Global Custody Pro - 18 April 2025

📰 Welcome to the Newsletter

Welcome to Global Custody Pro! I'm Brennan McDonald, Managing Editor. I write about the global custody industry based on my 12+ years in financial services, including working at a global custodian. From this edition, each post will have an AI audio version available in podcast format. Have feedback? Just reply to this email or connect with us on LinkedIn.

Table of Contents

• 📠 Editor’s Comment

• 🌏 Global Custody News

• 🚀 Digital Asset News

📠 Editor’s Comment

This week quarterly earnings season kicked off, with BNY, JPMorgan, Citi, State Street and US Bancorp reporting. Companies reporting next week who we’re covering include Northern Trust, BNP Paribas, HKEX, CME Group and NASDAQ.

While tariff related drama gets a mention on earnings calls, the fact it kicked off primarily after April 2 means we’ll need to wait until Q2 2025 to start seeing the real impact on earnings and platform volumes and values.

Here are the AuC/A figures for US global custodians so far this reporting season. I’ll collate the AuC/A numbers for ex-US custodians as they report their numbers over the next few weeks, then consolidate a new global custody AuC/A ranking list in May.

🌏 Global Custody News

State Street posted a 49% jump in first‑quarter profit as tight cost control and broad‑based fee growth offset flat net interest income. Diluted EPS rose to $2.04 from $1.37 a year earlier, while total revenue increased 5% to $3.28 billion on a 6% rise in fee income, led by servicing, management and front‑office software fees. Assets under custody and administration grew 6% to $46.7 trillion and assets under management climbed 9% to $4.7 trillion. Earlier in 2025, State Street announced the acquisition of Mizuho’s ex-Japan global custody business with $580 billion in assets under custody and over $24 billion in assets under administration. That deal is expected to close later in 2025.

BNY reported first-quarter 2025 earnings per share of $1.58, a 26% increase year-over-year, beating analyst expectations. The bank posted total revenue of $4.8 billion, up 6% from the same period last year, driven by higher fee revenue and an 11% rise in net interest income. Assets under custody and/or administration rose 9% to $53.1 trillion. Securities Services saw revenue increase 8% year-over-year to $2.3 billion, with Asset Servicing fees up 5% and Foreign Exchange revenue rising 10%. CEO Robin Vince highlighted the bank's "solid performance" and ongoing transformation into a more platforms-oriented company, while cautioning about increasing uncertainty in the economic outlook. The bank returned $1.1 billion to shareholders through dividends and share repurchases during the quarter.

JPMorganChase reported robust first-quarter 2025 earnings, with net income reaching $14.6 billion, up 9% year-over-year, driven by strong growth in its Markets business, notably a 48% surge in Equity Markets revenue. The Securities Service business segment recorded revenue of $1.3bn up 7% year-on-year and Assets under Custody increased 5% year-on-year to reach $35.7 trillion. JPMorgan also increased its dividend by 12% and repurchased $7 billion of common stock, reinforcing its liquidity and capital position amid volatile market conditions​.

Citi reported strong first quarter 2025 results with net income of $4.1 billion ($1.96 per share) on revenues of $21.6 billion, representing a 21% increase in net income and 3% revenue growth compared to Q1 2024. Securities Services revenues remained flat at $1.2 billion as a 7% increase in net interest income (driven by higher deposit balances) offset a 6% decrease in non-interest revenue. The non-interest revenue decline was attributed to the absence of certain fees seen in the prior-year period, along with impacts from foreign exchange and higher revenue sharing arrangements, partially offset by increases in assets under custody and administration, which grew 9% to $26 trillion.

U.S. Bancorp posted first‑quarter 2025 earnings of $1.30 a share, up from $1.09 a year earlier, as tight cost controls and modest margin expansion helped lift return on tangible common equity to 17.5 percent. The bank also reported assets under custody of $11 trillion dollars.

DTCC reported robust performance in 2024, with net income rising to $482 million and revenue up 11% to $2.49 billion, driven by higher market volumes and clearing services. DTCC led a historic transition to a T+1 settlement cycle across North America, returning $3 billion in margin liquidity to the market while achieving near-96% same-day transaction affirmations.

KKR signed a definitive agreement Tuesday to acquire OSTTRA from CME Group and S&P Global for a total enterprise value of $3.1 billion, subject to customary adjustments. The deal, executed through KKR’s North American private equity strategy, sees the post-trade solutions provider, established in 2021 as a 50/50 joint venture, transition to private ownership while retaining its co-CEOs Guy Rowcliffe and John Stewart at the helm. OSTTRA, which processes over 80 million trades monthly across interest rates, FX, credit and equity asset classes, will benefit from increased investments in technology and innovation aimed at further expanding its global footprint and client service capabilities.

IQ-EQ, an Astorg portfolio company, has signed an agreement to acquire Australia and New Zealand-based AMAL Group, subject to regulatory approval from Australia's Foreign Investment Review Board. The acquisition allows IQ-EQ to expand its global corporate trust and loan servicing business into key growth markets, where AMAL Group manages over A$37 billion in funds under administration.

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🚀 Digital Asset News

A16Z outlined five principles it says should guide U.S. regulation of digital‑asset custody, urging a “substantive protections over labels” approach that would broaden the pool of qualified custodians beyond federally chartered banks and broker‑dealers. The venture firm’s policy team argued that Registered Investment Advisers (RIAs) struggle with thin custodial options and unclear rules, and proposed allowing state‑chartered trusts or any entity meeting strict safeguards to hold crypto, while letting RIAs self‑custody or move assets to trading venues when necessary for governance votes, staking or best execution. The paper, submitted in response to an SEC information request, contends that aligning crypto with the Advisers Act’s Custody Rule goals of security, disclosure and verification will unlock investor rights without expanding the rule’s scope beyond securities.

Editor’s Note: It’s unclear to us why global custodians with deep experience in issues like proxy voting and corporate actions processing can’t extend the capabilities of their digital asset custody business units to support staking and governance activities when required - nor why the specialist digital asset custodians wouldn’t support these basic requirements. There is some comfort for investors with regulatory “labels” - they still matter because clients care deeply about the safety of their assets!

The U.S. Securities and Exchange Commission’s Crypto Task Force published the agenda and speaker lineup for an April 25 roundtable on crypto‑asset safekeeping, part of the agency’s push to weave digital assets into its regulatory framework. Acting Chair Mark Uyeda, Commissioners Caroline Crenshaw and Hester Peirce, and task‑force chief of staff Richard Gabbert will open the session before two panels moderated by Davis Polk partner Zach Zweihorn examine custody via broker‑dealers and, later, investment advisers and funds. Speakers include executives from Fireblocks, Anchorage Digital Bank, Fidelity Digital Asset Services, Kraken, Exodus, Etana, Copper, 1kx and WisdomTree, alongside law‑firm partners and academics Adam Levitin and Charles Mooney. Peirce said the forum would “grapple with custody issues, which are some of the most challenging as we seek to integrate crypto assets into our regulatory structure”.

JPMorganChase's blockchain unit Kinexys has introduced GBP-denominated Blockchain Deposit Accounts on its Digital Payments platform at the bank's London branch, one of the first such blockchain products in the UK. SwapAgent, an LSEG Post Trade Solutions business, and commodities firm Trafigura will be the initial clients, marking the first use of blockchain deposit accounts for 24/7 real-time payments and cross-border transactions in the UK. The accounts enable cross-border transactions with 24/7 foreign exchange capabilities, weekend processing, and extended same-day settlements.

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