A DORA double dip?

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📰 Welcome to the Newsletter

Good morning, at Global Custody Pro we track what's happening in global custody, clearing, payments, and digital assets. We filter through industry news to bring you what matters most in clear language.

The global custody industry is complex, but for a reason. This year we’re going to keep publishing articles that help unpack that complexity each Wednesday and share this roundup of global custody news and insights each Friday to save you time.

Mentioned in this edition: AFME, FIA, EACH, FESE, DORA, BIS, MarketAxess, ICE, AFX, GLAS, Watiga, Suriga Trust & Agency, CFTC, Rostin Behnam, EBA, GSR, FCA, MAS, Darrell Duffie and Gary Gensler.

🌏 Global Custody News

• AFME, the Federation of European Securities Exchanges (FESE), the FIA, and European Association of CCP Clearing Houses (EACH) have published a policy paper on the DORA ICT Services rules in the EU. They argue that financial services provided to financial firms should not be considered ICT services under DORA because they are already captured by strict regulation. Their view is no duplication of “digitally backed financial services” is necessary as it would add more cost and complexity for EU firms.

• The BIS Committee on Payments and Market Infrastructures will set up governance structures to monitor data harmonisation in cross-border payments with the progressive rollout of ISO20022 payments. The drive to move payments to the modern SWIFT standard is driven by central banks globally to align with G20 goals on improving the cross-border payments system.

• Trading platform MarketAxess reported a 19% increase in total average daily trading volume to $32.0 billion in December 2024, driven by strong growth in rates trading while total credit trading remained flat compared to the previous year. Despite achieving record quarterly average daily volume of $41.0 billion in Q4 2024, up 38% year-over-year, the company saw market share declines in key segments like U.S. high-grade bonds, where share fell to 19.5% from 22.1% a year earlier. The platform's declining market share in high-yield and high-grade bonds, despite record overall volumes, suggests growing competitive pressure in the electronic fixed-income trading space, particularly from newer entrants and bank-owned platforms.

• The Intercontinental Exchange (ICE) reported record trading volumes across its commodity and interest rate derivatives markets in 2024, with total open interest up 11% year-over-year and average daily volume up 24% for the year. The exchange operator saw strong growth in its WTI oil futures, where open interest rose 28% year-over-year, and its SONIA interest rate products, which saw a 61% jump in open interest including a record 2.9 million futures contracts on December 16.

• The ICE also announced it had acquired the American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing among banks and financials, from private market operator 7Ridge. AFX operates the credit-sensitive American Interbank Offered Rate (AMERIBOR®) benchmark rate index.

• Institutional debt administrator Global Loan Agency Services (GLAS) has acquired Hong Kong and Singapore based Surica Trust & Agency. The firm already services over US$500 billion of debt and the purchase will expand its network in Asia Pacific. The transaction builds on their 2024 acquisition of Singapore-based Watiga. Institutional debt administration firms manage and service debt instruments, including bonds and loans, on behalf of issuers and investors, ensuring compliance, payments, and governance.

🚀 Digital Asset News

• Blockchain security firm SlowMist released their review of the 2024 year in blockchain security incidents. The report explores the top incidents and found that smart contract vulnerability was the leading cause of loss, followed closely by account takeover. The cybersecurity risks around digital assets are a focus of both the industry itself and regulators.

• Outgoing CFTC chairman Rostin Behnam gave his final remarks. He has consistently advocated for regulatory oversight of the cash markets for cryptocurrencies, highlighting the need for legal certainty and protection against fraud and market abuse since the introduction of bitcoin futures in 2017. Whether 2025 brings regulatory clarity in the US is still an open question.

• The European Banking Authority published a consultation paper on calculating crypto asset exposures. The goal is to seek industry feedback on technical rules to align to Basel rules and the BCBS standard on crypto asset exposures. The consultation responses are due by 8 April 2025. The EBA will also hold a virtual public hearing on 4 March 2025.

• Trading firm GSR has become the first cryptocurrency liquidity provider to secure regulatory approvals from both the UK's Financial Conduct Authority and Singapore's Monetary Authority, allowing it to offer crypto trading services in both jurisdictions. The firm employs over 120 people in the UK.

🎧 What We’re Listening To

📺 What We’re Watching