Issue #7 - JPX, Coinbase, UBS, Tradeweb, HSBC, Standard Chartered, OKX

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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 JPX Group has a misconduct investigation, Coinbase reports strong earnings, and UBS continues to grow assets under management post its Credit Suisse acquisition.

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🌏 Global Custody News

Tradeweb reported its third quarter earnings of USD179.3 million on revenue of USD448.9 million, up 36.7% year-on-year. Tradeweb operates global electronic trading venues for interest rates, credit, equities and money markets.

With an adjusted EBIT margin of 49.9%, the growth of Tradeweb across different asset classes is evidence of a growing platform. Their recent acquisitions of ICD, r8fin, and YieldBroker are contributing strongly to this result according to CEO Billy Hult.

Sources: Earnings Presentation | Press Release 

UBS AG reported third-quarter profit before tax of USD1.9 billion on Thursday. Underlying profit reached USD2.4 billion, as strong wealth management inflows of USD25 billion and a 31% year-on-year jump in Global Markets revenues showcased the bank's diversified business model.

Total invested assets climbed 15% to USD6.2 trillion, while the bank maintained momentum in Switzerland with CHF35 billion in new or renewed loans. As the integration of Credit Suisse continues, UBS stayed ahead of schedule on non-core asset reduction, cutting USD5 billion in risk-weighted assets during the quarter.

Sources: Earnings Release

JPX Group announced the formation of an independent board committee to investigate alleged employee misconduct relating to alleged insider trading. They said “JPX Group will work tirelessly to regain the trust of our listed companies and other related parties by putting in place the strongest possible recurrence prevention measures…”.

Japan Exchange Group Inc (JPX Group) reported operating revenue of JPY81,810 million (~USD543 million) up 11% year-on-year. The increase was driven by higher cash equities trading volumes and revenue from listing services and data products. Average daily trading value for cash equities was up 28.9% year-on-year to JPY5,876,691 million (~USD38,368 million). The past year has seen enormous interest in the Japanese market, especially Japanese Government Bonds and top Japanese companies.

Sources: Earnings Release | Board Investigation

HSBC reported its third quarter earnings, as we indicated in Issue #6 - Assets under Custody just keep growing. HSBC reported Q3 profit before tax of USD8.5 billion, up 11% year-on-year, highlighting its strategic focus on four core business lines.. Their Securities Services business unit reported a fall in earnings of 6% to USD339 million following divestments in their fund administration business. Assets under Custody were reported as USD11 trillion, up 21% year-on-year.

Sources: Earnings Announcement 

Standard Chartered reported third quarter results with Q3 operating income up 12% year-on-year to USD4,904 million. The global bank also raised its 2024 income guidance upwards by 10%. Strong wealth management performance drove results, while the bank plans further retail optimization to focus on higher-margin activities.

The Securities & Prime Services business delivered operating income of USD156 million, up from USD140 million in Q3 2023. The result in this product area was driven by higher custody, funds and prime brokerage fees and margins.

Sources: Earnings Result | Earnings Presentation

LSEG had a trading update last week and reported robust performance with a 9.5% increase in total income at constant currency, supported by strong growth across all divisions including notable gains of 22.4% in Capital Markets and 10.4% in Risk Intelligence.

Their strategic partnership with Microsoft remains on schedule, with product development advancing according to plan. LSEG has strengthened its market position by agreeing to acquire an additional 8.3% stake in LCH Group for EUR433 million, which will increase its ownership to 94.2%.

What we found even more interesting was their comprehensive post trade presentation from from earlier in October which outlines how their post trade ecosystem works. It is an accessible overview of how clearinghouses and services work. The world of financial market infrastructures is complex and highly regulated, so it is always worth examining how the bigger players are thinking about their value proposition to customers.

Sources: Trading Update | Post Trade Presentation | Microsoft Partnership

🚀 Digital Asset News

Coinbase Inc reported its third quarter earnings with total revenue of USD1.2 billion and net income of USD75 million. Strong growth in stablecoin and institutional business lines provide insights into where growth might continue, as ongoing SEC litigation risk and regulatory risk continues to cast a shadow over the entire sector. Coinbase is increasingly looking like a major financial markets infrastructure player. Because it is publicly listed, many firms will have no choice but to partner with it as a prime services provider or custodian.

Sources: Shareholder Letter | Press Release

Cryptocurrency exchange OKX has appointed Standard Chartered as a third-party crypto custodian for its global institutional business, the company announced on Tuesday, in a move aimed at attracting more institutional investors to digital assets. The Dubai-based firm said the custody agreement would leverage Standard Chartered's global banking expertise and risk management framework to provide institutional clients with secure custody solutions. Earlier in October, Standard Chartered announced that TP ICAP would also use its digital asset custody service.

The appointment of independent custodians is a critical enabler for traditional finance firms and digital asset native firms. All major bank custodians will need to ensure their product and service offerings can accomodate secure servicing of digital assets to remain competitive, especially given the regulatory risk in this asset class.

Sources: Press Release | OKX Institutional | Standard Chartered

📈 Chart Of The Week