Global Custody Pro - 27 June 2025

In partnership with

📰 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.

Table of Contents

• 🌏 Global Custody News

  • ISDA, SIFMA seek US Stress Capital Buffer reforms

  • ASIC names expert panel for ASX group inquiry

  • Eurosystem proposes 2030 roadmap for post-trade ha …

  • China, Hong Kong IRD Markets Post Significant 2024 …

  • ESMA Issues Guidance on CCP Resolution Cash Calls

• 🚀 Digital Asset News

  • ESMA recommends a permanent DLT framework

  • BIS outlines a tokenised unified ledger for the fu …

  • Kraken Secures MiCA Licence from Central Bank of I …

🌏 Global Custody News

ISDA, SIFMA seek US Stress Capital Buffer reforms

• Driving the news: ISDA and SIFMA submitted a comment letter to the Federal Reserve Board acknowledging its proposal to reduce Stress Capital Buffer (SCB) volatility. However, they argued that it failed to fix more fundamental problems. The associations contend the proposal does not address "implausibility of the supervisory stress scenarios and the overlap with the risk-based capital framework."

• The letter states that the combination of excessive volatility and miscalibration of the SCB relative to actual risks constrains the capacity of large banking organisations to intermediate US capital markets and support economic growth.

• The associations propose broader reforms, including adopting an asymmetric averaging approach for SCB determination, removing the dividend add-on component from stress tests, and overhauling the framework to make it conceptually consistent with post-crisis reforms.

ASIC names expert panel for ASX group inquiry

• Driving the news: The Australian Securities and Investments Commission (ASIC) has appointed Rob Whitfield as Chair, alongside Christine Holman and Guy Debelle, to an expert panel for its inquiry into the ASX Group. The inquiry will focus on the frameworks and practices for governance, capability, and risk management.

• The panel is tasked with making recommendations to address any identified shortcomings in ASX's governance and risk management. The inquiry stems from ongoing concerns shared between ASIC and the Reserve Bank of Australia regarding ASX's ability to maintain stable and resilient critical market infrastructure.

• A report from the inquiry panel will be provided to ASIC by 31 March 2026. ASIC states it will make the report public, and the findings will "inform the next steps ASIC may take."

Eurosystem proposes 2030 roadmap for post-trade harmonisation

• Driving the news: In a recent ECB Economic Bulletin article, the Eurosystem has detailed a roadmap to implement a single European rulebook to harmonise the continent's fragmented securities post-trading landscape, with an initial focus on collateral management and asset servicing.

• The initiative seeks to eliminate national operational barriers, which currently confine over 95% of securities settlement volumes within individual Central Securities Depositories (CSDs), by mandating unified business processes and the ISO 20022 messaging standard.

• A phased migration strategy has been proposed, commencing with the Eurosystem Collateral Management System (ECMS) in June 2025. CSD participants will adopt harmonised interactions by the end of 2028, with an aspirational completion deadline for all parties no later than 2030.

China, Hong Kong IRD Markets Post Significant 2024 Growth

• The big picture: Mainland China's renminbi (RMB) interest rate derivatives (IRD) market grew 47.2% since 2022 to reach $4.5 trillion in traded notional in 2024. Concurrently, Hong Kong's broader IRD market rebounded to $117.9 trillion, with RMB-denominated IRD notional hitting $12.0 trillion.

• Growth in mainland China was driven by the Futures and Derivatives Law, which enhanced close-out netting recognition, and the launch of Swap Connect, which provides international investors access to the onshore market. In Hong Kong, a market-wide shift to overnight index swaps (OIS) now accounts for a large portion of traded notional, influenced by the global IBOR transition.

• ISDA’s report states that regulatory milestones and expanded offshore access have positioned the onshore Chinese market for its "next phase of growth". This market remains concentrated in short-term contracts (under one year) referencing the FR007 rate, accounting for two-thirds of activity.

ESMA Issues Guidance on CCP Resolution Cash Calls

• Go deeper: The European Securities and Markets Authority (ESMA) has issued a non-binding CCP resolution briefing to provide National Resolution Authorities (NRAs) with a methodology for operationalising resolution cash calls for central counterparties (CCPs). The guidance details data access and calibration procedures, impact assessment, and implementation, aiming to foster a common approach among authorities when drawing up resolution plans under the CCP Recovery and Resolution Regulation (CCPRRR).

• The briefing outlines a framework for NRAs to assess the potential impact of a resolution cash call on non-defaulting clearing members and the financial stability of Member States. This includes assessing the effect on members' capital and liquidity ratios, such as the CET1 and LCR, and considering contagion risks. The implementation process assumes the CCP executes the cash call, leveraging its existing processes where possible.

• ESMA states the approach could be refined as authorities gain more experience in resolution planning. A more structured framework for impact assessment may be considered in the future. The briefing also notes that NRAs may require their CCPs to improve operational capabilities to shorten implementation timeframes and ensure a swifter resolution process.

Sponsored Content:

Stay up-to-date with AI

The Rundown is the most trusted AI newsletter in the world, with 1,000,000+ readers and exclusive interviews with AI leaders like Mark Zuckerberg, Demis Hassibis, Mustafa Suleyman, and more.

Their expert research team spends all day learning what’s new in AI and talking with industry experts, then distills the most important developments into one free email every morning.

Plus, complete the quiz after signing up and they’ll recommend the best AI tools, guides, and courses – tailored to your needs.

Sign up to start learning.

🚀 Digital Asset News

ESMA recommends a permanent DLT framework

• Why it matters: The European Securities and Markets Authority (ESMA) has advised the European Commission to make the Distributed Ledger Technology (DLT) Pilot Regime permanent. In a new report, ESMA concludes that while uptake is limited, the regime has successfully fostered experimentation, justifying its continuation with amended rules to enhance its attractiveness and functionality.

• The big picture: The report identifies significant operational and legal frictions hindering wider adoption, including a lack of interoperability and access to central bank money for settlement. For custodians and market infrastructures, these critical hurdles must be addressed for DLT-based systems to scale effectively.

• On the Radar: ESMA recommends recalibrating the current participation thresholds and clarifying the long-term regulatory status of the DLT regime. This signals a move towards a more flexible and enduring framework, with ESMA prepared to support the European Commission in developing the necessary legislative amendments.

BIS outlines a tokenised unified ledger for the future

• Why it matters: The Bank for International Settlements (BIS) proposes that tokenisation on a "unified ledger" – integrating central bank reserves, commercial bank money, and government bonds – can create the next-generation monetary and financial system.

• The report states that tokenisation can improve current systems by integrating messaging, reconciliation, and asset transfers into a single operation to resolve inefficiencies in cross-border payments and capital markets.

• The BIS asserts that central banks must lead this transformation by articulating a vision, establishing regulatory frameworks, providing foundational assets like tokenised reserves, and fostering public-private partnerships.

Kraken Secures MiCA Licence from Central Bank of Ireland

• Why it matters: Kraken has been granted a Markets in Crypto-Assets Regulation (MiCA) licence by the Central Bank of Ireland, enabling the platform to scale its regulated services and marketing activities across the European Economic Area under a unified passporting framework.

• The licence, combined with the group's existing MiFID and EMI licences, is positioned to support growth across its retail, professional, and institutional client segments in spot trading, derivatives, and payments, while providing clients with consistent EU-wide regulatory standards.

• Kraken stated it will continue to invest in localised European experiences, partnerships, and talent as it enters its "next phase of European expansion," which includes integrating recent acquisitions and a partnership with Mastercard for crypto spending.

© Global Custody Pro. Published by Digital Content Operations LLC. All Rights Reserved.