Issue #8 - Kinexys, ICE, Apollo, Swift, UBS, Kraken, Paxos, Wise

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Global Custody Pro
November 07, 2024 • Time To Read: 7 minutes

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Good morning, we track what's happening in global custody, clearing, payments, and digital assets. Our team filters through industry news to bring you what matters most in clear language.

This week the news was dominated by the victory of Donald Trump in the US Presidential election. The implications for financial services and regulation are still not fully understood, but markets seem optimistic. Is a new chapter of de-regulation, especially for digital assets, ahead? If so, the pressure on firms to move quickly from proofs-of-concept and press releases to serious on-chain product offerings will be enormous.

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Wise plc reported half-year earnings and shared that cross-border payment volumes are up 2.9x from H12021 to GBP68.4 billion in H12025. They talk about moving trillions as their vision for cross-border payments, and the competition implications for the global FX market in the long-term are clear.

The rise of fintechs such as Wise that are combining innovation and compliance with regulations to meet customer needs is a big threat to the traditional payments and FX world. As we’ve seen with other new technology, entire categories can disappear as younger generations embrace what is simple and easy. They are certainly a business to watch closely, especially now their Business segment is growing at pace.

Intercontinental Exchange Inc reported third quarter net revenue of USD2,349 million up 7% year-on-year and net operating income of USD1,389 million up 12% year-on-year. The strong performance was driven by higher Exchanges volumes in energy, cash equities and financials. Fixed Income & Data Services performance did not grow at the same rate, but delivering operating margin at 45%.

The exchange operator's Euribor futures, a key benchmark for euro interest rate risk, saw volumes jump 47% compared to the previous year, while open interest climbed 15% in October. The newly introduced euro short-term rate (ESTR) contracts reached record open interest of 681,000 contracts.

In the UK market, ICE's SONIA futures hit a record 14 million contracts traded in September, with year-to-date growth of 53%. The exchange's Gilts futures market, which tracks UK government bond yields, experienced a 30% increase in year-to-date volume, with third-quarter growth of 42% and open interest nearly doubling year-over-year.

Apollo Capital Management reported third quarter net income of USD787 million on revenue of USD7,773 million driven by higher fee revenues as assets under management rose to USD773 billion.

The firm's retirement services unit, Athene, posted record quarterly funding agreement inflows amid continued strength in retail annuity sales. Fee-related earnings hit a record $531 million in the quarter, up 12.5% from a year earlier, while spread-related earnings excluding notable items reached $831 million. Apollo deployed $426 million to repurchase 4 million shares during the quarter while maintaining its quarterly dividend of $0.4625 per share.

🚀 Digital Asset News

JPMorgan Chase & Co announced on Thursday at the Singapore Fintech Festival that its blockchain business unit Onyx will be rebranded as Kinexys, as the bank expands its digital payment capabilities to include foreign exchange services. The platform has processed over $1.5 trillion in notional value since its launch, with daily transaction volumes averaging more than $2 billion, and payment transactions have increased tenfold year-over-year, according to the bank.

The bank plans to integrate its FX services with the platform in the first quarter of 2025, initially supporting U.S. dollar and euro settlements, with more currencies to follow. Kinexys currently serves clients across five continents, including Siemens, Ant International, and BlackRock, enabling near real-time, round-the-clock programmable cross-border transactions without requiring prefunding, while a new proof-of-concept focusing on blockchain privacy, identity, and composability is also under development.

Global Dollar Network, a new stablecoin initiative backed by major crypto firms including Kraken, Paxos and Robinhood, launched on Tuesday to boost mainstream adoption of digital dollars. The Singapore-based network will issue a regulated stablecoin called USDG through Paxos, with DBS Bank managing cash reserves.

The project brings together seven leading crypto and fintech companies aiming to challenge existing stablecoin models by distributing economic benefits among network participants rather than concentrating them with issuers. USDG is now available through several founding partners' platforms, with broader distribution planned across the network.

Swift, UBS Asset Management, and Chainlink announced Tuesday they have successfully completed a pilot that allows traditional payment systems to settle tokenized fund transactions across Swift's network of over 11,500 financial institutions globally. The project, part of the Monetary Authority of Singapore's Project Guardian, demonstrates how financial institutions can use existing Swift infrastructure to process off-chain cash settlements for digital assets.

The pilot aims to address inefficiencies in the $63 trillion global mutual fund market, where subscription and redemption processes often face delays and lack real-time transparency. Using blockchain technology and Chainlink's platform, the system enables straight-through-processing of payments for tokenized investment funds without requiring widespread adoption of on-chain payment methods.

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