Issue #6 - Assets under Custody just keep growing

📰 Welcome to the Newsletter

Welcome to Global Custody Pro. 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 it’s clear that assets under custody just keep growing, as interest rates and geopolitical factors zig-zag ahead of the US election. Let's dive in.

🌏 Global Custody News

Northern Trust marked its 135th anniversary with strong Q3 2024 results, reporting an 8% increase in trust fees and 21% growth in net interest income compared to Q3 2023. The major global custodian returned over USD450 million to shareholders and posted a 32% earnings-per-share growth, excluding notable items. Total Assets under Custody and Administration grew 23% year-on-year to USD17.423 trillion. The growth in AuC/A lines up with what we’ve seen from other custodians this quarter. Assets under custody are growing strongly as both public and private markets keep performing. LINK

Hong Kong Exchanges and Clearing Limited (HKEX) reported its second-best nine-month revenue and profit in Q3 2024, driven by strong trading volumes across all markets. This followed China's economic stimulus announcement and global monetary easing. The commodities arm LME reported a 25% year-over-year increase in daily volumes. HKEX also strengthened its position in Asia by hosting its largest IPO of the year when Midea raised HKD35.7 billion (USD4 billion). It will be interesting to monitor how HKEX performs as the Chinese stock market rebounds. LINK

Deutsche Börse's revenue jumped 18% to EUR1.4 billion in Q3, driven by growth across business units. They also raised their full year annual net revenue guidance to EUR5.8 billion based on the growth in net revenue. Year-to-date Securities Services revenue is up 8%, Fund Services revenue up 11% and Trading & Clearing revenue up 7%. The European interest rate environment will be a driver to watch in the next year. LINK

CME Group Inc reported record revenue of USD1.6 billion and earnings per share of USD2.68 for the third-quarter of 2024. This result was driven by record quarterly average daily volume of 28.3 million contracts. Of interest to our audience in particular is the 35% rise in SOFR futures and 31% growth in Treasuries called out in their release. Clearing and transaction fees were up 19.4% to USD1,297.1 million for the quarter. LINK

The U.S. Securities and Exchange Commission's examination division announced its 2025 priorities, expanding oversight of artificial intelligence, crypto assets and cybersecurity risks. The division will intensify scrutiny of investment advisers' handling of high-cost and unconventional products, while monitoring broker-dealers' compliance with Regulation Best Interest. Private fund advisers face heightened examination of fee structures and risk management, particularly for funds affected by interest rate changes or significant withdrawals. The agency will also focus on how broker-dealers are complying with T+1 related process changes and firms' resilience against cyber threats and market disruptions. LINK

HSBC announced that they are simplifying their operating structure. From 1 January 2025, the Company will operate through four businesses with clear lines of responsibility: Hong Kong, UK, Corporate and Institutional Banking and International Wealth and Premier Banking. It represents a clear focus on “Eastern” and “Western” markets, but many questions are outstanding on the implementation of the strategy. Their Securities Services business sits under the Corporate and Institutional Banking business line and for the half-year to June 30 2024 earned USD1,146 million including USD401 million in global custody fees. HSBC will report its next earnings on 29th October. LINK

The Governing Council of the European Central Bank (ECB) has decided to launch initiatives to help improve cross-border payments within the EU and beyond. The work, which builds on the Eurosystem’s TARGET Instant Payment Settlement (TIPS) service, will include the following: Implementation of a cross-currency settlement service in TIPS. The service will allow instant payments originating in one TIPS currency to be settled in another TIPS currency and in central bank money. This lines up with the global move towards faster payment systems, but introduces a new set of risks to be managed. LINK

🚀 Digital Asset News

Last week, Euroclear announced an investment in Marketnode, a digital market infrastructure provider based in Singapore. They join SGX, Temasek and HSBC as investors in the firm. Marketnode operates two platforms: Gateway, a one-stop, end-to-end platform leveraging the potential of tokenisation and Fundnode, Singapore’s investments fund infrastructure on blockchain. LINK

Digital asset custodian Komainu has agreed to acquire Singapore-based Propine Holdings Pte Ltd, subject to regulatory approval from the Monetary Authority of Singapore. The deal will establish Singapore as a regional hub for Komainu's custody and digital asset services, expanding its presence in Asia Pacific. Komainu's collateral management service already serves clients across Hong Kong, Singapore, Malaysia, Thailand and Australia. Financial terms of the deal were not disclosed. Singapore continues to be a jurisdiction of choice for many regulated digital asset players. LINK

📈 Chart Of The Week