Global Custody Pro - 28 May 2025

ISS Shareholder Proposals, Euroclear Bank Joins LCH RepoClear, BCBS, and more

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Global Custody Pro
May 27, 2025 • Reading Time: 7 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

This week, there is a sense that market volatility will not abate for the next few years. However, regulatory action in the US and EU might impact global custody banks.

The delay of US 50% tariffs on the EU for one more month buys some time, but what will be given up in negotiations? Big tech lobbyists in the Trump Administration will push to roll back EU regulatory “impositions” on US firms.

I’ll watch for any further movements on trade-related regulatory concessions that could lead to services-related concessions. This volatility is endless, and the lasting financial stability issues will take time to resolve.

Table of Contents

🌏 Global Custody News

ISS: Shareholder Proposals Fall, CEO Pay Climbs

  • Driving the news: According to ISS-Corporate, the US shareholder proposal landscape has "drastically changed" this proxy season, with total submissions and proposals voted on decreasing "drastically". In contrast, omitted proposals have risen to approximately 25 per cent. Governance-related resolutions continue to be the most prevalent type on the ballot.

  • The sharp increase in omitted proposals to about 25 per cent is "likely as a result of the SEC’s Staff Legal Bulletin No. 14M (CF)," which ISS-Corporate notes "places the onus on proponents to demonstrate that the issue at hand is significant and economically relevant to the company."

  • Regarding executive compensation, while median CEO pay reached an all-time high for both S&P 500 and Russell 3000 companies, ISS-Corporate indicates Say-on-Pay support levels have slightly declined and cautions that "stock market volatility and a rapidly changing economic landscape may necessitate deviations from regular compensation programs and support may drop further in 2026."

Euroclear Bank Treasury Joins LCH RepoClear SA

  • Driving the news: LSEG announced Euroclear Bank’s Treasury division has joined LCH RepoClear SA as a clearing member, expanding its long-standing partnership with RepoClear. Euroclear Bank will be active in the service's specials and €GCPlus segments as a key cash provider.

  • The membership provides Euroclear Bank access to LCH RepoClear SA’s extensive liquidity pool, alongside netting and risk management efficiencies. Herve Foyan Djoudom, Head of Treasury and Asset and Liability Management at Euroclear Bank, commented that expanding these clearing capabilities "enables us to achieve greater capital and operational efficiencies while enhancing our risk management solutions."

  • LCH RepoClear SA views Euroclear Bank's membership as a "significant moment for the growth of the service," broadening the range of financial institutions it serves, according to Michel Semaan, Global Head of LCH RepoClear. For Euroclear Bank, this step "aligns to our strategy of promoting safety and resilience in the financial markets,” as stated by Djoudom.

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🚀 Digital Asset News

Associations Urge BCBS to Re-think Cryptoassets

  • Driving the news: A coalition of global financial and digital asset industry associations has formally requested the Basel Committee on Banking Supervision (BCBS) to initiate a further consultation on targeted revisions to the Cryptoasset Standard (SCO60) and to set a new revised implementation date. The letter, dated 16 May 2025, states this would support the objectives of the Group of Central Bank Governors and Heads of Supervision (GHOS) to preserve financial stability while promoting responsible innovation.

  • The big picture: The associations highlight concerns that uneven implementation of the Cryptoasset Standard across jurisdictions jeopardises a level playing field and could lead to market fragmentation. They argue that aspects of the standard, such as higher risk weighting for assets on permissionless ledgers, depart from technology neutrality and may impede the scaling of beneficial distributed ledger technology (DLT) use cases in traditional assets.

  • Go deeper: The letter states that the current standard could push cryptoasset activities outside the regulated banking sector, potentially leading to unintended adverse consequences for market structure and oversight, and increasing banks' indirect exposure to the cryptoasset market. The associations propose specific areas for redesign, including treating cryptoassets on public permissionless blockchains and risk weighting for Group 2b cryptoassets.

BNPP AM Tests Tokenised Money Market Fund Shares

  • Driving the news: BNP Paribas Asset Management (BNPP AM) has launched natively tokenised shares of an existing Luxembourg money market fund, testing cross-border transactions with a French counterparty. Allfunds Blockchain provides the technology, with BNP Paribas’ Securities Services acting as transfer agent and fund dealing services provider.

  • This blockchain-based system aims to enhance operational efficiency through real-time subscription and redemption information. It enables on-chain instantaneous order execution based on NAV receipt, which BNPP AM states will move away from current batch-driven processes and, in the future, is expected to enable "faster“ and more efficient settlements for clients.

  • The project is anticipated to provide "valuable insights into the distinction between digital representation of a traditional fund share and a native token," according to Paul Daly, Head of Distribution Products & Solutions, Securities Services, BNP Paribas, a step described as "an imperative step to move to more impactful benefit." BNPP AM also states that blockchain can enable the distribution of money market funds to a broader retail investor base.

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