Non-banks, ACSA, JSCC, and more

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Welcome to Global Custody Pro, read by custody professionals like you. 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. Reply to this email with feedback or connect with us on LinkedIn.

Table of Contents

• 🌏 Global Custody News

  • NBFIs now exceed banks in major economies

  • ACSA Charts Custody's Digital Future

  • Millennium Joins JSCC Yen Clearing Service

• 🚀 Digital Asset News

  • Polkadot, Zodia Deepen Institutional Custody Acces …

  • Bybit Joins Komainu Connect Custody Platform

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🌏 Global Custody News

NBFIs now exceed banks in major economies

Non-bank financial institutions have grown to hold assets averaging around 400% of GDP in major advanced economies, surpassing traditional banks in size, according to a Bank for International Settlements research bulletin. The expansion has been driven primarily by investment funds, including hedge funds, alongside bond market growth reflecting increased government debt issuance. The bulletin, authored by Ryan Banerjee, Boris Hofmann, Ding Xuan Ng and Gabor Pinter, examined how this structural shift affects monetary policy effectiveness.

The research found that NBFIs influence transmission in complex ways depending on institutional type and market conditions. Other financial institutions, which include money market funds, hedge funds and finance companies, appear to amplify monetary policy transmission to long-term yields and financial conditions. However, insurance companies and pension funds may dampen these effects due to more stable balance sheets. The bulletin noted that transmission strength also depends on market conditions, with policy rate changes having stronger effects when hedge fund trading activity and leverage are high, whilst central bank asset purchases prove more effective when such activity is low.

The findings suggest aggregate monetary transmission may have strengthened as other financial institutions have grown in relative importance, though considerable statistical uncertainty remains. The bulletin concluded that this uncertainty reinforces the case for gradual policy adjustments combined with high flexibility to respond to changing conditions. The research also highlighted that NBFIs amplify cross-border monetary spillovers, with US monetary policy shocks exerting stronger effects on investment fund flows compared with total portfolio flows, particularly affecting emerging market economies.

ACSA Charts Custody's Digital Future

The Australian Custodial Services Association has released a whitepaper marking its 30th anniversary that outlines a transformation in the custody sector from transactional service providers to embedded strategic partners. The paper notes custodians are expanding into middle-office functions, data analytics, and liquidity management as asset owners seek to streamline operations.

Digital transformation is central to the industry's outlook, with nearly 40% of financial market participants currently using digital assets or distributed ledger technology, according to research cited from Clearstream, DTCC, and Euroclear. The report forecasts that assets will be digitally custodied and tokenised on DLT within 30 years, with settlement becoming instant and operations fully automated.

The whitepaper identifies alternative investments as the top priority for institutional investors, with average portfolio allocations now approaching 25%. Industry executives, including Northern Trust's Trent Richardson, point to Project Acacia, a joint initiative with the Reserve Bank of Australia, as evidence of political support for developing Australian wholesale tokenised asset markets.

Millennium Joins JSCC Yen Clearing Service

Japan Securities Clearing Corporation announced that Millennium has become the first U.S. customer for its yen-denominated interest rate swap clearing service following regulatory approval. The milestone marks the first U.S. customer since the Commodity Futures Trading Commission granted approval in September 2025 under a no-action letter and amended exemption order.

JSCC became Japan's first licensed clearing organisation for cash equity transactions in January 2003 and now provides clearing for listed cash equities, financial and commodity derivatives, over-the-counter derivatives, and OTC Japanese Government Bond transactions. The company's interest rate swap clearing services reached a monthly record of JPY 1,526 trillion in October 2025, driven by uncertainty around the Bank of Japan's interest rate policy.

Yasuyuki Konuma, President and CEO of JSCC, said the company remains committed to providing efficient clearing services to global market participants and delivering innovative clearing solutions whilst contributing to financial market stability. JSCC continues to work with partners worldwide to expand its reach and support market participants seeking access to yen derivatives market liquidity.

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🚀 Digital Asset News

Polkadot, Zodia Deepen Institutional Custody Access

Polkadot Capital Group and Zodia Custody announced a strategic initiative to expand institutional access to Polkadot ecosystem custody and staking solutions. The partnership pairs Polkadot's multi-chain technology with Zodia's bank-first security infrastructure, which enables institutions to stake DOT tokens directly from cold, segregated custody accounts.

Zodia Custody, backed by Standard Chartered in association with Northern Trust, SBI Holdings, National Australia Bank, and Emirates NBD, is registered with multiple regulators including the UK Financial Conduct Authority, Central Bank of Ireland, and Luxembourg's CSSF. The platform implements 5AMLD requirements and applies Standard Chartered's standards relating to anti-money laundering, financial crime compliance, and know-your-customer protocols. Polkadot Capital Group serves as the capital markets-focused division of Polkadot, headquartered in the Cayman Islands with teams in North America and London.

The initiative aligns with Polkadot's ongoing network evolution aimed at institutional and enterprise adoption. "Institutions are eager to participate in ecosystems like Polkadot, but only without compromising on security," said Anoosh Arevshatian, Chief Product Officer at Zodia Custody. Dave Sedacca, Lead at Polkadot Capital Group, stated the relationship "directly addresses" institutional security requirements by pairing Polkadot's technology with custody solutions that meet regulatory standards across key jurisdictions.

Bybit Joins Komainu Connect Custody Platform

Komainu, the regulated digital asset custodian backed by Laser Digital and Blockstream, announced that Bybit has joined its Komainu Connect collateral management platform. The partnership enables institutional clients to trade continuously whilst maintaining assets in secure custody, with regular automated off-exchange settlement removing the requirement to pre-fund trading accounts.

The platform provides 100% collateral mirroring of delegated assets in collateral wallets, with all holdings maintained in on-chain, bankruptcy-remote segregated wallets. Bybit serves over 60 million users globally, whilst Komainu operates under multi-jurisdictional regulatory oversight, with Komainu (Jersey) Limited regulated by the Jersey Financial Services Commission and Komainu MEA FZE regulated by the Dubai Virtual Assets Regulatory Authority.

Paul Frost Smith, Co-CEO at Komainu, said institutional investors increasingly demand the ability to act on market opportunities without compromising security or compliance. Yoyee Wang, Head of Business to Business Unit at Bybit, said the partnership strengthens the exchange's capabilities by offering secure, regulated custody alongside flexibility and scale.

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