Jerome Powell: Banks can handle crypto

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📰 Welcome to the Newsletter

Good morning from Global Custody Pro! Each week, we break down the most important developments in global custody, clearing, payments, and digital assets—so you don’t have to. Let’s dive into this week’s top stories.

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🌏 Global Custody News

• Northern Trust reported Q4 2024 results with assets under custody and/or administration rising 9% year-on-year to $15.64 trillion. Asset servicing revenues rose 10% YoY from $611.7 million to $675.5 million for the quarter. That concludes the earnings season for the major global custodians and with interest rate and cost movements uncertain for the year ahead, and the substantial costs involved in operating in a highly regulated sector, we’ll be monitoring how earnings and AuC/A evolve through the rest of 2025.

• In 2025, ISDA is celebrating 40 years of existence since its founding in 1985 and its major achievements such as the Code of Swaps and ISDA Master Agremeents. It’s IQ edition for Q1 2025 includes several articles detailing the history of the organisation and its achievements. ISDA CEO Scott O’Malia calls out several key regulatory topics for 2025 including the Basel III “end game”, central clearing for US Treasuries, regulatory reporting, and the development of the ISDA Digital Notices hub which aims to reduce the risk profile around derivatives contract terminations.

• A coalition of major financial industry associations has asked the SEC to postpone the rollout of new central clearing requirements for U.S. Treasury securities by at least 12 months. In a letter dated Jan. 24, the groups warned that current deadlines—starting with a March 31, 2025, compliance target for clearing agencies—leave insufficient time to resolve critical ambiguities in the rule, such as exemptions for inter-affiliate trades, cross-border impacts, and risks of double-margining for funds. They cautioned that rushing implementation could destabilize the $26 trillion Treasury market, citing operational hurdles like client onboarding delays and unresolved regulatory coordination with global authorities. The associations urged the SEC to let clearinghouse operator Fixed Income Clearing Corporation (FICC) finalize rulebook changes by March 2025 but delay enforcement until March 2026 to prevent market fragmentation. They also highlighted unresolved issues, including standardized legal documentation, capital rules for banks, and the need for alignment with the CFTC and overseas regulators. The groups requested an SEC decision by Feb. 21 to avert disruptions ahead of key deadlines, emphasizing that a phased approach would ensure a smoother transition to mandatory clearing while preserving liquidity.

• The UK Financial Conduct Authority (FCA) has fined Infinox Capital Ltd £99,200 for failing to submit 46,053 transaction reports required under the Markets in Financial Instruments Regulation (MiFIR), marking the first enforcement action under the UK’s post-Brexit MiFIR regime. Between October 2022 and March 2023, Infinox did not report trades involving single-stock contracts for difference (CFDs) executed through a major corporate brokerage account, risking undetected market abuse. The FCA emphasized that accurate, timely reporting is critical for monitoring misconduct, but Infinox did not proactively disclose the breach despite identifying it via a third-party review. The penalty reflects a 30% discount for early settlement; the original fine stood at £141,800. Infinox’s failure exposed weaknesses in its systems for handling high-risk products like CFDs, which allow speculation on asset prices without ownership. Steve Smart, the FCA’s joint executive director, warned that such gaps could let market abuse “fly under the radar,” undermining market integrity.

• Over at ClarusFT, Chris Barnes has conducted a detailed analysis of a proposed EU active account requirement. He found that it could impact up to 8% of the euro-denominated swaps market, mandating annual trading of 30,000 EUR swaps across 12 size and maturity categories, analysts estimate. The rule would affect approximately €1.25 trillion in notional value and €1.16 billion in DV01 (dollar value of a basis point), potentially boosting Eurex’s annual cleared volumes by 40% from its 2024 baseline of €3.2 trillion in notional and €2.8 billion in DV01. The requirements, deemed manageable for dealers and buyside participants, align with Eurex’s existing capacity and are unlikely to disrupt financial stability, according to his analysis.

• Delta Capita has secured a multi-year agreement with HSBC to provide global over-the-counter (OTC) derivatives confirmation and settlement services, the companies announced on Monday. The partnership aims to streamline HSBC’s post-trade operations through Delta Capita’s infrastructure-as-a-service model, which focuses on standardizing processes and cutting industry costs. Delta Capita has also expanded its 24/7 support capabilities with new hubs in Kuala Lumpur, Manila, and Pune. Karen Everingham, HSBC’s Head of Markets and Securities Services Operations, said the deal would enhance derivative post-trade services for clients, while Delta Capita CEO Joe Channer highlighted the firm’s commitment to scalable, cost-efficient solutions.

🚀 Digital Asset News

• Eurex Clearing has secured regulatory approval from BaFin to launch a DLT-based collateral mobilization initiative by Q2 2025, aiming to enhance the speed, efficiency, and flexibility of transferring securities collateral to meet central counterparties’ (CCP) margin requirements. Collaborating with HQLAx and Clearstream, the project will allow clients to instantly mobilize margin collateral across custodians and CSDs via a secure digital ledger. J.P. Morgan, participating as the pilot clearing member, emphasized the initiative’s potential to optimize risk and collateral mobility for derivatives trading. The effort underscores Eurex’s leadership in CCP innovation and Deutsche Börse Group’s broader push to digitize collateral solutions, improving accessibility and reducing operational costs for market participants.

• Binance Labs has rebranded to YZi Labs, signaling its independence from the global crypto exchange Binance and expanded investment focus into Web3, AI, and biotechnology, while maintaining its blockchain roots. Founder CZ will mentor startups and advise strategically, while former head Ella Zhang returns to lead the firm, leveraging her past success in incubating projects like Polygon and Injective. YZi Labs will prioritize Web3 innovation, AI’s transformative potential, and biotech advancements, supported by its incubation programs, including a revamped 12-week in-person residency and the BNB Chain MVB initiative.

📊 Chart Of The Week

📣 Quote of the Week

🎧 What We’re Listening To

📺 What We’re Watching