Global Custody Pro - 9 July 2025

US broker-dealers consolidate, Euroclear joins ECMS, $1.3 trn CCP risk article, SEC tightens crypto-ETP rules and more

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Global Custody Pro
July 08, 2025 • Reading Time: 11 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 working at a global custody bank. An AI voice reads the audio version of this newsletter. Have feedback? Just reply to this email or connect with us on LinkedIn.

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🌏 Global Custody News

$1.3 Trillion CCP Risk: Analysis of a new OFR Paper

New OFR research reveals that CCPs could demand 25.7% of banks' liquidity in a matter of hours. Analysis of $1.3 trillion risk affecting global custodians. 67% surge in 7 years.

www.globalcustody.pro/p/1-3-trillion-ccp-risk-analysis-of-a-new-ofr-paper-d7b1

Euroclear connects CSDs to the ECB's collateral platform

  • Key Move: Euroclear has connected its International Central Securities Depository (ICSD) and its central securities depositories in France, the Netherlands, and Finland to the European Central Bank’s new unified Eurosystem Collateral Management System (ECMS), mobilising over €550 billion in marketable assets for clients.

  • The connection provides clients with access to both Central Bank Money and Commercial Bank Money. Euroclear’s new Central Bank Access Service enables the outsourcing of end-to-end bilateral settlements with central banks, aiming to increase operational efficiency.

  • For Euroclear Bank, the firm states this development marks an "initial step toward ultimately offering CeBM settlement."

US Broker-Dealer Industry Consolidates

  • The big picture: A new paper from the SEC's Division of Economic and Risk Analysis reveals that the US broker-dealer industry has undergone significant consolidation between 2010 and 2024. The number of firms decreased by approximately 30%, from 4,758 to 3,341, while total industry assets increased from under $4.7 trillion to approximately $6.4 trillion.

  • A key stated implication is the shift in revenue models. The share of total revenues from commissions declined from approximately 18% in 2010 to 5% in 2024. Concurrently, revenue from fees for account supervision, investment advisory, and administrative services rose from 13% to 19% over the same period, becoming one of the most significant itemised revenue sources.

  • The analysis documents a steady, ongoing decline in the number of firms reporting securities commissions as a revenue source, falling from 52% of broker-dealers in 2010 to 39% in 2024. This reflects an evolution in business models toward fee-based advisory services.

FCA outlines regulatory approach for private markets

  • On the Radar: The UK's Financial Conduct Authority (FCA) is intensifying its focus on private markets to improve transparency and support sustainable growth, according to Deputy Chief Executive Sarah Pritchard. The regulator has completed a review of valuation practices and will subsequently review conflicts of interest. It is also co-chairing a Financial Stability Board working group on leverage in non-bank financial institutions.

  • The FCA states that stronger and more timely data are a "necessity" for firms to identify risks, such as concentrated leverage, and for regulators to conduct adequate supervision. Firms need to be prepared to invest in their data infrastructure for reporting that is "timely and consistent," according to the speech.

  • Looking ahead, the regulator is shifting its philosophy towards outcomes-focused regulation, intending to give firms more freedom to innovate while ensuring investors have clarity for decision-making. The FCA is also open-minded about expanding retail access to private markets, provided the "right guardrails are in place."

Crédit Agricole S.A. acquires 100% ownership of CACEIS.

  • Driving the news: Crédit Agricole S.A. has finalised the acquisition of Santander's 30.5% stake in CACEIS, bringing its ownership to 100% after receiving all required authorisations. The stated purpose of the transaction is to strengthen Crédit Agricole's position in the asset servicing sector, which it defines as a strategic business.

  • The deal is expected to have a negative impact of approximately 30 basis points on Crédit Agricole S.A.'s fully loaded Common Equity Tier 1 (CET1) ratio. The operation is described as being consistent with the group's targets for return on investment and return on tangible equity.

  • Despite the ownership change, CACEIS and Santander will maintain their long-term partnership. The joint venture for their Latin American operations will remain under joint control.

Tradeweb reports strong June, record Q2 trading volumes

  • Driving the news: Tradeweb reported a total June trading volume of $52.0 trillion, with average daily volume (ADV) reaching $2.4 trillion, a 25.9% year-over-year (YoY) increase. The second quarter of 2025 set records with a total volume of $165.3 trillion and an ADV of $2.6 trillion, up 32.7 per cent YoY.

  • The big picture: The performance reflects durable client adoption of electronic trading, which remained strong despite significant market volatility from evolving central bank policies, new U.S. tariffs, and geopolitical tensions. Electronic trading has "firmly... taken hold as a go-to strategy for our clients, even in times of stress," according to Billy Hult, CEO.

  • Under the Hood: Growth was driven by record ADV in multiple asset classes during the second quarter, including U.S. government bonds, European ETFs, and global repurchase agreements. Key drivers for June activity include substantial institutional volumes in European government bonds, increased client numbers, and greater adoption of protocols such as the Automated Intelligent Execution (AiEX) tool.

Eurex volumes fall 14pc, clearing and repo rise

  • By the Numbers: Eurex reported a 14 per cent year-on-year decrease in total traded contracts for June 2025, falling to 178.6 million, which it attributes to a recent risk-off environment. The decline was driven by a 30 per cent drop in index derivatives and a 23 per cent fall in equity derivatives, while interest rate derivatives grew by 3 per cent.

  • In contrast to trading volumes, OTC Clearing and repo activity showed significant growth. Notional outstanding volumes in OTC Clearing increased by 23 per cent to EUR 43,415 billion, and average daily term-adjusted volumes on Eurex Repo grew by 49 per cent to EUR 482.9 billion compared to June 2024.

  • The repo segment's performance contributed to what the exchange described as a highly successful second quarter, with total volumes across all repo segments rising by 18% for the period.

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🚀 Digital Asset News

SEC Division Clarifies Crypto ETP Disclosure Views

  • Why it matters: The US SEC's Division of Corporation Finance has issued a staff statement detailing its views on disclosure requirements for crypto asset exchange-traded products (ETPs). The statement aims to provide greater clarity for issuers by consolidating staff observations from recent reviews of registration filings.

  • Go deeper: Issuers are expected to provide specific and detailed disclosures on the custody of the ETP's crypto assets, including storage policies for private keys, the use of segregated or commingled wallets, and the extent of any insurance coverage. Material contracts with service providers, such as custodians and Authorised Participants (APs), must also be filed as exhibits.

  • On the Radar: The Division explicitly invites market participants to seek further guidance, welcoming questions and requests for interpretive or no-action letters regarding the application of its disclosure rules to crypto asset ETPs.

OCC flags elevated operational and compliance risks for banks

  • State of play: The OCC's Spring 2025 Semiannual Risk Perspective reports that the federal banking system is sound but identifies elevated operational and compliance risks. These risks are driven by an increasingly complex operating environment, sophisticated cyber threats, and evolving business models involving new technologies and partnerships with financial technology companies (fintechs).

  • The increasing reliance on a concentrated number of third-party service providers expands the cyberattack surface. This trend raises the likelihood of a single point of failure, which, according to the OCC, "could trigger widespread and cascading effects across the financial sector."

  • The OCC reaffirmed that banks are permitted to engage in crypto-asset custody and stablecoin activities. The regulator expects financial institutions engaging in these activities to do so in a "safe, sound, and fair manner, consistent with effective risk management practices."

EU, U.S. Regulators Tackle T+1, Crypto, Clearing

  • On the Radar: EU and U.S. regulators met in Brussels on 24-25 June to exchange views on key financial topics, with capital markets discussions covering the EU's work on shortening its settlement cycle and a one-year review of the U.S. T+1 migration.

  • The dialogue provided updates on the EU's MiCA and DORA implementation, U.S. crypto-asset priorities, and SEC rules for clearing U.S. Treasury securities, signalling a continued cross-jurisdictional focus on digital asset regulation and central clearing.

  • Participants will continue to engage on these and other topics of mutual interest ahead of the next Forum meeting, which is anticipated to take place in late 2025. Our view is that the shift in US regulatory posture toward digital assets and financial services in 2025 presents a clear challenge for EU politicians and regulators to address.

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