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Global Custody Pro - 2 July 2025

Global Custody Pro - 2 July 2025

EU T+1 roadmap, Japan custody attention, BNP Paribas–HSBC deal, plus Circle’s trust-bank play

Global Custody Pro
July 01, 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 a stint 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.

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🚀 Digital Asset News

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EU Industry Committee Publishes Roadmap for T+1

Driving the news: The EU T+1 Industry Committee released its high-level roadmap on June 30, 2025, outlining recommendations for the financial services industry's transition to a T+1 settlement cycle by the agreed-upon implementation date of October 11, 2027. The report provides a framework of actionable recommendations intended to guide stakeholders through the necessary operational, technological, and regulatory changes.
The roadmap establishes a standardised operational timetable featuring key deadlines, including a 23:00 CET target for completing allocations and confirmations on trade date and a harmonised 16:00 CET DvP cut-off on T+1. The document states that increased automation and standardisation are imperative for all post-trade stages to manage the significantly compressed timeline.
The Committee plans to establish expert task forces to develop EU market standards for Standard Settlement Instructions (SSIs), partial settlement, and a "gold standard" format for settlement instructions. Further analysis is planned for a potential extension of the DvP cut-off to 17:00, with a review scheduled for Q3-Q4 2025.

Japan FSA notes importance of foreign bank custody services

Source: FSA - equity trading value and bond trading value of foreign securities firms in Japan

Why it matters: Japan's Financial Services Agency (FSA) noted in a regulatory report monitoring foreign bank branches and foreign securities firms, that, against a backdrop of corporate governance reforms and interest rate changes, overseas institutional investors are actively investing in Japanese stocks and bonds, thereby increasing the importance of custody services provided by foreign banks in Japan.
The Japanese entities of some US and European banks act as sub-custodians, entrusted by global custodians to provide custody services for Japanese stocks and bonds. These services include the safe custody and settlement of securities, as well as the receipt of interest and dividends.
The FSA has stated its intention to deepen its understanding of custody services at each Japanese entity and to monitor their operational risk management framework. The agency also expects entities to continue efforts to ensure the effectiveness of the three lines of defence model.

Proposed eSLR changes to benefit custody bank models

Client Lens: The proposed recalibration of the enhanced supplementary leverage ratio (eSLR) is designed to reduce disincentives for GSIBs to engage in low-risk, balance-sheet-intensive activities. This directly addresses the business models of large custody and asset servicing banks, which were previously identified to SLR modifications for firms "predominantly engaged in custody, safekeeping, and asset servicing activities", but applies to all GSIBs.
The proposal aims to make the eSLR a backstop rather than a regularly binding constraint. This is intended to create "significant balance sheet capacity" for GSIBs to expand low-risk activities, including U.S. Treasury market intermediation, where they act as custodians and market makers.
By creating a more durable framework, the agencies aim to "reduce the need for temporary adjustments" like the 2020 exclusion of central bank deposits and Treasuries from the SLR denominator. The change is intended to enhance the functioning of the U.S. Treasury market, where GSIB broker-dealers and depository subsidiaries play a key role.

BNP Paribas names new Head of Securities Services

Key Move: Claudine Gallagher will be appointed Head of Securities Services globally, effective 1 January 2026. Patrick Colle will transition to the role of Executive Chairman of Securities Services while retaining his position as Chairman of Financial Institutions Coverage. Gallagher will report to Colle.
The appointment positions Gallagher to "lead the next chapter" of the business's development by leveraging the bank's integrated model to expand its institutional client franchise, according to Yann Gérardin, Chief Operating Officer and Head of Corporate & Institutional Banking.
As Executive Chairman, Colle's stated role will be to support Gallagher as she transitions into her new leadership position, ensuring continuity for the business unit.

RBA releases draft guidance on CS facility resolution regime

Driving the news: The Reserve Bank of Australia (RBA) has released a consultation paper on draft guidance for its new resolution regime for domestic clearing and settlement (CS) facilities. The guidance follows the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, which granted the RBA crisis resolution powers. Submissions on the draft are invited until 11 August 2025.
The big picture: The guidance aims to provide transparency on how the RBA would exercise its powers, which include resolution directions, the appointment of a statutory manager, and transfer powers. The use of these powers is positioned as an option of last resort, expected only when a CS facility's own recovery arrangements have failed or their use would threaten the stability of the Australian financial system.
On the Radar: The RBA has stated it does not expect to use loss allocation tools not already included in a CS facility's rules, such as initial margin haircutting. However, it does not rule out considering such tools in the future, noting their introduction would be subject to consultation. Following the current consultation, the RBA will publish the finalised guidance.

BNP Paribas to acquire HSBC's German custody business

Driving the news: BNP Paribas’s Securities Services business has agreed to acquire the custody and depositary bank business of HSBC Continental Europe S.A. in Germany, subject to regulatory approval. The transaction is intended to strengthen BNP Paribas' position in the German market, specifically within the institutional funds and financial intermediaries segments.
The acquisition will expand BNP Paribas’ client franchise by broadening its product and service offerings for insurance companies in Germany. It will also see the custody business staff from HSBC in Germany transfer to BNP Paribas.
A phased client migration is expected to commence in early 2026 as part of the implementation of the agreement.

SSGA Rebrands as State Street Investment Management

Driving the news: State Street Global Advisors has changed its brand name to State Street Investment Management to reflect its growth, strategic ambition, and commitment to product innovation for its global client base.
The rebranding places a stronger focus on the firm's "One State Street" approach, which aims to enhance collaboration across State Street Corporation and expand offerings for investors.
According to Yie-Hsin Hung, President and Chief Executive Officer, the new brand underscores the firm's mission of "investing in our clients as they invest in the markets, delivering tailored solutions, and prioritising partnerships."

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🚀 Digital Asset News

Circle Seeks US National Trust Bank Charter from OCC

Driving the news: Circle Internet Group has applied to the U.S. Office of the Comptroller of the Currency (OCC) to form a national trust bank, to be named First National Digital Currency Bank, N.A.
The stated purpose of the federally regulated trust is to oversee the USDC Reserve's management, strengthen USDC's infrastructure, and provide digital asset custody services for institutional clients.
Circle states that a national trust charter would help the firm meet anticipated requirements under the proposed GENIUS Act and align with emerging U.S. regulations for payment stablecoins.

CACEIS Bank secures MiCA authorisation for crypto assets

Driving the news: CACEIS Bank received authorisation from France’s banking regulator, ACPR, and financial regulator, AMF, to provide crypto-asset services under the Markets in Crypto-Assets (MiCA) regulation, covering custody, administration, order handling, and transfers for third parties.
The authorisation provides CACEIS Bank with a European passport to deliver its crypto-asset services across all European Union countries. The bank states the move enhances its value proposition by allowing clients to integrate digital and traditional financial instruments within a single portfolio.
According to Laurent Majchrzak, Group Head of Digital Assets, the MiCA authorisation "strengthens our position as a trusted third party, supporting the transformation of financial markets."

Hong Kong proposes licensing for VA dealers and custodians

Regulatory Beat: The Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) have launched a joint consultation to establish regulatory regimes for virtual asset (VA) dealing and custodian service providers in Hong Kong.
The proposals would grant the SFC authority to license, supervise, and enforce regulations for VA dealers and custodians, aiming to protect investors and ensure market integrity under the principle of “same business, same risks, same rules.”
According to the Secretary for Financial Services and the Treasury, Mr Christopher Hui, the licensing regimes are intended to "lay a solid ground for us to establish a comprehensive regulatory framework for digital assets with investor and customer protection at its core foundation."