), and uncertain US timing create operational complexity for globally active banks. He emphasised that completing these reforms with appropriate risk-sensitive calibration while maintaining cross-border consistency would be critical for market resilience as thousands of firms prepare to meet Treasury clearing obligations.

JTC Reports 17% Revenue Growth Amid Takeover Interest

JTC PLC delivered strong first-half results with revenue growth of 17.3% to £172.6 million and underlying EBITDA up 15.1% to £56.5 million, CEO Nigel Le Quesne told investors during the interim results presentation. The trust and fund services provider achieved net organic growth of 11%, exceeding its guidance, with the Private Client Services division delivering standout performance at 14.5% organic growth.

The company's acquisition strategy is advancing with the Citi Trust deal completed on July 1 and the Kleinwort Hambros Trust Company acquisition expected to close in Q4 2025. Management expressed confidence that the Citi Trust business will achieve margins of "30% plus by the end of 2026," accelerating from previous estimates. The U.S. market now represents 31% of global revenues, up from 4% at IPO, with this expected to reach 35% following the Citi Trust integration.

Looking ahead, management maintained confidence in doubling the business size by 2027 under its Cosmos Era plan, supported by a record new business pipeline of £60 million. The company disclosed it is in takeover discussions with private equity firms Permira and Warburg Pincus, though management remained restricted in their comments. CFO Martin Fotheringham noted leverage would exceed 2x by year-end due to acquisitions but remain below the 2.5x peak, with rapid deleveraging expected through 2026.

Firms Embrace Self-Clearing Amid Margin Pressures

A new study by Acuiti and FIS reveals that proprietary trading firms and hedge funds are increasingly taking control of their clearing and margin operations, with 69% of surveyed firms reporting they have assumed greater responsibility for margin calculation and payment processes over the past five years. The research, which surveyed 64 hedge funds, asset managers and proprietary trading firms active in derivatives markets, found that margin optimisation has become a critical operational consideration influencing where 74% of firms choose to trade.

The trend toward self-clearing is gaining significant traction, with 12% of respondents having already become individual clearing members of exchanges, while an additional 10% are actively exploring the option and 34% remain open to considering it in the future. Major proprietary trading firms including Citadel Securities, DRW, Jump Trading, Optiver, Eagle Market Makers and Gelber Group have secured CME memberships, while FICC's government securities division hosts several proprietary firms and hedge fund Millennium's subsidiary MFI Funding.

The incoming SEC mandate for US Treasury cash and repo clearing appears to be a major catalyst, with 75% of firms considering or holding clearing memberships identifying the Treasury clearing mandate and related cross-margining schemes as either very important or central to their decision. Survey respondents increasingly favour third-party vendor solutions over in-house development for building clearing technology stacks, with 94% of firms starting to build clearing capabilities open to outsourcing operations on a business-process-as-a-service basis to reduce operational complexity.

State Street Adds Ex-Scotiabank CEO Porter to Board

State Street announced the election of Brian Porter, 67, former President and CEO of The Bank of Nova Scotia (Scotiabank), to its Board of Directors. Porter brings more than forty years of banking experience, including expertise in international banking, risk management, corporate banking and capital markets.

During his tenure as CEO of Scotiabank, Porter led the bank through significant growth and global expansion that positioned it as Canada's third-largest bank by assets, with total revenues approaching CAD 32.3 billion in his final year. He previously served as Group Head of International Banking, managing operations in over 50 countries, and held various leadership roles including Chief Risk Officer.

Ron O'Hanley, chairman and CEO of State Street, praised Porter's "extensive experience in global markets with a strong focus on clients and a track record of innovative leadership." Porter currently serves on the boards of Emera and Fairfax Financial and holds a Bachelor of Commerce from Dalhousie University.

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🚀 Digital Asset News

Hex Trust Adds stETH Custody and Staking

Hex Trust, a digital assets financial service provider, has integrated custody and staking support for stETH, Ethereum's largest liquid staking token issued via the Lido protocol, the company announced on 17 September. The integration enables institutional clients to access staking rewards and liquidity through Hex Trust's platform while maintaining secure custody.

The solution addresses institutional adoption barriers by combining custody and staking in a single platform with one-click functionality and no minimum requirements. Calvin Shen, Chief Commercial Officer at Hex Trust, said the solution provides "a secure custody platform that enables a seamless one-click staking experience" eliminating operational friction and counterparty risks. Kean Gilbert, Head of Institutional Relations at the Lido Ecosystem Foundation, noted this extends institutional access to stETH in a way that balances security, scale and liquidity.

The integration is now live on the Hex Trust platform, with clients able to stake ETH and mint stETH directly, access flexible staking without minimums, and utilise stETH across the DeFi ecosystem. The development positions staking as a core component of institutional digital asset strategies as infrastructure providers build bridges for institutional capital.

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