Global Custody Pro - 25 June 2025

BNY-Northern Trust rumours, CFTC, CCP Global, Web3 and more

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Global Custody Pro
June 24, 2025 • Reading Time: 11 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. An AI voice reads the audio version of this newsletter. Have feedback? Just reply to this email or connect with us on LinkedIn.

📠 Editor’s Comment

When the WSJ reported rumours about a potential merger between BNY and Northern Trust on June 22, I thought about the “everybody wants a platform” theme in global custody I’ve been writing about.

A Reuters report stated Northern Trust wants to remain independent, but combining the two would cement BNY’s position as the dominant player in global custody. It would add $16.9 trillion to its Q1 2025 AuC/A of $53.1 trillion to get $70 trillion on the platform.

When you add this to State Street’s acquisition of Mizuho’s ex-Japan global custody business, what other M&A activity might we see through the rest of 2025? The reality is that even with a lighter regulatory posture in the USA, any tie-up of this scale would present regulators with a long list of questions and concerns.

The chief executives of BNY and Northern Trust had at least one conversation, the people said, though the firms didn’t discuss a specific offer.

BNY is considering its next steps, which might include returning to Northern Trust with a formal bid. It is possible the talks won’t result in a transaction, the people cautioned.

Northern Trust has no interest in pursuing a deal with BNY, a person familiar with the company’s plans said.

Source - WSJ

Table of Contents

🌏 Global Custody News

ESMA finalises technical standards for EMIR 3 active accounts

  • Driving the news: The European Securities and Markets Authority (ESMA) has published its Final Report and draft Regulatory Technical Standards (RTS) defining the conditions for the EMIR 3 Active Account Requirement (AAR). The standards specify the operational conditions, representativeness obligations, and reporting rules for counterparties required to hold active accounts at EU central counterparties (CCPs).

  • Stated Implication: Counterparties subject to the AAR must implement functional accounts with proven IT connectivity and internal processes, and demonstrate the capacity to handle a significant shift in clearing volumes. Firms with clearing volumes over EUR 6 billion must also meet a 'representativeness obligation' by clearing a minimum number of trades across defined derivative subcategories, with the report specifying the relevant classes, maturity and trade-size buckets.

  • Stated Outlook: ESMA will submit the final draft RTS to the European Commission, which has three months to decide on its adoption. The standards will then be subject to a non-objection period by the European Parliament and the Council before entering into force.

CFTC signals focus on CCP third-party and cyber risk

  • Driving the news: CFTC Commissioner Kristin N. Johnson, in a keynote address to CCP Global, highlighted recommendations from the Market Risk Advisory Committee (MRAC) to bolster the operational resilience of derivatives clearing organisations (DCOs) by establishing a formal third-party risk management program and enhancing recovery and wind-down plans.

  • Why it matters: The proposals, prompted by events like the ION Cleared Derivatives cyberattack, directly target perceived gaps in existing regulations, specifically CFTC Rule 39.18, which does not explicitly detail third-party relationship management. The recommendations aim to align the US framework with international standards, such as the Principles for Financial Market Infrastructures (PFMI), placing greater responsibility on DCOs to oversee their critical service providers.

  • On the radar: The Commissioner expects the MRAC to continue its work on cyber resilience and third-party risk, particularly concerning emerging threats like AI-enhanced cybersecurity. While a final rule on DCO recovery and wind-down is pending, the MRAC's recommendations are positioned as a "roadmap for future engagement," signalling ongoing regulatory development.

Clearstream takes private market fund processing digital

  • Driving the news: Clearstream is launching a digital solution to streamline private market fund processing. The solution will use its DLT-based platform, FundsDLT, integrated with its Vestima fund platform. It is being introduced to selected clients before a full-scale rollout.

  • The aim is to replace traditionally manual processes to improve operational efficiency and transparency for fund providers and distributors. The system allows for consolidating multiple investor portfolios under one Clearstream account and automates the exchange of information with back-end systems.

  • According to the company, the solution is designed to unlock new distribution opportunities in wealth management by reducing costs and complexity, while extending Clearstream's ecosystem towards a B2B2C model.

US Fed Removes Reputational Risk from Key Rating Guidance

  • Driving the news: On June 23, 2025, the US Federal Reserve revised its guidelines for rating risk management at state member banks and bank holding companies by removing all references to reputational risk. The change affects the attachment to its supervisory letter SR 95-51 (SUP).

  • This revision narrows the formal criteria within the risk management rating framework. The original guidance established a specific rating for an institution's risk processes, intended to be a primary factor for examiners when rating the management of larger, more complex financial organisations.

  • The Federal Reserve states it will continue working with other banking agencies to promote appropriate revisions to the bank rating system, highlighting the importance of market risks and sound risk management processes and practices.

HKMA, PBoC launch cross-boundary payment link

  • Driving the news: The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBoC) will launch Payment Connect, directly linking the Mainland's Internet Banking Payment System and Hong Kong's Faster Payment System.

  • The initiative enables secure, real-time cross-boundary remittances using a recipient's mobile number or account number for residents and institutions. According to Eddie Yue, chief executive of the HKMA, this is intended to enhance payment efficiency, support trade and personnel exchange, and "further promote Hong Kong's position as an international financial centre and offshore Renminbi business hub. “

  • At launch, an initial group of six institutions from both the Mainland and Hong Kong will participate, with services to be rolled out gradually. The regulators state that more institutions are expected to join over time.

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🚀 Digital Asset News

Digital Asset Raises $135M to Accelerate Canton Network

  • Why it matters: Digital Asset has raised $135 million in a funding round co-led by DRW Venture Capital and Tradeweb Markets, with participation from firms including DTCC, BNP Paribas, Goldman Sachs, and Citadel Securities, to expand its Canton Network. The capital is aimed at accelerating the integration of real-world assets onto the public, permissionless Layer-1 blockchain, which features configurable privacy for institutional use.

  • The funding seeks to address what the company identifies as the primary barrier to institutional blockchain adoption: the conflict between public transparency and financial confidentiality. By allowing institutions to tailor on-chain privacy settings, the network is positioned to support compliant integration of asset classes, including bonds, repos, and money market funds.

  • According to Yuval Rooz, CEO of Digital Asset, the investment will "accelerate onboarding even more real-world assets, finally making blockchain’s transformative promise an institutional-scale reality."

Industry blueprint outlines Hong Kong Web3 finance roadmap

  • Driving the news: Hong Kong's Web3 Harbour and PwC have launched a blueprint outlining a strategy to develop the city into a Web3-enabled International Financial Centre. Based on industry consultation, the report proposes integrating blockchain and decentralised systems to bolster economic growth and innovation.

  • Under the Hood: The strategy involves tokenising private market assets, specifically private credit, physical infrastructure, and intellectual property. Its success hinges on overcoming stated legal and structural blockers, such as laws requiring physical title deeds and share registers, and establishing a robust framework for on-chain settlement using stablecoins.

  • On the Radar: The blueprint calls on regulators to provide clear implementation timelines for planned initiatives, including the proposed comprehensive virtual asset custody licensing regime. It also advocates international passporting arrangements for licensed virtual asset service providers and foreign-issued stablecoins to enhance market liquidity and global connectivity.

Fiserv to Launch FIUSD Stablecoin for Financial Institutions

  • Why it matters: Fiserv is launching a new digital asset platform and a stablecoin, FIUSD, which will be integrated into its existing infrastructure by the end of the year. The platform aims to provide its network of approximately 10,000 financial institution clients with direct access to digital assets. The firm also announced that PayPal’s “PayPal USD” (PYUSD) stablecoin would be interoperable in the future.

  • The FIUSD stablecoin is designed to be "bank-friendly," allowing financial institutions to maintain control over their customer experience. It will be delivered via an SDK that integrates into existing Fiserv platforms, utilising built-in compliance features for fraud monitoring and risk management.

  • Fiserv is exploring deposit tokens as a capital-friendly alternative for banks and is discussing expanding use cases with other partners. The company stated this is the first in a series of announcements regarding its new digital asset platform.

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