Global Custody Pro - 4 July 2025

Custodian dividend hikes, DLT settlement, UK EMIR shake-up, and more

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Global Custody Pro
July 03, 2025 • Reading Time: 10 minutes

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Welcome to Global Custody Pro. I'm Brennan McDonald, Managing Editor. I write about the global custody industry, having spent over 12 years in financial services, including a stint 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

Northern Trust Signals Dividend Rise

  • Why it matters: Following the Federal Reserve’s 2025 CCAR, Northern Trust is subject to a preliminary Stress Capital Buffer (SCB) of 2.5 per cent, the minimum requirement. This enables it to propose a $0.05 per share increase to its quarterly common stock dividend at its July 2025 board meeting.

  • The unchanged SCB result confirmed the strength of the firm’s capital position and business model, according to Chairman and Chief Executive Officer Michael O’Grady.

  • The company stated it will continue an "opportunistic, considerate approach to common stock repurchases" and plans to invest in its franchise while returning excess capital to shareholders.

Industry bodies propose UK EMIR reforms diverging from EU

  • Driving the news: ISDA, UK Finance, and Clifford Chance have jointly published a paper outlining proposals for UK EMIR reform, drawing comparisons with the EU's EMIR 3.0 framework. The proposals advocate for simplifying reporting obligations, modifying clearing thresholds, and creating permanent exemptions for intragroup transactions and equity options.

  • The proposed changes aim to reduce compliance costs and operational burdens. Key suggestions include introducing single-sided reporting, which would eliminate the need for trade pairing and matching, and replacing the requirement for an equivalence decision for intragroup exemptions to reduce uncertainty for UK firms trading with non-UK group members.

  • The paper notes that HM Treasury and the FCA are expected to act on intragroup exemptions in H2 2025, and that a consultation covering CCP margin transparency and collateral eligibility was anticipated in July 2025. The authors also recommend that HM Treasury make additional equivalence decisions for the EU, US, and Switzerland to facilitate cross-border trade.

State Street Announces Planned 11% Dividend Increase

  • Driving the news: State Street intends to increase its third-quarter 2025 common stock dividend by 11% to $0.84 per share, following the completion of the Federal Reserve’s 2025 Supervisory Stress Test. The firm’s calculated Stress Capital Buffer was below the 2.5% minimum, which preliminarily kept it at that level and maintained its Common Equity Tier 1 ratio requirement at 8%.

  • The result “reaffirms State Street's robust financial strength and our ability to support clients through a range of severely adverse economic conditions,” according to Chairman and Chief Executive Officer Ron O’Hanley. The planned dividend increase was enabled by the firm’s strong earnings and resilient balance sheet.

  • State Street's Board of Directors will consider the dividend increase at a meeting in the third quarter of 2025. The Federal Reserve will release the firm’s final Stress Capital Buffer requirement by August 31, 2025, which will take effect on October 1, 2025.

JPM projects a 13.7% minimum CET1 ratio in the stress test

  • Driving the news: JPMorgan Chase has disclosed its 2025 Dodd-Frank Act Stress Test results, projecting its Common Equity Tier 1 (CET1) capital ratio would reach a minimum of 13.7% over the nine-quarter projection period from Q1 2025 to Q1 2027. The projection is based on the Federal Reserve's Supervisory Severely Adverse Scenario.

  • Under this scenario, characterised by a severe global recession, the firm projects a cumulative pre-tax net loss of $3.2 billion over the nine-quarter horizon. This figure includes $93.8 billion in pre-provision net revenue, which is more than offset by $79.3 billion in provisions for credit losses and $12.4 billion in trading and counterparty losses.

  • The disclosed results are hypothetical estimates based on the firm's internal models and do not represent a forecast of actual outcomes. The firm's formal 2025 Stress Capital Buffer (SCB) requirement will be determined and published by the Federal Reserve by August 31, 2025.

BNY Intends to Increase Quarterly Dividend by 13%

  • Why it matters: BNY announced its intention to increase its quarterly common stock dividend to $0.53 per share from $0.47, a 13% rise, starting as early as the third quarter of 2025. The plan, which is subject to board approval, follows the Federal Reserve's notification that BNY's preliminary Stress Capital Buffer (SCB) requirement will remain at the 2.5% regulatory floor.

  • The announcement underscores the company's position of financial strength, with the results of the Federal Reserve's annual bank stress test demonstrating a "resilient business model and strong balance sheet," according to the release. BNY's SCB has consistently remained at the regulatory minimum since the requirement was introduced in 2020.

  • The company stated it continues to be authorised to repurchase common shares under its existing share repurchase programme, with the timing and amount subject to its capital position and prevailing market conditions.

SIX completes Aquis buy, expands exchange business

  • The big picture: SIX has finalised its acquisition of Aquis Exchange, creating a pan-European exchange group with a stated 15% aggregated market share and access to 16 capital markets, including listing venues in Switzerland, the EU, and the UK.

  • The transaction aims to leverage Aquis's capabilities to deliver a unified client experience. According to Bjørn Sibbern, CEO of SIX, the goal is to offer clients a “‘One Plug, Multiple Trading Venues’ – a single connection providing access to Switzerland, Spain, and the UK –, ensuring more liquidity, better market access, and innovative trading solutions.”

  • Looking ahead, Aquis will operate under its existing brand and management. It will "continue to innovate in trading, to deploy cutting-edge technology, and to provide a tailored listings environment for the UK’s high-growth smaller companies, while further benefiting from the strength of the European reach and infrastructure of SIX," according to its CEO, David Stevens.

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🚀 Digital Asset News

ECB launches dual-track plan for DLT settlement

  • Driving the news: The ECB's Governing Council has approved a plan to facilitate the settlement of distributed ledger technology (DLT) transactions in central bank money, establishing a two-track approach to support market innovation.

  • The initiative creates a short-term settlement solution, Pontes, which will link DLT platforms to TARGET Services, with a pilot planned by the end of Q3 2026. A second, long-term track, Appia, will focus on shaping a future integrated financial ecosystem in collaboration with public and private stakeholders.

  • To ensure market engagement, the Eurosystem will establish dedicated contact groups for both Pontes and Appia. A call for expressions of interest to participate in the Pontes contact group will be published soon.

Paxos launches MiCA-compliant USDG stablecoin in the EU

  • Why it matters: Paxos has launched its Global Dollar (USDG) stablecoin across the European Union, offering a fully regulated, MiCA-compliant USD stablecoin to over 450 million consumers in 30 countries through initial partners including Kraken, Gate, and Zodia Custody.

  • The launch addresses the growing demand for US dollar-backed stablecoins in Europe by providing a regulated and compliant option, issued by Paxos Issuance Europe under the supervision of the Finnish Financial Supervisory Authority (FIN-FSA) and available on Solana, Ethereum, and Ink.

  • According to the release, the Global Dollar Network, an ecosystem comprising Mastercard, Worldpay, and Robinhood, aims to accelerate the adoption of stablecoins. Meanwhile, Paxos consults with the Monetary Authority of Singapore (MAS) to ensure that USDG remains compliant with the MAS's upcoming stablecoin framework.

AllUnity secures BaFin E-Money licence for EUR stablecoin

  • Driving the news: AllUnity, a joint venture of DWS, Flow Traders, and Galaxy, has been granted an E-Money Institution (EMI) licence by Germany’s BaFin, effective July 1 2025, to issue a MiCAR-compliant Euro stablecoin named EURAU.

  • The stablecoin, EURAU, is designed for 24/7 instant cross-border settlements and seamless integration for regulated financial institutions, fintechs, corporate treasuries, and enterprise clients in Europe.

  • According to the announcement, EURAU will be 100% collateralised and deliver institutional-grade transparency through proof-of-reserves and regulatory reporting, positioning it as a compliant and trusted Euro-backed stablecoin.

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