Global Custody Pro - 24 October 2025

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📰 Welcome to the Newsletter

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. Reply to this email with feedback or connect with us on LinkedIn.

Table of Contents

• 🌏 Global Custody News

  • Northern Trust Q3 earnings rise 14%

  • ISDA backs FICC default management rule changes

• 🚀 Digital Asset News

  • FalconX Acquires Crypto ETP Provider 21shares

  • Deribit Joins Komainu Custody Platform

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🌏 Global Custody News

Northern Trust Q3 earnings rise 14%

Northern Trust reported third quarter twenty twenty five net income of $458 million and earnings per share of $2.29, with return on equity of 14.8%. The Chicago-based custody bank delivered 14% earnings per share growth compared to the prior year period excluding notable items, as revenue increased 6% supported by higher equity markets and controlled expense growth. Chairman and CEO Michael O'Grady said the results demonstrated the momentum of the company's strategic transformation.

The financial services firm expanded its pretax margin by nearly 200 basis points year over year and achieved positive operating leverage of 110 basis points in the third quarter. Trust and investment fees totaled $1.3 billion, representing 6% growth from the prior year, whilst net interest income on a fully taxable equivalent basis was $596 million. The company's expense to trust fee ratio improved 120 basis points year over year to 112%. Currency movements favourably impacted revenue growth by approximately 50 basis points and unfavorably affected expense growth by approximately 30 basis points relative to the prior year.

Northern Trust returned nearly 100% of earnings to shareholders during the quarter, contributing to 110% of earnings returned year to date and a 5% decrease in shares outstanding. The company appointed Mike Hunstad as President of Northern Trust Asset Management in September and reported notable custody wins including the $14 billion Sacramento County Employees Retirement System, a $16 billion Atlanta-based private foundation, and the $19 billion New Mexico Educational Retirement Board. Management indicated artificial intelligence deployment across more than 150 use cases is generating measurable productivity improvements and expects continued gradual margin improvement in asset servicing.

ISDA backs FICC default management rule changes

ISDA submitted comments to the Securities and Exchange Commission on 14 October 2025 supporting Fixed Income Clearing Corporation's amended proposed rule changes for default management in done-away clearing, whilst requesting three additional clarifications to ensure full enforceability of close-out netting provisions.

ISDA indicated that the proposed rules represent progress in clarifying how members can close out client done-away positions during defaults, an issue previously raised by ISDA and FIA in earlier comments. However, the association emphasised that FICC rules should explicitly state that agent clearing members are not acting in agency capacity when managing defaulting indirect participant positions, and should provide clear mechanisms for transferring positions between proprietary and omnibus accounts.

The requested clarifications are necessary to qualify client clearing agreements as master netting agreements under U.S. bank capital regulations, according to ISDA. Without explicit close-out netting rights and associated mechanisms, prudentially regulated members could face negative regulatory capital treatment that may limit or prevent their participation in done-away clearing, potentially affecting the viability of FICC's done-away offering.

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🚀 Digital Asset News

FalconX Acquires Crypto ETP Provider 21shares

FalconX, a leading institutional digital asset prime brokerage, announced it has agreed to acquire 21shares, the cryptocurrency exchange-traded product provider managing over $11 billion in assets across 55 listed products as of 30 September 2025. The company stated the transaction represents a major milestone in accelerating the convergence of listed markets and digital assets whilst strengthening its global presence across the US, Europe and Asia-Pacific.

21shares, founded in 2018 by Hany Rashwan and Ophelia Snyder, has grown into a global leader in digital asset ETPs with a proprietary technology platform underpinning its ability to bring new products to market at scale. FalconX, co-founded by Raghu Yarlagadda, has facilitated over $2 trillion in trading volume with a global client base exceeding 2,000 institutions. The acquisition follows FalconX's integration of Arbelos Markets and majority stake in Monarq Asset Management earlier in 2025, alongside expansions in Latin America, APAC and EMEA.

Following completion, 21shares will remain independently managed under the FalconX umbrella, with Russell Barlow continuing as CEO. The company stated no changes to the construction or investment objectives of existing 21shares ETPs in Europe or ETFs in the US are planned. Financial terms of the transaction were not disclosed, and the announcement did not specify an expected completion date.

Deribit Joins Komainu Custody Platform

Komainu, an institutional digital assets custodian, announced that Deribit by Coinbase, the world's largest crypto options exchange, has joined its Komainu Connect collateral management platform. The partnership enables institutional customers to conduct 24/7 trading whilst holding 100% of assets in segregated custody with Komainu, a regulated third-party custodian with operations in Jersey, London, Dubai and Singapore.

The integration allows clients to maintain assets in bankruptcy-remote segregated wallets whilst trading derivatives on Deribit's exchange, addressing institutional requirements for counterparty risk management and regulatory compliance. Komainu (Jersey) Limited is regulated by the Jersey Financial Services Commission, whilst Komainu MEA FZE operates under Dubai Virtual Assets Regulatory Authority oversight. The platform supports institutional-grade collateral assets including BUIDL tokens and Lido's staked ETH.

Paul Frost Smith, Co-CEO at Komainu, said the collaboration expands the firm's ecosystem of exchanges whilst combining regulated custody with market access. Jean-David Péquignot, Chief Commercial Officer of Deribit by Coinbase, stated the partnership provides clients with greater scale and support for off-exchange custody solutions. Deribit, a Dubai-based subsidiary of Coinbase, facilitates a significant majority of crypto options trading globally.

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