Global Custody Pro - 21 May 2025

JPMorgan’s Kinexys tops $2 T in blockchain volume, ISDA warns on Basel III, FMX debuts U.S.-Treasury futures, and more.

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Global Custody Pro
May 20, 2025 • Reading Time: 8 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

Our first story today is about JPMorgan’s Investor Day which was held on Monday. It highlights what I’ve been writing about when it comes to the importance of platforms in global custody.

Investor Days are partly marketing and partly spin - yet they offer a good opportunity to see how a custody bank is thinking about its business and technology. Last year’s Citi Services Investor Day for example was a great insight into how it thinks about its Services business units like Securities Services.

Everyone wants to build a platform - and each little piece of information we get through public disclosures and the behaviour of clients tells us what the market really thinks of the platforms executives at global custody banks are building.

The continued volatility and disruption in the markets and regulatory landscape this year might just throw up further M&A disruption and client wins or losses. I can’t wait to see where this ends up in earnings releases by Q4 as the operating environment adjusts globally.

Table of Contents

🌏 Global Custody News

JPMorgan details Kinexys' $2 trillion volume

  • Driving the news: At its Investor Day held Monday, JPMorgan Chase detailed significant scale in its digital asset and payments operations, with its Kinexys blockchain platform having processed nearly $2 trillion in transactions. The firm also reported its AI and machine learning models have cut manual transaction exceptions in its payments franchise by 50% and reduced turnaround times by 75%.

  • Why it matters: These advancements underscore JPMorgan's capacity to handle large-scale institutional flows with increasing efficiency. The bank is preparing for emerging digital financial infrastructure, stating it is "very excited about recent developments in areas like tokenised assets" and is "ready to capture these opportunities" via Kinexys, a stance supported by CEO Jamie Dimon, who added, "If it’s a technology [blockchain] we can use, we’re going to use it."

  • The big picture: JPMorgan's Securities Services unit, which achieved over $5 billion in 2024 revenue (its fifth straight record year) and holds a 10.7% market share with over $35 trillion in assets under custody, is similarly focused on tech-driven efficiency. The bank highlighted a 11% reduction in per-transaction costs and a 32% operating margin for the division, stating its "Fusion platform... opens up incredible potential for AI to further drive value" as part of its strategy where "technology and scale are critical to being an end-game winner."

Source: JPMorgan Chase

ISDA Chair Urges Basel Shift Amid Clearing Concerns

  • Driving the news: ISDA Chair Jeroen Krens, at the 15 May 2025 ISDA Annual General Meeting in Amsterdam, voiced significant concerns regarding proposed Basel III market risk rules, particularly the US "endgame" proposals and G-SIB surcharge, stating these "would increase capital for US G-SIB client clearing businesses by more than 80%."

  • These capital increases, which Krens indicated are not aligned with risk, reportedly threaten the economic viability of client clearing, especially as US Treasury clearing mandates approach. They could also broadly reduce bank intermediation capacity, potentially leading to diminished market liquidity, reduced competition, and increased costs for end-users accessing derivatives markets.

  • ISDA is advocating for the recalibration of US rules and modifications to the Supplementary Leverage Ratio. The association also supports a delayed European Union FRTB implementation with targeted fixes and promotes its digital solutions, including ISDA Create, ISDA SIMM, and Digital Regulatory Reporting (DRR), to enhance market efficiency and simplify regulatory compliance.

FMX Exchange Launches U.S. Treasury Futures

  • Driving the news: BGC Group's FMX Futures Exchange, supported by ten global investment banks and market-making firms, launched U.S. Treasury futures on May 18, 2025, commencing with 2-year and 5-year contracts. This follows the Exchange's introduction of SOFR futures in September 2024.

  • The introduction of U.S. Treasury futures on the platform provides an important capability for global institutional trading clients, including leading banks and investment firms. The Exchange expects to provide these clients with significant capital savings through its clearing partnership with LCH Limited, a CFTC-approved Derivatives Clearing Organization.

  • This launch broadens FMX Holdings' offerings, which the press release describes as including the "world's fastest growing cash U.S. Treasuries marketplace" and "a rapidly growing spot Foreign Exchange platform," signalling an expansion of its market infrastructure.

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🚀 Digital Asset News

Standard Chartered Targets Digital Assets

  • Driving the news: Standard Chartered's Financing and Security Services (FSS) is "doubling down on investments to accelerate digitization and expand our product capabilities, including for digital assets as we seek to grow our client base," according to Margaret Harwood-Jones, Head of FSS, speaking at a CIB Investor Day held by the bank on May 15th.

  • The big picture: The strategy significantly targets financial institutional (FI) clients, as "Most FSS income is from the FI segment," which supports CIB's wider ambition to increase FI income contribution, Harwood-Jones said. This focus is complemented by initiatives to build competitive differentiation, particularly in digital assets, demonstrated by the bank supporting Asia Pacific's first tokenised retail fund with China AMC and partnering with Brevan Howard Digital.

  • Go deeper: Standard Chartered aspires "to be a leader in the digital asset space and a leading digital asset custodian," Harwood-Jones stated. She also indicated the bank believes digital asset adoption is inevitable and is actively pursuing digital custody licences in Hong Kong and Singapore, following recent crypto and stablecoin custody launches in the UAE and Luxembourg. According to the CIB Investor Day presentation, the business unit earned income of $611 million, had $1.8 trillion in AuC/A and average custody deposits of $11 billion at the end of 2024.

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