Global Investor Magazine Summer 2022

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Summer 2022 CHRISDTCC’SCHILDS MUFG aims to be data-driven securities finance partner Securities finance THE LOWDOWN ON THE WORLD’S KEY STOCKHOWSONPRESIDENTCBOE’SMARKETSNEWDAVIDTAKES discusses regulatory reporting standards SUB-CUSTODY GUIDE DERIVATIVES

While it may be tempting to sit back, relax and enjoy such a market share, the fact is the DTCC is now preparing for a whole new challenge presented by various regulatory reviews that are set to rewrite the rules that have been in place for only a few years in some cases.The prospect of rule amendments from multiple international regulators presents an additional challenge for large firms that operate in multiple jurisdictions, suggests Chris Childs, the head of repository and derivatives services at the DTCC.

The derivatives industry has been especially hard-hit as regulators took aim at the opaque and largely unchecked over-the-counter markets. The Depository Trust & Clearing Corporation has been in the past decade at the cutting edge of that initiative.Tracingits roots back to credit default swaps before the banking crisis, the DTCC is now the marketleader in global trade reporting services, handling about four fifths of global interest rate derivatives and 85% of credit derivatives.

EDITORIAL Summer 2022 3

As a global exchange group, the scope of regulatory reforms affecting Cboe is vast. Howson pointed to Securities and Exchange Commission chair Gary Gensler’s bold ambition to reshape the US equities market through far-reaching regulation, something that hasn’t happened for more than a decade. “In Europe, there’s the MiFIR review. It seems as though the Czechs, which currently hold the Presidency of the European Council, are keen to move the file along, which is great Howsonnews.”said Europe is also reviewing reference price waiver venues and the controversial practice of payment for order flow (PFOF) may be banned, adding: “The European Parliament came out in that direction, though it’s never certain when it comes to regulation.”

The US derivatives regulator confirmed in June a six-month delay to the first phase of its new data reporting rules (dubbed ReWrite) to December 5. The implementation of the second phase of the CFTC Rewrite rules is expected in late 2024, while the European Markets Infrastructure Regulation update, known as Refit, is set to be phased in from April 2024. That month will also see Australian, Japanese and Singapore regulators’ versions of the re-write rules, with Hong Kong Monetary Authority rules and the UK version of Refit set to be rolled out later that year. But Childs sees these regulatory reforms as an opportunity. He said in our cover feature: “At DTCC we believe that the industry can capture real value in terms of risk mitigation, efficiency and cost savings from standardisation across jurisdictions.”

Love it or hate it (some people do love it), financial regulation has become increasingly pervasive in recent years as governments have sought to shore up the financial markets against the risks that caused the banking crisis of 2008.

EDITORIAL Managing editor Luke Jeffs Tel: +44 (0) 20 7779 luke.jeffs@globalinvestorgroup.com8728 Derivatives editor Radi Khasawneh Tel: +44 (0) 20 7779 radi.khasawneh@euromoneyplc.com7210 Senior reporter, Securities Finance Ramla Soni Tel +44 (0) 20 7779 ramla.soni@euromoneyplc.com7246 Design and production Antony aparselledesign@me.comParselle BUSINESS DEVELOPMENT Business development executive Jamie McKay Tel: +44 (0) 207 779 jamie.mckay@globalinvestorgroup.com8248 Sales manager Federico federico.mancini@euromoneyplc.comMancini Head of sales, News & Insight Sunil Sharma Tel: +44 (0)20 7779 sunil.sharma@totalderivatives.com8556 Divisional director Jeff Davis Chairman Leslie Van de Walle Chief executive Andrew Rashbass Directors Jan Babiak, Colin Day, Imogen Joss, Wendy Pallot, Tim Pennington, Lorna Tilbian © Euromoney Institutional Investor PLC London 2022 SUBSCRIPTIONS UK hotline (UK/ROW) Tel: +44 (0)20 7779 8999 US hotline (Americas) Tel: +1 212 224 hotline@globalinvestorgroup.com3570 RENEWALS Tel: +44 (0)20 7779 renewals@globalinvestorgroup.com8938 CUSTOMER SERVICES Tel: +44 (0)20 7779 customerservices@globalinvestorgroup.com8610 GLOBAL INVESTOR 8 Bouverie Street, London, EC4Y 8AX, UK Next publication Autumn 2022 Global Investor (USPS No 001-182) is a full service business website and e-news facility with supplementary printed magazines, published by Euromoney Institutional Investor PLC. ISSN 0951-3604

Another firm watching regulatory changes closely is Cboe Global Markets, the US options giant that promoted former Europe and Asia head David Howson to group president in May. Cboe Global Markets has pledged its ambition to become the world’s largest securities and derivatives network, and has been working to achieve that objective in recent years, partly through targeted acquisitions.

Tough regulation has become in the past ten years a fact of life for trading firms but the ability to see through the red-tape and find opportunities is an attribute to be commended.

Global Investor Group

Navigating consequencesunintended

Luke Jeffs, Managing Editor,

REGULAR FEATURES: 6 Trading Places: Aberdeen makes changes after Chessum leaves; BNY Mellon hires CFO from Goldman Sachs; JP Morgan promotes Herlihy to run global trading; Former Curve chief Andy Ross joins Standard Chartered 8 Highlights from Web: Voting and collateral “key” to ESG – NNIP; Trade body warns against Mifid II reforms; European short interest falls 12% in second quarter; HKEX to relax position limits on equity derivatives COVER STORY: 12 DTCC is working hard to help multi-national clients navigate the changing waters of regulatory reporting. Chris Childs, the firm’s head of repository and derivatives services, outlines the current challenges 18DERIVATIVES:CboeGlobal Markets has promoted David Howson from its head of Europe and Asia to president of the group. As the Brit settles into life in the Windy City, Howson reflects on the shape of the US options trading giant. 23 The new president of Intercontinental Exchange’s fixed income and data arm discusses opportunities for expanding the US group’s thematic Environmental, Social and Governance (ESG) products 24 The London Metal Exchange chief executive Matthew Chamberlain looks back on a turbulent six months for the market as he and his team deal with the aftermath of the nickel suspension 26 The London Stock Exchange Group plans to leverage the foreign exchange assets it acquired through the Refinitiv takeover to expand its currency trading business in Asia SECURITIES FINANCE: 27 MUFG is looking to expand its business in the US and align the firm as a data-driven partner to its securities finance customers 29 Representatives of the London, Toronto and Boston chapters of the Women in Securities Finance (WISF) group offer an update on developments over the last 12 months. 32 BNY Mellon EMEA head of product & strategy, securities finance & markets ESG considers the specific challenges that the growth of ESG investing presents to securities finance teams 37CUSTODY:TheGlobal Investor Sub-Custody Guide 2022 considers the key clearing and settlement changes in the world’s most popular investment markets 64 RBC Investor & Treasury Services’ head of FX product Mark Hogg outlines the key strategies to manage better currency risk at times of severe market volatility 69 Crypto traders feel the establishment of New York-settled contracts will expedite the development of the digital asset market in the world’s biggest economy 70 Analysis: Elba Horta, the fluctuating fortunes of the carbon removal market 10 12 18 29 CONTENTS Summer 2022 4

top asset managers,


StateCUSTODY:Streethires blockchain engineering head, digital tech lead State Street Digital has appointed Rob Otter as head of blockchain engineering and Nitin Gaur as digital technology strategy lead, as the US group seeks to accelerate its digital transformation for clients. In his new London-based leadership role, Otter oversees the development and implementation of blockchain technology across the US custody bank’s digital arm, the banking group said.He brings with him more than 20 years of technological and transformation experience and joins from JPMorgan Chase, where he served as head of chief technology officer blockchain, application programming interface technologies, and applied research since 2019. Places world’s banks, brokers

and exchanges continued to shuffle their decks in the third quarter of 2022.



ICMA taps board members from BlackRock, Credit Agricole, StanChart The International Capital Market Association (ICMA) has elected three new board members from BlackRock, Credit Agricole and Standard Chartered.StephenFisher, BlackRock Investment Management, London, Jean-Luc Lamarque, Credit Agricole Corporate and Investment Bank, London and Henrik Raber, Standard Chartered Bank, Singapore, have all been elected to the board for a first term of three “Additionallyyears.Alessandro Brusadelli, UniCredit, Milan, Dr. Frank Engels, Union Asset Management Holding (effective July 1 2022), Frankfurt, Kun Hu, Bank of China Limited, Beijing, and Janet Wilkinson, RBC Europe, London were all elected to the board for an additional consecutive term of three years,” the association said in a statement. ESG impact of lending decisions to be ‘carefully considered’ - SIX Stock lending firms should “carefully consider” the environmental, social and governance (ESG) impact of their lending decisions and the processes behind them, according to Swiss exchange SIX. The Swiss group said ESG is becoming a key part of the financial markets as stock lenders and borrowers increasingly want to know about the ESG profiles of the assets they are borrowing. Jacob Gertel, senior content manager for legal and compliance data at SIX, told Global Investor: “As ESG becomes central to all parts of the financial markets, lenders and borrowers of financial instruments are increasingly interested in whether the assets they are borrowing or the borrowers they are lending to comply with their vision of responsible investing.”

Aberdeen Standard Investments has re-allocated securities lending and collateral responsibilities to staff in response to the departure of investment director Matthew Chessum.TheUKasset manager confirmed Chessum’s departure, adding the firm has taken this opportunity to develop existing talent within the business. Stuart Lindsay, investment director within the global liquidity management team, and Josh McClinton, who has now been promoted to investment manager from investment analyst, are taking on additional stock lending and liquidity management responsibilities, respectively.



TRADING PLACES Summer 2022 6

Euroclear said: “In establishing the group transformation office, Rudi will be responsible for orchestrating Euroclear’s continued digital transformation and to monitor the progress of the implementation of its business strategy.”

BNY Mellon has appointed Dermot McDonogh from Goldman Sachs as chief financial officer (CFO), replacing Emily Portney who will transition to lead the company’s treasury, credit and clearance and collateral management businesses. McDonogh will join BNY Mellon on November 1 and start as CFO in February 2023, the bank said. Portney will continue as CFO until January 31 2023, and will work closely with McDonogh to ensure a seamless transition, the bank said. Robin Vince, CEO-elect of BNY Mellon, said in a statement: “Dermot has exceptional experience in finance and financial operations as well as leadership across global teams and dynamic international environments. The addition of Dermot to our firm will further enhance the strength of our industry-leading team.”

After spending five years at management consultancy McKinsey & Company, Collin joined Fortis in 2004, holding various roles in finance, risk and operations until 2008 when BNP Paribas acquired the bank.

PASLA appoints BlackRock’s Burns as new chair

JPM sets up new global trading services sales team Eileen Herlihy, the current head of derivatives clearing sales, Europe, the Middle East and Africa at JP Morgan, has been promoted to lead a new global trading services sales team at the investment bank. A spokesperson said the new team will be responsible for selling agency securities finance and collateral services products, and will also provide securities services coverage to the bank and infrastructure clients.

Burns has been a director of PASLA for over three years. As chairman, he will continue to focus on promoting open, transparent and efficient securities lending practices across Asia-Pacific, the trade body said.

Euroclear appoints chief transformation officer Euroclear appointed in mid-July Rudi Collin, formerly of BNP Paribas, as group chief transformation officer, the second senior management hire by the Brussels-based group in a week.Collin brings over a decade of transformation, digital and finance experience to the role, and joins Euroclear after it promoted Sara Cescutti to the post of chief commercial officer for Europe, the Middle East and Africa.

The main Asian securities lending trade body has appointed Ben Burns of BlackRock as its chair effective immediately.Burnsreplaces Stuart Jones of Jefferies who resigned from the position in late July, said the Pan Asia Securities Lending Association (PASLA).PASLA said in a statement: “We would like to thank Stuart for his outstanding contribution as a PASLA director for over ten years and chair for five years. He has been instrumental in integrating our franchise with the securities lending industry and we wish him well in future endeavours.”

“This is a new global role for Eileen, partly in recognition of the fact that our clients themselves are getting more sophisticated at optimising their collateral balances and financing needs on a global basis. Eileen’s experience in clearing will be invaluable too,” they said.Based in London, Herlihy will run the sales function for Ben Challice, global head of collateral management and agency lending at JP Morgan. Pirum hires US head of product Veneziano from Citi Pirum has appointed Thomas Veneziano from Citi as its North American head of product, marking the latest hire by the securities finance fintech as it continues to expand in the US.Based in New York, Veneziano will focus on expanding the company’s product range in North America and be the local subject matter expert in supporting clients and the sales team, PirumVenezianosaid. reports to chief operating officer and head of Americas Bob Zekraus and Rob Frost, global head of product.Hejoins from Citi where he was senior vice president managing the securities finance middle office since 2011.


BNY Mellon appoints finance head from Goldman Sachs

The former head of LSE Group’s (LSEG) interest rates market CurveGlobal has joined Standard Chartered in a senior role, after the closing of the venue early this year. Andy Ross joined the Londonbased banking group as its global head of prime and financing segment within its financing and securities (FSS) division in late July, according to a statement seen by Global Investor Group.


Former Curve chief Ross joins Standard Chartered to run prime

In addition, Ross will take up a role as head of financial markets for the UK starting in August, the announcement said.

The Options Clearing Corporation (OCC), which clears the US options market, has appointed its new chief financial officer in its second senior hire since Chicago-basedJune.

TRADING PLACES Summer 2022 7

OCC said in July Mike Nowak will take over as CFO on August 8, replacing the incumbent Amy Shelley, who will leave the firm. Nowak was chief financial officer of ABN Amro Clearing Chicago, where he spent 12 years including a stint as interim chief executive in 2016. OCC’s chief executive John Davidson will be replaced by the head of prop trading firm Akuna Capital early next year, the firm said in June. Bolkovic served as chief executive of ABN Amro Clearing Chicago from 2016 to 2020. “As both the former CFO at one of our member firms and a former OCC Board member, Mike has been a strong partner over the years who has a deep understanding of our industry and our business,” Craig Donohue, executive chairman at OCC, said in a statement. “He is an established leader with a track record of success, and we look forward to him joining our team.”

“Prime & Financing is core to the FSS business, and I am thrilled that someone of such high calibre is joining our team to further enhance the growth momentum of our business and deliver our client commitments,” Margaret HarwoodJones, global head of FSS, said in the statement.Inhisnew role, Ross will report to Harwood-Jones and Molly Duffy, head of Europe and the Americas in the financial markets segment.

OSTC chief Hodgkinson to leave as training arm spins off The chief executive of OSTC Lee Hodgkinson has said he is stepping down from that role as the prop trad ing group spins off its training arm into a separate entity. Hodgkinson, who has led OSTC for more than four years after joining from Euronext in 2018, said he will leave his post as group chief executive before the end of July. “After four fantastic years as CEO, I will be leaving OSTC at the end of this month,” Hodgkinson said. “I’m taking up a truly unique opportunity, and the next exciting chapter in my career begins Hodgkinsonshortly.”toldGlobal Investor his departure is timed to coincide with a corporate restructuring that will see OSTC’s fast-growing training arm ZISHI become independent from the group’s traditional proprietary trad ingThebusiness.firmhas made in the past two years acquisitions to grow ZISHI Cornerstone, including FSTP in May 2021, BG Consulting in January 2021 and UK options training firm Volcube in late 2020.NOWAK LEE HODGKINSON

Amro Clearing finance head


Here are some of the top stories you may have missed atXAVIERGlobalInvestorGroup.comBOUTHORS

Voting and collateral ‘most important’ ESG factors - NNIP Shareholder voting and collateral are the “most important” factors to consider when it comes to incorporating environmental, social, and governance (ESG) factors in securities lending, according to Dutch asset manager NN Investment Partners.XavierBouthors, senior portfolio manager, investment solutions at the Goldman Sachs-owned firm, believes that ESG integration into portfolio management has triggered a review of securities lending programs’ parameters.Hesaid:“At NN IP we see voting and collateral as the two most important ESG pillars in securities lending. Shareholder voting is an important mechanism to voice concerns and expectations to companies and engage on ESG issues.

A key challenge in securities lending is to ensure the securities are back in time for firms to vote, Bouthors said. “This requires monitoring of voting dates which may face some obstacles to have a timely source of information especially in some markets like the US. In addition, recalling all or selected securities for voting has an impact on the revenue and trade opportunities. Counterparties are looking for some balance on loan stability and will include the recall risk in pricing when borrowing from lenders.”

The International Organisation of Securities Commissions (IOSCO) has laid out a plan to publish guidelines for regulators looking to create rules overseeing cryptocurrency markets by the end of next year.

IOSCO sets sights on global crypto framework

IOSCO established a Fintech Task Force in March to establish an agenda and timeline for creating policy guidelines in two separate areascrypto/digital assets and decentralised finance.“Thecross-border nature of crypto assets and markets calls for a robust set of policy recommendations to support consistent and coordinated regulatory action,” said Tuang Lee Lim, assistant managing director for capital markets at the Monetary Authority of Singapore and chair of the Fintech Task Force. UK interest rate may hit 2% in next 12 months - MPC member The Bank of England is set to hike British interest rates further in the short-term despite a likely slowdown in global growth, a member of the UK Monetary Policy Committee (MPC) hasMichaelsaid. Saunders, an external member of the MPC and economist at Citigroup, said in his valedictory speech at the Resolution Foundation in London in July that a rise in the UK lending rate to around 2% in the next year is not ‘implausible or unlikely’ given the need to manage inflation.

Regulators neglecting green impact of crypto mining – report Regulators are neglecting the environmental impact of mining cryptocurrencies, according to a new report that states less than 0.1% of proposed guidelines address the carbon footprint of issuing new tokens.

Breaking stories from Global Investor Group


He added that market pricing, as gauged by the forward rates, was higher and had moved in line with central bank policy shifts.

The annual general meeting gives us this opportunity, so we need to ensure our voting rights are protected and available on voting day.”


SGX, ICE seal index plan as part of partnership Singapore Exchange (SGX) and Intercontinental Exchange (ICE) have agreed to develop new indices as the two exchange groups finalised a wider cooperation deal in late July. The Singapore-based exchange group said it would work with ICE’s Data Indices arm to develop new index products as they announced the partnership. ICE-owned New York Stock Exchange (NYSE) will also begin dual listing companies with SGX, and the agreement includes working to bring environmental, social and governance (ESG)-based products as well as new exchange traded funds (ETFs).“This agreement underscores SGX Group and NYSE’s joint interest in driving greater collaboration between the two exchanges,” Loh Boon Chye, chief executive of SGX said in a statement. “It aims to create a more connected ecosystem to facilitate access to capital and the development of new investment solutions to address growing complex needs of market participants and investors.”


Currently, central counterparties (CCPs) are responsible for the collection and distribution of cash penalties for settlement fails on clearedESMAtransactions.saidinastatement: “Our proposals would change this existing practice by allowing the central securities depositories (CSD) to collect and distribute all types of penalties, including those for settlement fails relating to cleared transactions”.

The main European banking trade body has warned European regulators against proposed changes to the Markets in Financial Instruments Regulation.

The Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI) and the DTCC said ‘The T+1 Securities Settlement Industry Implementation Playbook’ outlines a detailed approach to identifying the implementation activities, timelines, dependencies, and risk impacts firms should consider to prepare for the transition from the current T+2 settlement cycle to T+1. Trade body warns against European Mifid regulatory reforms

DTCC,CUSTODY:twotrade bodies publish T+1 settlement guide

A study by reg tech firm CUBE said that regulators are overlooking the negative environmental effects of mining crypto such as Bitcoin and Ethereum.Thereport, entitled Cryptopia: Regulation & Crypto on a Cliff Edge, suggests there is a potential conflict of interests for banks that are committing themselves to green projects while separately investing in cryptocurrencies.

The Association for Financial Markets in Europe said the proposed changes to the European regulation that has been in effect since 2018 risk hampering the work of banks supporting markets by providing liquidity.Thetrade body welcomed parts of the proposed changes, including those related to a consolidated tape for equities and bonds. Clearstream to give Italian investors access to funds portfolio Clearstream has been selected by Italian online broker Directa to provide investors with access to its global funds portfolio. Clients will be able to access Clearstream’s funds suite of more than 190,000 international funds in 50 jurisdictions globally.

The Depository Trust & Clearing Corporation (DTCC) and two US trade bodies have published a guide on preparations for the proposed reduction of the US equity settlement cycle to T+1.

Clearstream will also provide Directa with fund distribution support via its Fund Centre platform, the post-trade arm of Deutsche Boerse said. Europe opens consultation on CSDR penalties process

CACEIS Bank Italy will act as local paying agent, ensuring communication with transfer agents via Clearstream’s cross-border fund processing platform, Vestima.

‘Connectivity’ for margin rules is key challenge - CloudMargin Large investment banks are still faced with the challenge of “building out connectivity to third parties” ahead of the next round of margin rules in September, according to a margin fintech.BNPParibas Securities Services became in July the latest firm to connect to CloudMargin’s collateral platform to manage the allocation of margin by BNP clients ahead of initial margin phase six, due to take effect in September.DavidWhite, chief commercial officer, CloudMargin told Global Investor: “We’re very pleased to add BNP’s triparty service to the list of more than 60 custodians and triparty agents already connected to the CloudMargin platform. Phase six of UMR is going to add a large number of new clients to the 160 groups that are already using our platform today.”

SECURITIES FINANCE: LCH RepoClear extends settlement to Austria, Spain All Austrian and Spanish government debt securities cleared by LCH SA’s RepoClear service are now available for settlement through Clearstream Banking.FromJuly, clearing members of RepoClear will be able to choose Clearstream as a new settlement place for both the markets. Investors will also be able to consolidate a wider range of their European settlement activity in one place, minimising cross-border inefficiencies, reducing intraday liquidity requirements and fostering global trading, the Paris-based clearing house said. Corentine Poilvet-Clediere, group

The European securities regulator is seeking views on simplifying the process of the collection and distribution of cash penalties for settlement fails relating to cleared transactions.TheEuropean Securities and Markets Authority (ESMA) has launched a consultation on a possible amendment to the central securities depositories regulation (CSDR) cash penalty process for cleared transactions.



BNY Mellon, Goldman Sachs settle first lending transactions on DLT BNY Mellon and Goldman Sachs are the first to settle agency securities lending transactions using the HQLAx distributed ledger technology (DLT) platform, the firms announced in July.


The securities lending fintech said as part of the combined series of 35-day term transactions, it created ISIN-level securities trackers called digital collateral records (DCRs) from loaned securities it received from BNY Mellon. It gave Goldman Sachs a digital copy of those trades.

Shareholder voting vital for ‘good governance’ in lendingBroadridge Shareholder voting is key to “good governance” of a corporation in securities lending when it comes to environmental social and corporate governance (ESG), according to an industry Investor, Darren Crowther, general manager, securities finance, and collateral management at Broadridge, said all of the aspects in ESG are important to varying degrees, but the one that stands out for the securities finance industry is of the most fundamental activities for the good governance of a corporation is shareholder voting, for example at annual general meetings and on specific issues such as takeovers. Many of the buy-side firms that are major providers of securities for loan are becoming increasingly diligent at voting as a part of their commitment to corporate governance.”

EXCLUSIVES FROM GLOBAL INVESTOR GROUP Summer 2022 10 leader, head of RepoClear, collateral and liquidity, LCH SA, said: “An open approach and customer choice remain central to our strategy and values as a clearing house, as such, it is LCH SA’s role to support our members’ settlement strategies whilst enabling them to benefit from RepoClear’s deep and diverse netting pool. We are thus delighted to continue to serve our membership in expanding its choice in settlement venues.”

‘Interoperable, flexible’ technology key to achieve T+0 - Provable Markets “Interoperable and flexible” technology solutions will be integral to the longerterm goal of making seamless same day (T+0) settlement for cash equities tangible, a US lending fintech has said. Matthew Cohen, co-founder and CEO of Provable Markets, believes the move to T+1 should not be a major problem for the industry to accomplish by the proposed deadline of March 2024 in the US, but that this won’t be the case for T+0 which will be much harder to achieve.Speaking to Global Investor, he said: “Interoperable and flexible technology, and partnerships among technology providers, will play a key part in supporting market infrastructure at scale. We believe many advancements need to work together to help achieve this.“

European short interest dropped in Q2 - research Short interest in the European market fell by 11.9% or $33.4 billion (£27 billion) to $247 billion in the second quarter of 2022, according to new research.Thedecrease in short interest was mainly due to a down-trending market in the second quarter with the Stoxx Europe 600 down 10.67%, research from New York-headquartered S3 Partners showed.

Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, said: “The $33.4 billion decrease was made up of $52.0 billion in shorted share price decreases which was partially offset by $18.6 billion of increased short selling. Short sellers increased the amount of shares shorted to offset the decrease in the value of their short positions as stock prices declined, but unlike the first quarter the additional short selling did not offset the total decline in market value of the shorted securities.”

SGXDERIVATIVES:goeslivewith equity derivatives link to India’s NSE Singapore Exchange (SGX) has gone live with its equity derivatives trading link to the National Stock Exchange of India (NSE).SGX, which trades an Indian index future, said the NSE IFSC-SGX Connect service will trade and clear Nifty equity derivatives, after a formal launching

CME traded 3.986 million SOFR futures over two days in late July, versus 2.657 million of Eurodollar futures. This compared to a daily average of 1.6 million SOFR futures in the three months to the end of June, the US group said.

EXCLUSIVES FROM GLOBAL INVESTOR GROUP Summer 2022 11 ceremony at Gujarat International Finance Tec-City. Settlement is conducted by the NSE IFSC Clearing Corporation with SGX Derivatvies Clearing acting as the central counterparty.“Theroll-out of the Connect is a significant milestone for SGX Group and NSE, and it brings us one step closer to combining the growing domestic and international liquidity pools for Nifty products,” Loh Boon Chye, chief executive of SGX, said in a release. “We are confident that the Connect will be the key platform that connects the world to India, offering global investors unprecedented access to India’s capital markets.”

“For the second consecutive FOMC meeting, the Fed raised its rate by 75 basis points on Wednesday,” Rogerson said in an emailed comment.

HKEX to relax position limits for equity derivatives Hong Kong Exchanges and Clearing (HKEX) plans to relax the position limit rules covering single stock derivatives and mini contracts on its most popular equity index contracts after the conclusion of a review process.

“Our proposals underscore HKEX’s commitment to continue to develop a strong, vibrant and sustainable derivatives market,” John Buckley, co-chief operating officer and head of operations and transformation at HKEX, said in a release. “A more robust position limit regime will provide enhanced capacity and flexibility for investors as they look to manage their market exposure, further facilitating market growth and consolidating Hong Kong’s position as the leading derivatives and risk-management hub of Asia.”

CFTC commissioner hits out at Shanghai Clearing House exemption A commissioner of the Commodity Futures Trading Commission has questioned the US regulator’s decision to extend Shanghai Clearing House’s exemption from registration despite the lack of an agreement with the Chinese central bank on the matter. Commissioner Summer Mersinger took issue with the extension granted by the CFTC. Shanghai Clearing House’s exemption from registration as a derivatives clearing organisation (DCO) was set to expire in late July, and will now run to the end of July next year, with the division of clearing and risk saying it does not plan to issue further extensions.“Iamtroubled by Shanghai Clearing House’s lack of engagement with Commission staff regarding its application for an exemption from DCO registration, its sudden re-engagement as the expiration date for its prior no-action letter looms, and issues surrounding the feasibility of securing a memorandum of understanding with the People’s Bank of China that satisfies the requirements for such an exemption,” Mersinger said in a statement.TheCFTC requires a memorandum of understanding between the agency and the home country regulator to qualify for such exemptions, but the US-Chinese agreement expired in 2016, at which time the clearing house first received no-action relief.


The report, based on a survey of over 100 senior proprietary traders, says that over half of firms saw strong profitability in digital assets. There were, however, some signs of pullback, with 3% of prop firms saying they had exited the market in the period and 16% reducing their trading activity. SOFR trading jumped after historic US rates hike - CME Trading in CME Group’s derivatives linked to the US alternative to Libor jumped in late July after the US central bank increased domestic interest rates by 75 basis point for the second time. Mark Rogerson, head of interest rate products for the EMEA region at CME, said the trading bump continued a trend observed in April, when trading of US Secured Overnight Financing Rate (SOFR) futures began to eclipse use of Libor-referencing Eurodollar contracts.

Prop firms still entering crypto markets despite turmoil – Acuiti More than a fifth of proprietary trading firms accelerated plans to enter the cryptocurrency markets in response to volatility in the market, according to research firm Acuiti. Some 22% of respondents to the Acuiti proprietary trading survey commissioned by fintech Avelacom said they had stepped up efforts to enter the cryptocurrency market in the first half of the year, with 13% increasing trading in the period. The latter group cited opportunities in the relative low current price and volatility in the market, the research said.

“Following this news, CME Group short-term interest rate volumes were expectedly strong during Thursday’s and Friday’s sessions, with SOFR products outperforming Libor-based Eurodollar products by healthy margins, continuing the trend we have consistently seen during the summer’s SOFR First months.”

The Hong Kong-based exchange group said it would increase the position limits for its single stock derivatives and bring the limits on mini contracts in line with the standard benchmark equity index contracts.

Harnessing technological change to meet the reporting data challenge

The global derivatives markets are set to hit a significant milestone. In October 2012 the Commodity Futures Trading Commission (CFTC) became the first regulator to go-live with requirements for the reporting of over the counter (OTC) derivatives to an authorized trade repository (TR), kicking off a regulatory cascade that continues to this day.

DTCC created its Trade Information Warehouse in 2006 with an initial focus on post-trade processing of credit de fault swap transactions. It subsequent ly gained the industry mandate (from trade bodies the International Swaps and Derivatives Association and the Association for Financial Markets in Europe) to be the preferred service pro vider for much of the OTC market in 2011.Fast forward to today, and the firm estimates that its Global Trade Reposi tory service (GTR) covers around 80% of OTC derivatives and 85% of secu rities financing transactions reported globally. DTCC operates locally regis tered or recognized TRs for cleared and uncleared derivatives across multiple asset classes, which puts it in pole posi tion as the industry looks to meet the challenge of how best to process all this new information.

These new rules shift regulatory re gimes towards the harmonisation that was lacking ten years ago. Based on a recommendation from the Financial Stability Board (FSB), the International Organisation of Securities Commis sions (IOSCO) and the Bank for Inter national Settlements Committee on Payments and Market Infrastructures (CPMI) worked to extend international data standards beyond the existing re quirements by some regulators for the reporting of legal identity identifiers (LEIs) and universal transaction identi fiers (UTIs). In 2018 the CPMI-IOSCO Harmo nization working group introduced a framework for OTC derivatives data standardisation, introducing a recom mended set of critical data elements (CDE) including LEIs, along with uni versal product identifiers (UPIs) to be used as technical guidance for jurisdic tional regulators. DTCC was involved in that effort, and believes the new re gime represents a significant step for ward. At DTCC we believe that the industry can capture real value in terms of risk mitigation, efficiency and cost savings from standardization across jurisdictions.

Cracking the code:


In January, the CFTC extended the compliance date for the first phase of its new data reporting rules (dubbed CFTC Rewrite) to December 5, but that deadline is only the first of many for international firms. The implementa tion of the second phase of the CFTC Rewrite rules is expected in late 2023, while the EU’s European Markets In frastructure Regulation (EMIR) up date, known as Refit, is expected to be phased in from as early as April 2024. That month could also see Australian, Japanese, Hong Kong and Singapore regulators’ versions of the rewrite rules, with the UK version of Refit set to be rolled out later that year.

Much has changed over the last dec ade, and Global Investor spoke with one of the firms at the epicentre of en gineering that change to gauge lessons learned and the path forward ahead of the incoming wave of trade reporting Refits and Rewrites. Chris Childs, head of repository and derivatives services at DTCC, com mented: “I don’t think there’s an or ganization that’s been more active in working groups and public forums to push harmonisation and standardisa tion of reporting rules,” Childs said. “At DTCC we believe that the in dustry can capture real value in terms of risk mitigation, efficiency and cost savings from standardisation across ju risdictions. We don’t expect that global requirements will ever be 100% aligned, but we believe the incoming rule chang es represent significant progress.”

Summer 2022 13 DERIVATIVES Chris Childs, head of repository and derivatives services at the Depository Trust & Clearing Corporation (DTCC)

“We are looking at data amalgamation technology proof of concepts internally while exploring how this technology could eventually be used across multiple TR datasets.” Childs said. “It does, how ever, raise all sorts of questions around governance, and under what sort of framework the regulators would allow this activity to operate. For example, you would potentially need formal data sharing agreements or other governance structures in place. To advance a coordinated regulatory framework in this space it is key that the industry under stands and starts to address the issues as sociated with data sharing. Lack of such a framework will reduce the potential benefits of harmonised data rules.”

“A crucial side effect from that previ ous lack of harmonization has been the inability to aggregate data from a glob al systemic risk perspective,” Childs said. “We were one of the early insti tutions that called for greater harmoni zation and contributed to the work of CPMI-IOSCO to try and remedy that at the time. The publication of the CDE and the subsequent implementation of the CPMI-IOSCO recommendations were the result of that process.”

Looking forward, DTCC sees an opportunity for efficient data shar ing across TRs, but for that to happen a governance framework needs to be agreed between regulators.

“Jurisdictional differences persist, but with the introduction of UPIs and the ISO 20022 XML messaging schema and with the CDE being to a large ex tent consistently applied, there is now an opportunity to reuse code in a dif ferent way within the systems we have today. There is a real opportunity to harness technological advances and the progress being made towards har monization to rethink the way this data can be used in the future.”


Once all the changes have come into force, DTCC analysis shows that 52 of the 110 critical data elements identi fied by CPMI-IOSCO will have been implemented consistently across juris dictions, which is enough of a base for the industry to build a better overall picture of market risks.

“The analysis that we have done shows that those 52 data elements do contain enough information from an economic perspective to amalgamate and arrive at a reasonable systemic risk assessment,” Childs said. “So progress has been made, and technology has now improved to the point where it is possible to connect and share datasets, temporarily merge datasets, run ana lytics, and then afterwards expunge the data. Harnessing that technological ad vancement could allow for an assess ment on exposures and the potential contagion impact after a market event, or pull data on particular trading coun terparties or specific asset classes.”

Under their rule revisions, ESMA, FCA and CFTC are adopting varying subsets of CPMI IOSCO’s recommended CDEs*. 1 CDE CDEADOPTIONANALYSIS OF ESMA, FCA & CFTC RULE CHANGES ESMA (EU) 76% ADOPTION (84 out of 110 w/o deviation) FCA (UK) 76% ADOPTION (84 out of 110 w/o deviation)CFTC (US) 70% ADOPTION (77 out of 110 w/o deviation) Shared & Aligned 47% ADOPTION (52 out of 110) TotalCDEsCDEsCDEsCDEsAdopted & Partially Aligned Not Adopted by Any Regulator Adopted by Only 1 or 2 of the 3 Regulators CDEs Adopted & Fully Aligned MAS and ASIC Re writes are currently in the proposal stage with adoption rates of the CDE w/o deviation >65 % The analysis that we have done shows that those 52 data elements do contain enough information from an economic perspective to amalgamate and arrive at a reasonable systemic risk assessment.

“Readiness for upcoming rules changes and the increased the latest cloud technologies has allowed to simplify platform and enabled it to function

In the current landscape, scope of cov erage alone is not enough to grapple with the challenges of integrated and reliable trade reporting so the firm has looked to keep pace with the techno logical tailwinds in the market. “In today’s global trade reporting landscape, enhanced flexibility is re quired to quickly respond to evolving regulatory mandates,” Childs said. “To meet the growing need for scalable, resilient and reliable trade reporting infrastructure we completed a multiyear re-architecture of our GTR plat form. Leveraging the latest cloud tech nologies has allowed us to simplify our platform infrastructure and enabled it to function across jurisdictions and products while supporting regional nuances in reporting requirements.” In 2017, the DTCC undertook a pro ject to update the architecture of the GTR to leverage cloud technologies, simplifying and enabling the platform to function across jurisdictions and products while supporting regional nuances and differences in reporting requirements. The enhancement pro gram was launched in Europe and Hong Kong in 2017, the Asia Pacific in 2018, the US and Canada in 2020, and in Japan last year. The introduction of Securities Fi nancing Transactions Regulation (SFTR) reporting obligations in 2020, as well as the consequences of the postBrexit regulatory split on UK and Euro pean domiciled firms are two examples of that flexibility in action. “It was this modernized platform that allowed us to seamlessly extend our services to support the reporting of securities financing transactions, al lowing clients to meet their SFTR obli gations when the regulation came into force,” Childs said. “When Brexit came into effect, we split our repositories between Europe and the UK, allowing clients to meet their existing European Securities and Markets Authority and/ or new Financial Conduct Authority reporting obligations.” That longstanding expertise has grown alongside the expansion in the coverage and scope of the company’s services over that time, Childs says, as the firm has leveraged its experience and flexibility to enhance customer sup port services. In 2020 the firm launched DTCC Consulting Services, separate from its TRs, that offers impactful frontto-back consulting for firms looking to implement change strategies.


Support regulatoryongoingforrefits&rewrites DTCC licensedlaunchesTRsforASIC,HKMA,MASreportingadded GTR starts to build functionalityoutandsecuresregulatoryapprovalforSFTRcoverage GTR architecturerebeginsinHongKongandEurope Next MicrosoftReportReportgenerationHublaunchedHubbecomespartner DTCC the(DDRIE)(Ireland)RepositoryDTCCestablishesDataPlctoserviceEU7post-Brexit Report Hub client base grows to over 70 top global firmslicensedlaunchesDTCCTRintheUK20081 FinancialGlobalCrisis G20 meets in recommendationsPittsburgtodefineforriskmitigationDTCC endorsed by the industry to build TRs derivativesfor 2009 2011 2012 DTCC launches first TR under the GTR umbrella for CFTC reporting 2013 2014 2017 2018 2018 2020 reportingSFTRbegins Support for FCA SECBrexit),(post-SouthKoreaandreportingadded 2021 2021 2022 20222024 10 YEARS OF DTCC’S GLOBAL TRADE REPOSITORY SERVICE Leveraging


As a firm, DTCC has expanded and upgraded its trade reporting systems to meet the growing needs of clients, and its GTR, through locally registered or recognized TRs, supports the report ing of derivatives and securities financ ing transactions across 12 jurisdictions.

across jurisdictions and products while supporting regional nuances in reporting requirements.




As firms look to prepare their sys tems for the most immediate chal lenges to their post-trade processes, the industry should also have one eye on the ultimate purpose of these changes – building capability that can quickly be deployed to accurately manage sys temic risks and events.


“In the two years to 2024, the indus try needs to think about a controlled and efficient application of regulatory change,” Childs said. “It is time to start thinking about that now because there is significant planning and execution that will have to take place. In paral lel, it would be good for the industry to start taking steps to address the chal lenges of data amalgamation and learn the lessons of the past.”

Childs: “We’ve pulled together best practices from our direct experience and we can assess an individual reporting entity’s internal controls against that best in class control framework and identify gaps, and then discuss any remedial action to address that.”

“The growth we have seen in use of Report Hub reflects the fact that firms are actively thinking about the right strategy to address the cost and com plexity attached to these various regu latory updates,” Childs added. “When GTR and DTCC Report Hub are used together, clients can manage their de rivatives and SFTR reporting obliga tions holistically, benefiting from a full suite of products that have been de veloped and updated in tandem with global regimes. “It can be more efficient, and less costly to use a vendor than it is to do all the redevelopment yourself, but every firm will have to assess its own needs and strategy. Vendors will have differ ent approaches, so if they go down to vendor selection route, firms will have to understand exactly what the capa bilities are and the impact of different fee methodologies. DTCC Report Hub is a comprehensive pre and post report ing solution aimed at protecting clients against much of the cost of change.”

regulatory scrutiny, focus on accuracy and data quality are all clear and pre sent pain points for our clients,” he said. “We introduced Consulting Ser vices as a direct response to our clients’ needs as they prepare for the unprec edented volume and pace of regulatory change.”“Our bespoke engagement model covers all steps of a client’s regulatory change program, starting with impact analysis all the way through to busi ness requirement development and documentation, testing, control frame work analysis and design, and finally post-implementation review. All of these offerings are supported by a team of DTCC subject matter experts with decades of collective post-trade experi ence.”“We’ve developed best practices from our direct experience and we can assess an individual reporting entity’s internal controls against that best-in-class con trol framework and identify gaps, and then discuss any remedial action to ad dress those gaps,” Childs says. As the regulatory landscape has evolved, industry demand for endto-end trade reporting solutions has grown. To help meet this need, DTCC leveraged its extensive expertise to cre ate a new cloud-hosted service, DTCC Report Hub®. Report Hub, which allows firms including banks, swap dealers, custodians, clearing houses and buy-sides to manage pre and post trade reporting activities across 14 ju risdictions, has also seen a significant parallel growth in users. The service has signed up 85 firms, up from 70 at the beginning of July.

Regulatory Snapshot: the coming cascade

• The Association of National Numbering Agencies, which founded the DSB, in February announced that it had set February 2, 2023 for the release of its ISO 6166 International Securities Identification Number standard. The revised ISO 6166 schema includes legal entity identifiers, classification of financial instruments and financial instrument short name fields as part of the minimum data record, as well as recognition of assignment rules for OTC derivatives, carbon credit and digital assets.

• The European Refit rules updating the European Markets Infrastructure Regulation (EMIR) will cover 76% (84) of the data element fields, increase overall reporting fields from 129 to over 200, and will apply ISO 20022 messaging. Implementation timeline is uncertain but the legislation is in late stages and estimated live dates look like being achieved late in 2023 or in the first quarter of 2024. A possible fly in the ointment is a July letter from the European Systemic Risk Board to the European Commission. Among other changes, it does call for additional data fields (such as clearing fund contribution and public quantitative data) to be added, as well as third country subsidiaries to support systemic risk assessment and a requirement to check data before reporting. Questions remain on the implementation of these changes at this late stage, with the rules so late in the process of gaining legislative approval.

Note: Dates are indicative and subject to change by the regulators


• The UK has been setting up a parallel though largely aligned process of applying its version of Refit, after formally exiting the European supervisory framework in December 2020. The UK Financial Conduct Authority(FCA)’s latest timeline says it expects to issue its documentation and rules by the end of the year, with a prospective live date at the end of the third quarter/start of the fourth quarter in 2024. While they will be similar, firms will have to treat them as separate consultations. OTC derivatives trade body ISDA early this year called for a simplified approach to Britain’s proposed trade reporting rules. In its response to a Bank of England and FCA consultation paper on the application of European rules on trade reporting issued in November. The bodies supported unique product identifiers but questioned the need for OTC International Securities Identification Number (ISIN) reporting as well as the use of classifications of financial instruments metrics as well.

• The Australian Securities and Investments Commission is set to bring in its own phase 1 Rewrite with legal entity and unique trade identifier adoption expected around October 2023, with a second phase rolling out ISO 20022 and unique product identifier adoption as early as April 2024.

• The US CFTC is once again set to be the first to the plate with the first phase of its Rewrite, with implementation slated for December 5. The rules bring in 70% (78 fields) of the CPMI-IOSCO CDEs, as well as collateral valuations and unique transaction identifiers. Validation, reconciliation and error reporting are also included in that phase. Phase 2, which will rollout unique product identifier and the ISO 200022 XML messaging schema is slated for late 2023.

• In a separate process, the Derivatives Service Bureau (DSB) in April published its terms and conditions for its new unique product identifier service, a step towards making it available to the market in 2023. The agency launched a series of consultations on the terms of unique product identifiers last year, which will apply to OTC derivatives reported to trade repositories across FSB jurisdictions. One of the measures introduced in the rules was the addition of an additional review process for the fee framework, which extends the pre-existing system applied for OTC international securities identification numbers.

• April 2024 is also the expected go live for the Monetary Authority of Singapore and the Japanese Financial Services Agency revisions. Although full technical details are yet to be released, there will be additional data fields, a shift to daily reporting and a move to the ISO 20022 format. The Hong Kong Monetary Authority is also planning to release technical details this year governing its own transition, though the go-live date is uncertain.

The group’s second quarter perfor mance underlined the extent to which Cboe’s fortunes are partly tied, like those of its US exchange peers, to postCovid trends such as the rise of retail traders and the collapse of the crypto currency market. Cboe reported on July 29 good and bad news. Its revenue for the three months to the end of June was up 21% to $424.1m (£350m), driven largely by a 32% jump in options earnings to $235.3m.USoptions are still Cboe’s engineroom, accounting for over 55% of its group earnings, dwarfing North Amer ican equities, its next largest earner, which contributed just over one fifth of revenue ($92.7). Cboe’s strong options return reflect ed the fact that it has claimed in the past year a bigger slice of a growing pie. The Chicago group was the largest US options trader with an overall mar ket share of 33.2% at the end of June, compared to 30.4% at the same time last year, Cboe said. Howson told Global Investor: “If you look at the total US options market, there was an average daily volume (ADV) record in 2021 of about 39.1 million contracts which was up by 10 million contracts vs. the prior year. This year to the end of July, the ADV is higher than last year at 40.9 million, so we had a record last year and it has grown further this year. “That growth is reflected in Cboe’s options volumes. Last year, we report ed an ADV of 11.9 million contracts and this year we have traded an ADV of 13.1 million contracts so that is up again on last year. Then, when we drill down into SPX options, that’s where we start to see the real inflection point where there is a 46% increase in the overall ADV in the first seven months of the year to the end of July compared to the same period last year.”

David Howson, who was promoted to president of Cboe Global Markets in May, moved in late July to the ex change group’s Chicago headquarters from his former base in London. His appointment comes at an inter esting time for the US options giant as it works on various fronts to diversify further its interests by product (into fu tures and digital assets) and geography (Europe, Canada, Japan and Australia).

The extended trading hours have also fed into the trend of increasing demand for options from retail trad ers.Howson said: “When we think about customer types, we have also seen a significant increase in the num ber of unique accounts traded from retail platforms during our global trading hours. We have leaned into the shorter-dated demand we’ve seen in our SPX weekly complex with the introductions of Tuesday and Thurs day expiries.”

“We’ve seen good growth with our global trading hours initiative, with a year-over-year increase of 189% in SPX options volumes during Q2 2022 during global trading hours. VIX op tions were up 49% and VIX futures up 19% over the same time period during global trading hours.

Howson reflects on life as Cboe Global Markets’ new group president

Howson said the extension in No vember last year of the trading hours for its flagship S&P 500 and VIX index options has been a success.

Cboe introduced for its S&P 500 weekly options Tuesday expiries in

David Howson has just moved to Chicago to become president of Cboe Global Markets. He talks to Luke Jeffs.

The new Cboe president said the uptick in US options activity is partly linked to the general heightened levels of volatility kicked off by the pandemic and sustained by the Ukraine war, add ing: “A further growth area has been the engagement of the retail brokerage platforms and the usage of those short er dated options which is consistent with our ambition to broaden access to our products to manage risk across timezones and customer types.”

We’ve seen good growth with our global trading hours initiative, with a year-overyear increase of 189% in SPX options volumes during Q2 2022 during global trading hours.


“Of course, events happen over night, not just in US trading hours, so the ability to manage risk 24-5 has proven to be extremely valuable.”

Summer 2022 19 DERIVATIVES

The re-valuation of Cboe Digital has come as Cboe continues its talks with potential equity partners about pur chasing a minority stake in the business.

Howson said: “The focus is currently on the equity syndication process for the Cboe Digital business that is in flight right now and the margin futures application to build out the offering. In terms of the equity partners in the Cboe Digital business, it is a broad range of firms that we are engaging with.”


Cboe timeline.

It is early days, but we think the incremental volume of SPX contracts from the Tuesday and Thursday expiries is about 200,000 contracts per day, which is meaningful.

Source: Cboe Annual Report 2021

And Howson feels the influx of re tail traders may have, in turn, attracted more flow from other clients. “The argument of course is that high volatility days have driven this in crease. However, even on days where the S&P 500 has moved less than 1%, we don’t see demand drop-off too much, which suggests more algorith mic type flow or engagement that is less sensitive to volatility.”

He cited the recent news that Fidel ity has agreed to make available to its clients the small S&P 500 index options (called Nanos) that Cboe launched in March this year. ErisX write-down Cboe’s US options story then is a com pelling one but the second quarter op tions performance was overshadowed by the announcement that the group had written down $460m on its May purchase of crypto market ErisX, since renamed Cboe Digital. Howson said: “The goodwill impair ment we recently announced in the Cboe Digital business reflected cur rent market conditions but it doesn’t change the opportunity we see or the execution strategy for ErisX.

Howson continued: “As a result, we’ve seen the ADV in SPX contracts with zero dated expiration increase 120% since the start of 2021, with retail brokerage platforms accounting for 80% of those volumes. “It is early days, but we think the incremental volume of SPX contracts from the Tuesday and Thursday expi ries is about 200,000 contracts per day, which is meaningful.”

“We still think, potentially even more so with the directional signals on regulation and the environment as we see this asset class evolve and mature, that the traditional finance construct of trusted, transparent and regulated markets for digital assets is beneficial for market participants.”

April and Thursday expiries in May, adding to the established Monday, Wednesday and Friday expiries.

Howson said there is more to come for retail traders: “We are continuing to lean into the demand for the shorterdated exposures, so we are looking at new products as well as serving and educating the retail customers through the retail platforms.”

Ade Cordell, the president of Cboe NL, which operates CEDX, said in Sep tember last year the plan was to share revenue with clients to align better the commercial interests of CEDX and its users. Howson continued: “We always said this will be a journey so, from our perspective, this is just part of the process of building a brand-new prod uct exchange and clearing house from scratch.“We’re not going to judge it on the merits of a 12-month period, particu larly one with the shocks that we have seen. The value proposition is still the same as it was two years ago, nothing hasHechanged.”added: “The opportunity and the appetite from customers remains strong, but the timing is the only differ ence. In reality, our expectations have been pushed out by a year at this point so the three year guide we gave is now probably more realistically a four year guide.”

Cboe Global Markets completed in June last year its acquisition of Chi-X Asia Pacific, which operated equity markets in Tokyo and Sydney. The Howson: “We are continuing to lean into the demand for the shorterdated exposures, so we are looking at new products as well as serving and educating the retail customers through the retail platforms.”

He added: “Alongside that, we will deliver the usual tools necessary when you are building liquidity in a brandnew product exchange and clearing house, including incentive schemes to help encourage flow in the new prod ucts as you bring them on.”

European Expansion

The Cboe president said the man agement team remain convinced that CEDX is the right model. “We continue to execute on the plan we have in place. That’s single stock op tions in 2023 and a continued push to onboard more futures market-makers to make the futures picture even better than it already is. In sequence, we will also improve the option pricing.”


Further afield Beyond Europe, Cboe is also pushing hard in Asia, specifically Japan, where it has a small equities market share, and Australia, where it is more estab lished.Howson, who was head of Asia and Europe before becoming president, said: “Our Japanese market share grew from 2.5% in Q2 2021 to 3.5% in Q2 2022 which is meaningful in terms of the percentage but also in terms of the “why?” which is due to a marketmaker scheme to introduce incentives to encourage more competition for Japanese retail flow.”

A project close to Howson’s heart is the Cboe Europe Derivatives (CEDX) which launched in September last year when he was still head of Cboe Eu rope, the position he held before being bumped up to group president. CEDX, Cboe’s first European deriva tives venture, is an ambitious bid to break into the ultra-competitive Euro pean equity futures and options sec tor by replicating the US options mar ket structure, a template Cboe thinks should resonate with quant-based hedgeAlmostfunds.ayear after launch, however, volumes are thin. Amsterdam-based CEDX traded just 1,872 lots in June, ac cording to the exchange.

Howson said: “The onboarding pro cess has been slower than originally projected and the key driver for that is the impact of the geopolitical situation in Europe linked to the war in Ukraine. “There was the event itself and the subsequent sanctions, so firms were in mandatory mode in terms of what they need to get done and that has a tail on it which led to the reprioritisation of nonmandatory strategic projects including CEDX in some cases.”

Acquisitive prospects Howson said Cboe sees acquisitive and organic growth working in tandem: “Nine acquisitions in two years takes us up to 26 marketplaces around the world. The drivers for the acquisitions have been extending our geographic footprint, expanding our diverse set of asset classes, and accessing new cus tomer sets that we hadn’t previously addressed fully.

EXECUTIVE FEATURE: DAVID HOWSON, CBOE Summer 2022 22 CUSTODYDERIVATIVES group has since announced its plan to move the two former Chi-X markets to its main technology platform.

“We see the combination of M&A and organic initiatives as inherently complementary, fuelling future growth at Cboe. In terms of our ambition to be the world’s largest securities and de rivatives network, we are now in every major equities market that is open to competition. For instance, we have meaningful footholds in Canada, Aus tralia, Europe and the US.”

The Cboe president said the plan for Australia is consistent with the group’s strategy in Canada where it acquired a dark pool called MATCHNow and moved that to its technology in Febru ary this year before starting to roll out of BIDS. On June 1 2022, Cboe acquired Canadian securities exchange Neo. Howson said: “The interesting thing about the Cboe BIDS angle is since its launch in Canada we’ve added Eu ropean buy-side clients who want to trade Canada and Canadian buy-side clients that want to trade Europe, ex tending access to and from both geog raphies.“Tofurther illustrate that point, with the announcements that we are bringing BIDS to Australia, we’ve had superannuation funds that want to be gin onboarding before the launch to trade the rest of the markets globally. So that’s the playbook, we have multidirectional flow from one jurisdiction to another over that network.”

“The playbook that you saw us suc cessfully utilise in Europe was to start with cash, add data products and off those data products launch derivatives. That flywheel, that ecosystem, enables procyclical growth. So with acquisi tions, we always think about them in that frame of reference: Can we grow by asset class, geography or general ac cess to products?”

Howson continued: “A tailwind in Ja pan is the announcement of a best execu tion requirement for retail brokers which comes into force in January 2023, with a one year grace period. The re-platform ing of technology onto Cboe technology and the introduction of Cboe BIDS are also planned for Q4 2023.” Cboe acquired in early 2021 BIDS Trading, an equity block matching en gine. Howson said the former Chi-X Australia business will move to Cboe technology in February next year and Cboe BIDS will be rolled out in Aus traliaHowsonthereafter.said Cboe has a strong foothold in Australia: “We’ve seen an increase in market share there to 17% from 16% over a one-year period and we’ve had some good wins around crypto ETPs. The listings business is doing well and winning about 30% of ETPs listings in Australia.”

Cboe Global Markets Breakdown by Business Line Cboe Global Markets Total Revenues Less Cost Business Segment of Revenues (In millions USD) Options 235.3 North American Equities 92.7 Europe and Asia Pacific 49.9 Futures 29.6 Global FX 16.6 TotalDigital 424.1 Source: Cboe Global Markets Second Quarter Results Cboe Global Markets Second Quarter Results (In millions USD) Q2 2022 Q2 2021 Change Total Revenue Less Cost of Revenues 424.1 350.6 21% Total Operating Expenses 661.5 160.6 312% Operating (Loss) Income (237.4) 190.0 (225%) Source: Cboe Global Markets Second Quarter Results In terms of our ambition to be the world’s largest securities and derivatives network, we are now in every major equities market that is open to competition.

Howson said Cboe’s plan when eye ing a new jurisdiction is to establish mar ket share in the existing equities space, launch and then build up adoption of its own equity indices and, then, launch de rivatives based on those indices.

He added: “That said, we’re focused on integration right now, we’ve got a lot to do and integrations take a lot of work and focus. We don’t generally buy things and leave them as they are, rather we look to integrate because we think that is the best way to develop sustainable growth out of acquisi tions.”

“When I think about what the next two or three years may hold for us, there’s a lot to be optimistic about,” Hindlian said. “I could talk about where the growth areas are today and where I see room for market share expansion, but something new will probably emerge in the next year. There’s no more interesting intersection to be at than data, technology and ESG.”

The newly appointed head of ICE’s fixed income and data arm has said she is keen to tap the increasing demand for sustainable investment tools, writes Radi Khasawneh

“Innovation can come from anywhere, including cross collaboration with our businesses,” she added. “For example - our mortgage business collaborated with the fixed income and data services team to create the mortgage rate lock index, and we worked with the ICE Futures exchange business to announce the mortgage rate lock index futures contract. By collaborating across our business, we have essentially created a better hedge for the mortgage market thanLookingtreasuries.”forward, the ICE data business is becoming increasingly important to revenue growth at the group. First quarter results published last month showed the fixed income and data services division revenues up 9% year-on-year to $509 million (£408m), with chair and chief executive Jeff Sprecher describing data as a “core competency” for the exchange group.

Alongside the management changes that brought her to the role, the exchange in December last year announced a deal to purchase long time ESG data partners risQ and Level 11 “ComingAnalytics.into the seat I expected that ESG would be a core focus area for us, and I was positively surprised with the pace of development,” Hindlian said. “We had just closed on the acquisitions of risQ and Level 11 Analytics, so we were able to utilise two highly entrepreneurial cuttingedge data companies producing some really powerful geospatial mapping technology that has some significant ESG implications. The fact that we continue to build out this product is a great example of how ICE’s entrepreneurial spirit works in practice.”

Amanda Hindlian took up her current role in early 2022, after a series of senior management changes at the Atlanta-based exchange group. The move was part of the firm’s efforts to set strategic priorities for the coming years, and Hindlian says climate transition and thematic indices are a key focus in the near future.

ICE partnered with Boston-based risQ in January 2020, creating new metrics for municipal securities that consider climate risks in any particular part of the US. That template is key as the firm looks to help clients navigate the fragmented regulatory and data environment in the sector. “If we’re talking specifically about ESG, it’s such a broad topic that in order to effectively innovate and address the client need, we are consistently in front of C suite level executives at a lot of different types of clients,” Hindlian said. “Almost every single client with which we interact is working hard to understand how they need to implement new rules and regulations related to ESG, and also what it is that their shareholders are demanding of them. We have the benefit of being able to aggregate of those conversations and identify the underpinning trends.” Hindlian joined ICE in February 2020 as global head of capital markets at NYSE. She previously spent 19 years at Goldman Sachs, latterly as partner and chief operating officer of its global investment research division. With that wide-ranging experience across markets and asset classes, she sees building on the firm’s competitive advantage as key to future growth.

“I think about the data business as being one where differentiation is key, and that’s one of ICE’s specialties,” she said. “We take data that are hard to access, analyse and assess, and deliver it in a useful, normalised way to our clients. If I look at what we do from a pricing and reference data perspective on the bond side, that’s an area where we have a very wide coverage universe and we have deep expertise that is very hard to replicate.”

From that perspective, fostering collaboration across the vast range of businesses ICE now touches is a big part of that growth.

ICE data president eyes thematic ESG launches for growth

“In the index business what might surprise some people is that we do quite a bit of thematic work,” she told Global Investor. “ESG is a term with a lot of definitions, and some people are not necessarily aware of precisely how it’s being implemented. But nevertheless, there’s almost an incessant demand for information. And that’s where ICE has an edge, that’s what differentiates us.”

ICE Summer 2022 23 DERIVATIVES

The new president of Intercontinental Exchange’s (ICE) fixed income and data arm has said she sees opportunities for expanding its thematic Environmental, Social and Governance (ESG) products as markets increasingly focus on standards in the sector.

Then there was a “systems error” that allowed trading outside of the price bands, before the market slowly returned to order over a few days.

The chief executive of the London Metal Exchange started 2022 by saying he was departing the LME after five years at the helm to join a digital assets firm.Then, in the early hours of March 8, the price of nickel doubled, leaving Chamberlain and his team facing the unenviable choice between making huge, possibly default-inducing margin calls on a few clients, or shutting the market.

The LME said on April 4 it would commission an independent review into the disruption. The Financial Conduct Authority and Bank of England confirmed at the same time they would conduct their own probes. Then the exchange said on April 27 that Chamberlain was not leaving after all and was, instead, staying on permanently as chief executive of the LME.On June 6, the LME was once again cast into the spotlight when hedge fund Elliot Associates filed a $456m (£360m) lawsuit linked to the nickel suspension.

“In terms of the Oliver Wyman report, we have set the scope at a broad level so that is four broad areas but within that, we have absolutely not constrained what Oliver Wyman can do and it would not have been right for us to do that. I would say we have put a framework around it so people know what to expect.”

Matthew Chamberlain can be forgiven for welcoming the end of the first half of this year.

In the end, the LME nickel market was closed for six days before reopening on March 16 with limit down buffers that took just 90 seconds to breach, forcing the market to suspend again.

The London Metal Exchange has had a torrid start to 2022, dominated by its decision to suspend Nickel trading in March, writes Luke Jeffs.

Chamberlain: “We like the protection but I would be really interested to know is there a more elegant way of putting in place those protections without stopping us from pricing for the rest of the day.”

LME chief Chamberlain reflects on nickel suspension

The Oliver Wyman review is addressing the LME’s market structure, trading rules, physical contract specifications, and risk, clearing and collateral policies but not “the LME and LME Clear’s decisionmaking processes and governance arrangements”. They are the regulators’ focus.

In terms of the Oliver Wyman report, we have set the scope at a broad level so that is four broad areas but within that, we have absolutely not constrained what Oliver Wyman can do and it would not have been right for us to do that.

Most recently, the LME said on June 23 it had picked consultancy Oliver Wyman to conduct the independent review.Speaking after that announcement, Chamberlain said the study could yield some interesting pointers for LME senior management.


LME Summer 2022 25 DERIVATIVES

“We like the protection but I would be really interested to know is there a more elegant way of putting in place those protections without stopping us from pricing for the rest of the day.”

Chamberlain said: “We are fortunate at the LME to have had a stable management team for the last four years and, outside Adrian’s departure, we remain a stable team. I think there is continuity and we have been fortunate with that. So I am confident that we will be able to marry the existing tech steps that we are making with the new things that come out of the independent review.”Aside from the immediate, Chamberlain will also be instrumental in managing arguably the most profound challenge facing the LME: rebuilding trust among members and customers.Onthis point, he said: “While I acknowledge the concerns, I feel the steps we took quickly will stop it from happening again, notwithstanding other challenges. Then there are the reviews, and they are an important part of what we’re doing, but the biggest thing that we can do is to be totally open-minded to everything that we are Chamberlainhearing.”added: “It is easy in these kinds of situations to retreat into your shell. I think trust is built through personal engagement and I think that’s what we have been doing.”

The independent probe will also consider the changes introduced by the LME since the nickel disruption, namely the price-specific trading limits and new requirements for the reporting of over-the-counter (OTC) positions, a key factor in the nickel suspension.

I think there is continuity and we have been fortunate with that. So I am confident that we will be able to marry the existing tech steps that we are making with the new things that come out of the independent review.

Chamberlain said: “You can see from the actions we have taken there are things we would like to do. The first thing we did before we reopened nickel was introduce price limits. We have seen that those 15% price limits can be hit, and an effect of those limits being hit is we can’t produce an official or closing price.”

LME Clear CEO Adrian Farnham retired in early July, to be replaced on an interim basis by James Cressy, the chief operating officer of LME and LME Clear, until the exchange finds a permanent replacement.

The LME introduced on July 18 new OTC reporting requirements, historically a bone of contention between the exchange and some members.Chamberlain said: “I am pleased with what we have done with OTC reporting but we haven’t said we are going to move to an OTC position limit, as some people have suggested. So that’s another example of maybe it’s the right thing or maybe it’s the wrong thing but I’m going to be interested to see what Oliver Wyman come back with.”The CEO continued: “The third example is around the deliverable specification of the nickel contract. This goes to the heart of nickel as an industry which has evolved in a matter of years from metallic nickel being used for stainless steel production to chemical nickel being used to make batteries, particularly for electric vehicles, but nickel sulphate isn’t deliverable against our contract. This is another area that we have looked at in the past and I’m interested to see what Oliver Wyman and the whole market propose.”Another change the LME made immediately after the trading disruption was to move the nickel market open from 1am London time to 8am London time, effectively closing the market during Asian trading hours. Chamberlain said: “We hear conflicting views on this. On the one hand, we hear stakeholders, particularly those in Asia, saying if we opened at 1am again, they’d have a healthy arbitrage with Shanghai, which would add liquidity back to the product. “Another view is that, given the market is still a little wary, it is better to concentrate liquidity in a smaller period of time. We haven’t reached a determination on that but that is one that we are doing quite a lot of work around.”Thenickel saga is undoubtedly the biggest thing to happen to the LME in years but Chamberlain is mindful that its fallout does not stop the firm from doing other things. He said: “In parallel with the Oliver Wyman work, we are looking at the technological steps to bring on board certain types of circuit-breakers. As the thinking of the review evolves, we will be, as appropriate, trying to put that into our technology book of work so we can deliver that as quickly as possible. “Separately, we are building a new version of our trading platform. Select 10 is an inhouse built platform based on the HKEX exchange trading engine and the switch-over for that is 2023. So, for any implementation, it is a question of: Is it safest to deliver that as a change to Select 9 or as part of Select 10?”

He said: “I was planning to leave and then nickel came along and I threw myself into the immediate post-nickel remediation steps. HKEX and the LME were kind enough to suggest: “Why don’t you stay to shepherd that through?” That felt to me like the right thing to do.”

Given he was leaving the LME just four months ago, Chamberlain should be credited with staying on to lead the LME through what will no doubt be a tough second half of 2022, and beyond.

“The other large push to clearing, firstly from the sell-side, is SA-CCR and the impact it has already had on pricing in the FX market,” Batchelor said. “Given the fact that the capital treatment of FX under SA-CCR is four to five times more expensive, differential pricing will likely emerge as we have seen already from anecdotal evidence. We believe that eventually you will see the emergence of a cleared price for FX that diverges from the trend in the uncleared markets, and electronic matching platforms certainly will help in that change.”

“Beyond the margin benefits under UMR and the capital benefits under SACCR, the market is increasingly seeing clearing as an operationally efficient way to manage trading workflows,” Moreau said.

“The view from our clients is that they think the ultimate destination for the FX markets is to move to clearing,” Batchelor said. “That’s a long-term game, but they are excited about the NDF matching platform as a first step.

In contrast to the extension of Uncleared Margin Rules (UMR) in September this year, the effect of the SACCR change is likely to be much more widespread. LSEG estimates that around 10% of FX market are in scope under UMR - mainly through NDF and FX options (FXO) - while SA-CCR captures FX swaps and forwards, meaning it covers 70% of the FX market.

“In practical terms, 20-25 banks have meaningful NDF and FXO portfolios and are affected by UMR, but 200-300 banks have meaningful FX forward and swaps portfolios, which are impacted by SA-CCR,” Moreau said. “That is where there will be a tangible effect in terms of rising costs across a large range of FX market participants globally.

A key part of that integrated plan has been to capitalise on LSEG’s FX clearing business, LCH ForexClear.

Many of the non-bank market-makers are engaging so we believe there will be strong support from them too.”


“We are creating a first for the FX industry in terms of building trading and clearing onto a single venue,” said Neill Penney, group head of FX. “Our hypothesis is that if you design into the trading platform the fact that the trade is going to be cleared, you can create a better trading experience. For example, you don’t need individual credit lines with every counterparty you want to trade with: just one line with your clearing broker means you are connected to everybody.”

“There is a pressure to reduce those costs and potentially reflect that change in their pricing, leading to a focus on optimisation to reduce their balance sheet and capital requirements as well as finding ways to absorb the cost.”

Banks cannot simply shift their entire portfolios to clearing, because they have to consider the twin effects of the increased capital charge under SA-CCR on one hand and the rise in initial margin under the clearing model on the other.

LSE Group has worked with its overthe-counter business SwapAgent to develop an extended Smart Clearing analytics service aimed at reducing capital and margin requirements across portfolios using multilateral netting.

The Monetary Authority of Singapore (MAS) has been supportive of plans by several firms to develop local hubs based in Singapore. The presence of a local rates engine has already begun to reap benefits for local market participants, according to LSEG. “In the case of Singapore, MAS’s support for developing local FX technology has already had a positive effect on local market trading conditions,” Penney said. “For example, having rate engines based locally has meant better pricing and reduced last look rejections for market participants. This has helped feed improved engagement between the private sector and the local regulator.”

The largest British exchange group is exploring the opportunity to develop its foreign exchange business in Asia, writes Radi Khasawneh.

The London Stock Exchange Group (LSEG) sees the launch of new foreign exchange venues and an Asian hub to more accurately capture pricing shifts as key differentiators as the FX markets move to Global Investor, the LSEG executives in charge of the firm’s FX strategy see tailwinds developing to support their ambitious plans. The exchange pledged in May to launch non-deliverable forwards (NDF) matching in Singapore, and separate spot matching and streaming relationship venues in Asia. The move comes after LSEG at the end of last year said it had connected its Refinitiv FXall electronic trading platform to LCH ForexClear for NDFs.

Loic Moreau, head of risk at ForexClear, said the firm has thought hard about ways to help clients manage the change.

There are early signs of price shifts linked to roll-out of the Basel Committee’s new Standardised approach to counterparty credit risk (SACCR) calculation in January.

LSEG sees clearing, Asian hub as key FX differentiators

Average daily volume (ADV) at the segment is up 16% in the first six months of the year versus the same period in 2021. The clearing business has 51 clients live comprising 15 clearing brokers while another five are getting connected. Client ADV through brokers is up 93% over that period, which chief operating officer and head of product Andrew Batchelor sees as part of a wider shift to clearing.


MUFG’s Securities Lending Solutions to become ‘data driven’ business

Speaking to Global Investor, Anthony Toscano (pictured above), head of North American Global Securities Lending So lutions at MUFG, said in the past the business was primarily regionally fo cused with a mostly Japanese client base and that structure had been maintained for several years in terms of adapting to changes in regulations and client de mands. “However, in 2019 we made a signifi cant investment to begin to grow this business to expand into investor bases beyond Japan and to get more active in the market to create revenue opportu nities for these clients in the securities financing world. Our growing global client base hires us to canvas their ap proved counterparts for all opportuni ties which fit their collateral and risk profiles. “Hence, we want our business to be very data driven and we are now im porting significant amounts of data from various sources to make smart decisions about how we price portfolios for clients who want to join our lending program, how we price individual se curities when we put them out on loan and how we price risk associated with any sorts of collateral we might take back. And this has been a big difference for us,” he said. Toscano said the bank’s trust arm, Mitsubishi UFJ Trust & Banking Corpo ration’s Securities Lending, is a pricemaker rather than a price-taker. “I think, generally the view is that se curities lenders lend securities at a price the counterpart wants to borrow them at. We prefer to lend securities at a price that we believe is fair, and that we can come to an agreement with the counter part. It’s a subtle difference but I think on average, it manifests itself within the performance of the client.”

When it comes to advancements in technology such as the implementation of distributed ledger technology (DLT) in securities finance, Toscano sees it as an important evolution. He said: “I see tremendous benefits to DLT and we will stay interested as it continues to evolve. However, I don’t see us being on the forefront of cryp tocurrency lending because that is not what our clients currently ask us to lend.” Investors all have different priorities when it comes to the future, says Tos cano who joined MUFG in 2009 from Deutsche Bank. “Some investors try to manage mon ey based on a very old set of guidelines that don’t evolve very quickly. Others are on the cutting edge of long-short

MUFG uses EquiLend’s Spire secu rities finance system as its core global platform, as well as S&P Global’s secu rities lending market data which allows the firm to export securities lending activity directly to the clients, Toscano explained.“Ultimately, we are an extension of our clients when we act as their secu rities lending agent. We’re building solutions for clients who cannot find them with their custodians right now, whether that would be reporting, per formance and/or transparency. We are customising solutions for large institu tional investors that make the biggest impact to them, rather than catering to the masses,” he added.

Mitsubishi UFJ Financial Group’s (MUFG) Securities Lending Solutions has said it aims to become a “data driven” business to cater to the evolving needs of clients.

year ending March 31, 2023


Source: MUFG GAAP for 1st quarter of fiscal



2021 FY Change Net Operating Profits 425.1 283.4 (50%) Total Credit Costs -73.9 -5.1 (1350%) Gross Profits (before credit costs for trust accounts) 1,124.8 957.1 (17.52%)

Working at MUFG requires staff to have an intimate knowledge of the cli ents, what they own and what their ex pectations are as well as counterparts in terms of what they need and what their binding constraints may be to execute on a transaction, Toscano explained. “So, as well as investing heavily in our staff with around 25 new hires made in the past two years, we are also training our existing staff making sure we have a unified approach to servicing clients and counterparts. There is also a fair amount of business to implement throughout the rest of this fiscal year which ends in March for MUFG, Toscano said. “We want to con tinue to take on mandates all around the world and have diverse clients as well as diverse success,” he concluded. Business Segments Operating (In Yen)


Summer 2022 28 ANTHONY TOSCANO, MUFGFINANCESECURITIES strategies, exchange-traded funds and high yield programs. So, we need to be able to respond to any one of those cli ents. I think there’ll be many investors, who will be forced into adopting DLT and not because they want to adopt it. It will be the custodians giving direc tion and saying this is what needs to be done. But, at MUFG, we will take our cues from our clients directly,” Toscano stated.Transparency remains the industry’s core issue today as it has been for the last 20 years, according to Toscano. “As we are an extension of our clients, we want to give them as much informa tion about the securities lending activity that’s occurring as possible. We believe that’s their information so we should be able to provide it for them.”


billions Japanese

Source: MUFG highlights under Japanese GAAP for 1st quarter of fiscal year ending March 31, 2023 UFG Financial Group (MUFG) highlights for 1st quarter of fiscal year ending March 31, 2023 (In billions Japanese Yen) 2022 FY Q1

Global Markets 158.9 Global Corporate & Investment Banking Business Group 80.0 Asset Management & Investor Services Business Group 26.8 Global Commercial Banking Business Group 64.4 Japanese Corporate & Investment Banking Business Group 76.8 Digital Service Business Group 52.8 Retail & Commercial Banking Business Group 21.2 Total 429.1

However, the challenge is that differ ent jurisdictions require different levels of transparency, he believes, and regula tions such as Europe’s securities financ ing transactions regulation (SFTR) and the US Securities and Exchange Com mission’s (SEC) proposed rule 10c-1 do aim to increase transparency. “With the rule 10c-1, after the SEC has given firms comment period, it’s my expectation that they’ll gravitate to something similar with SFTR. And that makes sense as we would have a global view on transparency, but firms need to respond,” he said. However, while the overall belief is that transparency is better for the indus try, the proposed rule 10c-1 does create a higher barrier of entry for new partici pants in the marketplace, he argues. “Overall, you need to have a global approach to how you do the business and having a global approach helps dis perse the expense and capture a diverse understanding. The approach should be that all data in the program should be consumable by either clients or regula tors at any time. You also must look to find the most efficiencies possible in order to capture demand, price appro priately and minimise manual interven tion,” Toscano Environmental,, and govern ance (ESG) is another pressing issue be cause all investors are talking about it, he continued. “The definition of ESG varies, and we define ESG on a client-by-client basis,” heMUFGsaid. allows clients to create their own guidelines when it comes to im plementing ESG in its lending program, Toscano said. “We start off with documentation where the client defines virtually every aspect of how they want us to run the business. That then gets translated into front end compliance into the system, so the traders don’t need to spend time interpreting guidelines prior to transact ing or understanding if the client does or doesn’t want to take a certain type of collateral or if a client wants to vote all proxies. It’s all done in the system in advance.”However, as markets evolve, so do cli ents’ interpretations of or views on risk, so MUFG keeps that dialogue up with customers to react to changes they want in the program and follow that process accordingly, Toscano explained. Moving forward, we will be making some strate gic hires to the business, Toscano said. “We want to make sure we have a diverse team. It is also important for us to look for curious people who are team players as we are driven to succeed as a team and our team is global. So, we are looking for people who understand that they’re part of a bigger organisation and their success is based on the success of the business and the satisfaction of our clients,” he explained.


financial highlights under Japanese


Harpreet Bains: Realistically, it might be years before the full ramifi cations of the pandemic on our profes sional and personal lives are properly understood. A key lesson for me per sonally is more greatly appreciating the importance of leading with empa thy and Covidtrust.has helped shine a light on the role that empathy plays in ef fective leadership. Hopefully, this is

Stronger together

Global Investor speaks to Betsy Coyne, senior vice president, client relationship management eSecLending, Harpreet Bains, managing director, global head of product management for agency securities finance J.P. Morgan and Mary Jane Schuessler, director, equity finance global equity products, BMO Capital Markets


Betsy Coyne, eSecLending

WISF members continue to participate in podcasts, which are all available via the WISF website and all major podcast services. Past topics include leading remotely, effective leadership, and self-advocacy.

Representatives of the London, Toronto and Boston chapters of the Women in Securities Finance (WISF) group offer an update on developments over the last 12 months.

What kind of impact have you seen the pandemic have on how women work in the securities finance space? Mary Jane Schuessler: I often hear how working from home has been a game changer for the work/life bal ance, especially when you have chil dren in the mix. However, I am also hearing some nervousness about the future. There are many questions WISF is attempting to help answer through research, sharing of past successes, growing network initiatives, and gen eral support. Looking back at the past couple of years, what are lessons that you/your members have learnt?

What is WISF working on to support the securities finance industry acknowledge the role and impact of women in the industry?

Betsy Coyne: WISF hosted the open ing keynote event at the IMN Interna tional Securities Finance & Collateral Management conference in Arizona in May. The discussion (and podcast for WISF Perspectives podcast series) fea tured behaviour change communica tion expert, Morgan Hillenbrand, who shared methods for advancing gender equality in male-dominated industries. WISF members continue to partici pate in podcasts, which are all avail able via the WISF website and all major podcast services. Past topics include leading remotely, effective leadership, andWeself-advocacy.alsopublish a quarterly newslet ter that highlights our events, accom plishments, and member updates and promote all this content to augment the networking opportunities of WISF and increase visibility of women in our in dustry.Ishould also highlight the educa tional initiatives of our members. On International Women’s Day in March, WISF and Vanguard participated in a discussion with high school students local to Vanguard’s headquarters to discuss careers in the mutual fund and securities finance industry with a focus on the importance of distinguishing be tween excellence and perfection.

MJS: I often get asked how one can get involved especially when it comes to leading an event or a chapter. This is something we have discussed across all the chapter leads: the need for succes sion planning and bringing those into the fold who want to take on more than just attending events. Although women within the finan cial services sector have made enor mous headway, we continue to hear from our members about challenges - especially when it comes to senior leadership roles. As chapter leads, we try and build events and activities around building your own brand and confidence to be well positioned for these roles.

There are many questions WISF is attempting to help answer through research, sharing of past successes, growing network initiatives, and general support.

HB: There is no doubt that the pan demic has brought about positive change for women in the workplace and helped dismantle some long-held barriers. The scaling up of flexible working practices has potential to be a real game changer, particularly helping unlock professional opportunities for women who juggle work and caring responsibilities.Thechallenge now is how to focus on retaining these changes into the future and working towards stamping out cultural stigma that might mean these policies exist only on paper as opposed to fully embraced (across a spectrum of roles) in Anotherpractice.positive change that WISF members feel upbeat about is the fact that diversity, equity and inclusion has clearly gained more executive account ability in recent years. Within individu al organisations it has moved from be ing an additional aspect of someone’s job to being the sole responsibility of an executive who sees to it that it is an im portant part of the conversation at all levels of the organisation. Across the securities finance indus try, there is now much wider aware ness of gender parity. This is good, because if we want to move the dial it

What are you hearing from you members in terms of challenges they are facing but also opportunities they are seeing?

Mary Jane Schuessler, BMO Capital Markets

HB: The benefits of hybrid working have been spoken about at length, but this does not mean the end of the office.

BC: One of the lessons I learned was that I had not previously grown, nur tured or leveraged my network as much as I should have. I always focused on my job and my team, neglecting my personal development and exposure. I had been fortunate to have mentors who encouraged me to make time for networking, but personal development was always less comfortable to do. WISF helped me to move outside my comfort zone, encouraged me to focus on my personal development and re minded me about the importance of leveraging my trusted resources.

How do you build effective networks in a sector which has also seen elements of remote working being introduced?


It’s very important that women - and everyone - do not lose sight of the im portance of teamwork, physical inter action and networking. To do this suc cessfully means learning to network more smartly.

It may seem that there are plethora of events and gatherings taking place and trying to manage for these within a hy brid working pattern may be proving difficult, but reality is that you don’t have to go to every event. In fact, ‘over networking’ can actually have a detri mental effect. Be selective and opt for those that will be of most value to you.

Finally, consider expanding your digital footprint and getting to know people on social media. Reading lengthy articles and papers can be challenge if you’re time poor but short posts on LinkedIn can be more man ageable, easier to engage with, and open up opportunities to connect with someone new and like-minded that you might otherwise not have reached through traditional methods.

something that will continue to be valued by workplace cultures even beyond the pandemic.

effective Harpreetpandemic.evenbycontinuesomethingHopefully,leadership.thisisthatwilltobevaluedworkplaceculturesbeyondtheBains,J.P.Morgan

One of the lessons I learned was that I had not previously grown, nurtured or leveraged my network as much as I should have.

HB: For the London chapter, our main priority this year is to focus on helping our members grow their connections. Having launched immediately before the pandemic, the networking com ponent of our mission was the harder piece to manage as we grappled with ongoing lockdowns. That said it cre ated an opportunity to rethink tradi tional networking and transform the way we make connections, using a hybrid of virtual technologies and/or in-person.Atthestart of 2022 - following a suc cessful pilot at the end of 2021 - we for mally launched Grow Your Network, an initiative aimed at connecting our members on a one-to-one basis for short icebreaker introductions, mak ing sure that we intentionally lever aged the breadth of diversity across the London chapter (gender, experience, grade, experience) when constructing theWepairings.expect this initiative to run sev eral rounds this year and subject to feedback, we aim to sustain it into 2023 hopefully with the continued assis tance of members wanting to get more involved in WISF delivery. We are also very excited about the ISLA conference in Vienna, where the Women in Securities Finance London Chapter hosted its first in-person net working event. In creating a spirit of sharing and inclusivity, the invite was open to all conference delegates - wom en and men - and was an opportunity to cross paths with someone new in an informal setting. Covid helpedhasshine a light on the role that empathy plays in

Betsy Coyne, eSecLending

begins with industry leaders recognis ing that there is a problem that needs to be fixed. The challenge is now mak ing sure that we can collectively move this from well-intentioned discussions and one-off unconscious bias training to measurable impact and outcomes that serve to improve the experience for marginalised employees. We also need to remain mindful that diversity goes beyond gender. It is en couraging to see that the importance and need to bring different ethnicities and backgrounds into the conversation is growing.Overallfemale representation in the industry is still not where we want it to be, but the black and ethnic footprint is even lower. We often hear that it is a pipeline problem but it is now time to unpack why that is the case and what specifically is hindering the entry of diverse talent into our hiring pipeline and/or impacting retention rates. We have an opportunity to break away from the long-standing narrative of being a white, male dominated in dustry to one that is more aspirational for the newer generations. This will include evidencing that we are taking steps towards levelling up and creating a fairer and more equitable workplace for all, and not just talking about it.


What is on the agenda in terms of projects and initiatives for WISF in 2022?

MJS: The Toronto chapter typically holds two events though the year with a focus on networking and building your own personal brand. With the im pact of Covid in the past two years we added an additional community out reach event with the goal of supporting women in need. This year we partnered with a char ity, Yellow Brick House, which assists women and children trying to escape violent situations. The Toronto chap ter raised over C$7,000 for the char ity and spent most of a Saturday at the women’s shelter doing yard work and building a garden. The event was extremely rewarding and we hope to continue this as a yearly tradition. Our event ahead of the Canadian securities lending conference was the first in-person event for many and again we focused on networking given we have had many new members join not only WISF but the wider industry.

But the question that we’re addressing as an industry remains: when you’re lending out securities, are you able to vote? The answer is: absolutely, you can vote on the securities, you will not lose the right to vote. However, you need to recall your securities, and develop

We have seen interest in and uptake of ESG accelerate over the last couple of years across the financial services industry. Our industry, securities lending, is no different: we are having the same conversations about the sustainable agenda and about embedding sustainability in what we do. In that context, there is a lot of debate about how securities lending should operate in this new environment. I would start by saying that in securities lending, the transaction itself is not a sustainable product or part of one - it is a key component of capital markets infrastructure that supports trading and financing by providing liquidity. As such, you need to look at different points in the securities financing chain to see where they intersect with ESG. Take collateral as an example. An asset owner will consider ESG factors when constructing its long portfolio. There will be bespoke ESG requirements, depending on the focus and principles that are set in-house, and they will apply that strategy to their loan portfolio. But when it comes to collateral, how should they consider ESG? The question has arisen as to whether asset owners should apply their long portfolio ESG strategy to collateral, or whether they should develop a separate ESG strategy specific to collateral, given that collateral is not a long holding. A specific situation arises when a party receives the collateral in a securities lending contract: they don’t get the related voting rights. In practice, it’s a temporary transfer with a primary purpose of risk mitigation. One issue we are faced with is reconciling this situation with the increasing focus by regulators and asset owners on the need to be active stewards and drive change through engagement with corporates. There is a strong emphasis by regulators, particularly in the UK and the EU, on engagement and voting stewardship rather than on the more direct approach of divestiture. Asset owners should not simply divest interests in lower rated ESG securities, and potentially create liquidity issues around particular stocks and stranded assets. Rather, they are being encouraged to actively engage and vote to push that transition.

The road ahead

Global Investor speaks to Ina Budh-Raja, EMEA Head of Product & Strategy Securities Finance & Markets ESG, BNY Mellon


All industries have been faced with the need to integrate environmental, social and governance (ESG) policies in everything they do. Securities lending has also had to tackle the issue. What are some of the unique considerations that this industry is faced with?

The transaction itself is not a sustainable product or part of one - it is a key component of capital markets infrastructure that supports trading and financing by providing liquidity.

Part of our role as agent lender is to work with clients so that we’re helping them execute their ESG strategies as they engage in securities lending. Securities lending is an important tool for the capital markets, and it should happen smoothly without impeding the asset owners’ ability to vote and engage. It’s also vital to the general financial market infrastructure and supports market integrity, price discovery and liquidity. This last point is important as it underpins the success of the sustainable agenda. It’s critical for us as agents to understand the appetite that a particular asset owner has for ESG and to be able to respond to that in the investment process and on the lending side. A fundamental focus for BNY Mellon, as agent lender, is transparency: giving clients reliable and transparent data on their securities, collateral and cash investments so that they’re able to assess their lending programme from an ESG lens. That lens will be different for each asset owner but all of them must have that visibility, so they are empowered to make informed decisions to fulfil their fiduciary duties, including the duty to generate revenue for their underlying investors, alongside incorporating ESG factors appropriately. There is a plethora of standards and initiatives that has been developed to formalise ESG standards. What is the situation for the securities lending space?

It’s very much a journey and many asset owners are still in the earlier stages. The whole ESG topic is a longterm journey.

Focusing on the intersections of ESG with securities lending, some aspects that need to be taken into consideration include transparency, purpose for lending and borrowing, collateral, cash reinvestment and proxy voting.

Summer 2022 33 THOUGHT LEADERSHIP: BNY Mellon FINANCESECURITIESa thoughtful approach to an ESG policy around recalling for voting purposes. You also need to be working closely with your agent lender, to communicate that so that so those policies are well understood and flowing through your agency lending programme. As an agent lender, we’re certainly very conscious of this and working closely with our clients to understand their ESG policies, including how they approach voting and recall processes. How advanced are market participants engaging in securities financing in the integration of ESG standards to lending programmes?

We have seen many initiatives develop rapidly over the last couple of years and an increasing uptake of those initiatives from the market.

As an industry, we have set up working groups through the various regional trade associations to develop best practice for ESG. Given the breadth and global reach of ESG, it’s one of those topics without borders that needs to be considered in a collaborative way across regions.

Two years ago, we were seeing several different nascent frameworks with regional differences - both regulatory and voluntary initiatives. We’ve seen the TCFD [Task Force on Climate-Related Financial Disclosures developed by the Financial Stability Board], for example, being very foundational. More recently, we’ve seen the IFRS Foundation’s International Sustainability Standards Board [ISSB] which are intended to foster further harmonisation of standards that can be applied on a global basis. A very positive move has been the drive by organisations to create a harmonised approach globally with some necessary regional nuances.

I am directly involved as I sit on the International Securities Lending Association’s [ISLA] board of directors and co-chair its ESG Steering Committee. Alongside other regional trade associations, we formed the Global Alliance of Securities Lending Associations [GASLA] in September 2021: part of its mandate is to advocate for harmonised standards and promote best practice for ESG across our industry. This initiative has been so well received because it provides a continuous discussion forum on the touch points between securities lending and ESG. The intention is to create a best practice framework that is not prescriptive, but takes lenders through various considerations that they may want to apply when making decisions about their lending programmes.

It’s critical for us as agents to understand the appetite that a particular asset owner has for ESG and to be able to respond to that in the investment process and on the lending side.We’ve forward.ESG.securitiescompatibilityfrompositiveresoundinglyreceivedfeedbackthemontheoflendingwithThisisabigstep


The initiative also reflects the specificities of the industry. Generally, ESG policies are being developed at a corporate level, and then permeated through organisations, to be embedded within the individual lines of business including the securities lending product. But those corporate level policies do not necessarily consider the specifics of securities lending at the outset. The intention is to drive best practice and encourage asset owners to think through some of the issues I highlighted earlier: voting and active engagement, while remaining a lender of securities and driving revenue for underlying investors, and; considering necessary ESG requirements applicable to collateral, while at the same time, balancing the need to adequately diversify collateral and mitigate risk, which is the primary purpose of that collateral. Through the ISLA ESG Steering Committee, the industry has also been engaging with the United Nations’ PRI [Principles for Responsible Investment] and various voluntary green-labelling bodies in the UK and EU. We’ve received resoundingly positive feedback from them on the compatibility of securities lending with ESG. This is a big step forward. The fundamental point for us goes back to ensuring that securities lending operates in support of and harmoniously with the ESG landscape and is not inadvertently constrained, as it is a critical tool for market liquidity and market efficiency and therefore vital to support the broader sustainable finance agenda. What are some of the typical questions clients who lend their assets out ask you when it comes to ESG? Are there some recurring themes that you’re seeing? Absolutely, some themes are emerging, and, as I said, this really is a journey. Currently, a question I get asked regularly is: can we vote on the securities that we own if they’re on loan, what’s the recall process, and how reliable is it? Lenders are keen to understand that they can vote for any purpose that they feel is important to them so that there aren’t restrictions on recall and we’re seeing there are some ESG topics upon which lenders will chose to prioritise voting over the lending revenue. On the collateral side, we’re starting to see more questions around collateral eligibility. We’re not seeing collateral being fragmented at this stage – however, lenders want to understand what their collateral looks like from an ESG standpoint. The demand at this point is around transparency; there is generally an understanding that collateral needs to be broad enough to mitigate risk, but at the same time, lenders need to embed their broader ESG policies, so visibility into the ESG metrics around collateral is important to evidence alignment with board-level ESG priorities.

Lenders want to understand what their collateral looks like from an ESG standpoint.

Ina Budh-Raja EMEA Head of Product & Strategy Securities Finance & Markets ESG, BNY Mellon Ina Budh-Raja has been BNY Mellon’s Head of Product & Strategy Securities Finance & Markets for EMEA since October 2018, responsible for regulatory strategy and ESG product development for securities finance. In her capacity as member of the BNYM ESG Corporate strategy team, she co-leads the BNYM ESG Partnership Strategy and is co-chair of BNYM’s Global Markets ESG working Shegroup.previously spent nearly 15 years at State Street in various roles, including as Head of Regulatory Affairs for Securities Finance, EMEA and, most recently, as Managing Director - Global Markets EMEA Head of Regulatory Strategy until her departure from the bank in 2018. She also previously worked at Deutsche Bank as legal Inacounsel.also sits on the International Securities Lending Association’s board of directors and is chair its ESG committee. She also is part of the Bank of England’s Money Markets Committee, the Securities Lending Committee and is Co-Chair of the Money Markets Code SheSub-Committee.isCo-Chairof the London Chapter of the Women in Securities Finance group, created in 2018 promote the advancement of women in the securities finance industry. Contact:

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Global financial services provider Apex Group acquired BRL Trust Inves timentos, a Brazilian fund administra tor, in August 2021. The acquisition is part of the group’s ambition to expand its footprint in the Latin America re gion, and follows its takeover of MAF, the fund administration business of the Brazil-based Banco Modal in 2020. US-based fintech Broadridge told Global Investor in September 2021 that Brazil was a ‘prime market’ in plans to expand proxy sub-custody services in Latin America. It said it wanted to ‘build greater digital connectivity with local infrastructure providers’ in the region.

One of the most active in the world, the Canadian market was one of several that saw a recovery of activity in 2021 after the Covid crisis, with AuM grow ing to just over USD$3.5 trillion. This upward trajectory was also observed in Q1 2022, with Datalend figures showing lendable equity rose 15.5% and lendable fixed income rose 2.5%, with corresponding rises in on-loan levels, especially in the latter category (+23.9%). The largest revenue drivers were financial and energy companies.

ARGENTINA Argentina – Cross-Border - Unweighted Citi 5.28 Argentina – Cross-Border - Weighted Citi 7.39 Argentina – Domestic - Unweighted Citi 5.75 BRAZIL Brazil – Cross-Border - Unweighted BNP Paribas Securities Services 6.00 Citi 5.44 Banco Itau 4.31 Brazil – Cross-Border - Weighted Citi 7.62 Banco Itau 6.04 BNP Paribas Securities Services 6.00 Brazil – Domestic - Unweighted Citi 5.75 BNP Paribas Securities Services 5.25 Latin America is responsible for a small proportion of assets under manage ment (AuM) globally: USD$1.8 trillion in 2021, 1.6% of the USD$112.1 trillion worldwide, according to a report from the Boston Consulting Group. Annual growth in the region has also slowed down in the past 20 years, though remains in double-digit figures (11% in Brazil,2020-2021).whichishome to nearly onethird of the region’s population, is the largest asset management market in Latin America, with around USD$1 trillion in assets at the end of 2020, two-thirds of the region’s total AuM. A combination of strong performing local equities and cheap currency have made Brazil one of the stronger emerging markets in recent years, though some recent momentum is eroding with in creasing monetary and fiscal interven tion to manage inflation and volatility. While the proportion of assets on loan remains small in the equity and fixed income spaces, the market keen to at tract new local and international inves tor activity.

EquiLend said June 2022 saw a new all-time high for average daily trading volume on its NGT platform, including inCanadianCanada. equities have outper formed global equities with returns of 7.9% compared to 5.2% as the econo mies return to normalcy post-Covid.


CANADA Canada – Cross-Border - Unweighted CIBC Mellon 6.13

Kyle Kolasingh, Director, Securities Finance at RBC Investor & Treasury Services (RBC I&TS), told Global In vestor that “general collateral for both fixed income and equities continues to increase”.“Additionally, the interest rate envi ronment in Canada and across North America will be closely monitored es pecially as changes to the Overnight Reverse Repo operation facilitated by the Bank of Canada shape out. Collat eral is readily available, and pricing is set to remain steady in both financing and repo markets,” he added. RBC I&TS won mandates this year to supply custodial services to fund manager, Tradex Management, based in Ottawa, and to Toronto-based Ever more Capital’s exchange-traded funds (ETFs), a growing area of interest in the market. Founded in 2021, Evermore Capital is a Canadian asset manage ment firm that focuses on retirement ETFs.BNP Paribas Securities Services India will provide institutional investment manager Alberta Investment Man agement Corporation with custody, clearing and settlement services for its recent investment in India’s first re newable energy infrastructure invest ment trust. In other industry news, in the summer

RBC Investor and Treasury Services 5.64 Canada – Cross-Border - Weighted RBC Investor and Treasury Services 6.67 CIBC Mellon 5.92 Canada – Domestic - Unweighted CIBC Mellon 5.80

©2022 CIBC Mellon. A BNY Mellon and CIBC Joint Venture Company. CIBC Mellon is a licensed user of the CIBC trade-mark and certain BNY Mellon trade-marks, is the corporate brand of CIBC Mellon Trust Company and CIBC Mellon Global Securities Services Company and may be used as a generic term to reference either or both companies. With more than 1,800 professionals exclusively focused on servicing Canadian investors and global investors into Canada, CIBC Mellon can deliver on-the-ground execution, expertise and insights to help clients navigate the Canadian market. Leveraging the technology and scale of BNY Mellon, a global leader in investment servicing, and the local presence of CIBC, one of Canada’s leading financial institutions, CIBC Mellon has the experience and the capabilities to help you succeed in Canada. 1 Provided by CIBC 2 Provided by BNY Mellon Canadian custody and sub-custody Brokerage1 Canadian correspondent banking1 Investment fund services Broker-dealer clearing MIS (Workbench, STP scorecard, trade match report card) Securities lending2 Data analytics2 Canada’s Leader in Sub-custody Learn more, contact: Richard Anton at +1 416 643 5240 Lloyd Sebastian at +1 416 643 5437

One of the two largest markets in Latin America, Mexico continues on its path to become a global player, since open ing its national pension system to inter national alternatives in 2019. State Street announced in April the launch of a new capability to support fund order services in Mexico, in col laboration with Clearstream’s Vestima, which provides a range of investment fund services that support the crossborder distribution needs of the funds industry.According to the custody bank, this would meet the requirements of its clients, which includes the ability to manage both segregated and omnibus accounts.

Services an nounced in May 2021 it had expanded its proprietary network to 27 markets with the launch of local custody ser vices in Chile. It already had a presence in Brazil, Colombia and Peru. Chile is one of three nations to have allowed early withdrawals from pen sion funds, amounting to USD$50 bil lion, to support households during the covid-19 pandemic. Local pension funds manage around USD$210 billion in assets, according to OECD data, and have been key in providing long-term financing and liquidity in local curren cy and reducing exchange-rate risks.

SUB-CUSTODY GUIDE 2022 | AMERICAS Summer 2022 41 CUSTODYof 2021, the Canadian Securities Administrators (CSA) unveiled plans to create a single self-regulatory organisation to consolidate the functions of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). In January this year, the Canadian Capital Markets Association (CCMA) confirmed plans to shorten Canada’s standard securities settlement cycle from T+2 to T+1 (next day), in line with the US. This is expected to go live in H1 2024.Canada Post Pension Plan and BMO Wealth Management, Canada have been two recent beneficial owners from this market to join a trade body promoting peer-to-peer securities lend ing, following from Caisse de dépôt et placement du Québec, CAAT Pension Plan, and PSP Investments in July 2021. The Global Peer Financing Associa tion’s (GPFA) goal is to promote securi ties financing activities, liquidity man agement and collateral management. CHILE Chile – Cross-Border - Unweighted Santander 5.75 Citi 5.07 Chile – Cross-Border - Weighted Citi 7.10 Santander 5.75 Chile – Domestic - Unweighted Citi 5.75 One of the smaller South American markets, Chile is nonetheless seeing someBNPmovement.ParibasSecurities

Mexico – Cross-Border - Weighted Citi 7.05 Santander 6.56 Mexico – Domestic - Unweighted Citi 5.75

COLOMBIA Colombia – Cross-Border - Unweighted BNP Paribas Securities Services 5.88 Citi 5.03 Colombia – Cross-Border - Weighted Citi 7.04 BNP Paribas Securities Services 4.76 Colombia – Domestic - Unweighted BNP Paribas Securities Services 5.88 Citi 5.75

MEXICO Mexico – Cross-Border - Unweighted Santander 5.51 Citi 5.04

The first client to use the service in the region is Afore Profuturo, a Mexico company owned by Grupo Bal. It spe cialises in managing retirement saving funds for Mexican workers and it has more than six million clients.

Euroclear and Chile’s Ministry of Finance authorised in the summer of 2021 foreign investors to access local corporate debt through the Eurocleara ble link with the country. This will also allow local companies to tap a wider pool of investors and increase liquidity pools. Dutch fund manager NN IP told Global Investor that it saw opportuni ties to capitalise on the green transition and stated that emerging markets such as Hungary, Chile and Egypt have is sued ESG-related bonds as the demand for these products increases.

Credit Suisse Mexico recently an nounced the transfer of its clients with domestic needs to Corporación Actin ver. According to the terms of the deal, the Swiss bank will keep the relation ship and advisory services of Mexi can clients with “complex and global” needs, and transfer the local custody and execution business of its advisory clients to Actinver.

The report, Post-pandemic shift: Evidence from institutional-investor and sover eign wealth fund activity, details recent flows in State Street’s USD$43 trillion (£33.8tn) in assets under custody and administration.Citistrengthened its custody capabil ities with the appointment of Rebekah Flohr as managing director, head of custody for North America, earlier this year. She joined from Deutsche Bank where she served for more than five years. It was also among the first adop ters of a new credit optimisation and compression service from OSTTRA’s post-trade arm. The US investment bank also partnered with Taskize in November of last year to give its cus tody clients the ability to use the fin tech’s query management platform to directly connect to their Citi operations counterparts, and with SimCorp to provide mutual clients with a front-toback offering in its post-trade custody data. It also teamed up with Switzer land-based METACO to develop and pilot digital asset custody capabilities.

PERU Peru – Cross-Border - Unweighted Citi 4.89 Peru – Cross-Border - Weighted Citi 6.84 Peru – Domestic - Unweighted Citi 5.75 USA United States – Cross-Border - Unweighted Mizuho Bank Ltd 6.10 BNP Paribas Securities Services 5.55 United States – Cross-Border - Weighted Mizuho Bank Ltd 6.10 BNP Paribas Securities Services 3.78 United States – Domestic - Unweighted Brown Brothers Harriman 6.80 BNY Mellon 6.00 BNP Paribas Securities Services 5.08 After much debate and industry feed back, the largest local and global mar ket has confirmed it is eyeing a date in early 2024 for its move to T+1, a move which effectively compresses the settle ment cycle to the next day. Figures for 2021 show that the three largest US custodians saw assets un der custody grow, adding a combined US$13 trillion in the year to December 2021. Things were more uncertain in 2022BNYyear-to-dateMellonhad an interesting year on several fronts. It announced in Sep tember 2021 it was accepting agency mortgage-backed securities as collat eral on overnight repo trades. It also made inroads into digital assets and ESG, making several hires in both spaces. In November, it launched a ser vice to enable firms to apply their ESG principles to the assets they are will ing to accept as collateral. It recently partnered with Goldman Sachs to com plete the first agency securities lending transactions using the HQLAX Distrib uted Ledger Technology platform. For its part, J.P. Morgan has invested significantly in technology, and grow ing its data management and reporting capabilities for clients, notably with the launch in May 2022 of Fusion, a data platform designed to deliver end-toend data management and reporting solutions for institutional investors. It also made significant hires in the cus tody space, adding Scott Markowitz as head of direct custody for the Ameri cas with responsibility for the business in the US, Latin America and Canada, and ex-Deutsche Bank senior executive Mike Collier as international asset ser vicing product lead for global custody. State Street, which has been in the news for its proposed acquisition of Brown Brothers Harriman (BBH) In vestor Services, launched a new divi sion, State Street Digital, to add crypto, central bank digital currency, block chain, and tokenisation to its digital multi-asset platform in the summer of 2021.More recently, a report by the custo dian bank highlighted that investors were ‘cutting their exposure to equities and emerging markets in favour of less risky assets following a deterioration in investor confidence in early [2022]’.


URUGUAY Uruguay – Cross-Border - Unweighted Banco Itau 5.21 Uruguay – Cross-Border - Weighted Banco Itau 7.30 VENEZUELA Venezuela – Cross-Border - Unweighted Banco Venezolano de Credito 4.43 Venezuela – Cross-Border - Weighted Banco Venezolano de Credito 6.20


The main Hong Kong and Chinese stock markets will now include ETFs in their Stock Connect trading link, enabling for the first time international firms to buy Chinese ETFs and Chinese investors to tap Hong Kong-listed ETFs for the first time. The launch announce ment in July 2022 followed approval from Hong Kong’s Securities and Fu tures Commission and China’s Securi ties Regulatory Commission (CSRC). The CSRC is also working on reform ing China’s mutual fund management business, worth nearly USD$4.7 tril lion. In April, the regulator published guidelines on accelerating the develop ment of the mutual fund industry (关于 ) – these include relaxing rules for li cence application and taking long-term investment performance into account more when assessing fund managers. Chinese equities offer a ‘safe haven from global headwinds,’ according to Asian investment experts. Speaking at conference earlier this year, one speak er noted: “Fundamentally we are quite

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BNP Paribas Securities Services 5.85 Bank of China 5.60 China Construction Bank 5.37

CHINA China – Cross-Border - Unweighted BNP Paribas Securities Services 6.25 HSBC 5.69 Standard Chartered 5.44 Citi 5.00 Industrial & Commercial Bank of China 4.59 Bank of China 4.00 China Construction Bank 3.83 China – Cross-Border - Weighted HSBC 7.96 Citi 7.00 Industrial & Commercial Bank of China 6.43 Standard Chartered 6.39

Clearstream Australia was appointed as sub-custodian for J.P. Morgan’s un listed managed funds processing in Australia and New Zealand. A statement from Clearstream said ‘international players active in the Australian market have looked to Clearstream to provide the same infrastructure service domes tically that it provides internationally to its clients and to handle the link from the Australian managed funds market back to the global market’.

BANGLADESH Bangladesh – Cross-Border - Unweighted Standard Chartered 4.67 Bangladesh – Cross-Border - Weighted Standard Chartered 6.53

SUB-CUSTODY GUIDE 2022 | ASIA PACIFICCUSTODY Summer 2022 44 AUSTRALIA Australia – Cross-Border - Unweighted Citi 5.00 BNP Paribas Securities Services 4.83 HSBC 4.78 Australia – Cross-Border - Weighted Citi 7.00 HSBC 5.72 BNP Paribas Securities Services 2.90 Australia – Domestic - Unweighted HSBC 6.06 BNP Paribas Securities Services 5.55 There has been a huge rise in wealth di rected towards the Asia Pacific region in the past few years, with an increasingly active and sophisticated investor base. According to the Australian Custodial Services Association (ACSA), total assets under custody rose by 5.8% to USD$4.7 trillion in the six months to December 2021 in this market. ACSA chief executive, David Travers noted that ‘there was also onboarding of new custody mandates on the part of some members evident in the relative movements during the half’. ‘Looking ahead to 2022, we expect our members’ focus will centre on the re sponse to changing regulatory data re porting requirements, the evolving role of custodians in supporting institutional involvement in digital assets including cryptocurrencies, and the implementa tion of the ASX’s DLT-based replacement for CHESS [the Clearing House Electron ic Subregister System manages the settle ment of share transactions and records shareholdings].’Australianfund manager and ETF provider BetaShares and South Korea’s Mirae Asset Global Investments both se lected Citi Australia to provide custody and fund administration services. HSBC and State Street have also won local mandates to provide custody sup port.Another increasingly active player is BNP Paribas Securities Services, which won several mandates for sub-custody and clearing in 2020/2021.

SUB-CUSTODY GUIDE 2022 | ASIA PACIFIC CUSTODY Summer 2022 45 constructive on China. China has had a repricing over the last 12 months so coming into this year, they feel far more right sized versus a lot of the other global equity product sets. There are a lot of tailwinds that should see Chinese equities do well versus the broader peerDeutschegroup.”Bank connected to the Bei jing branch of China Securities Deposi tory and Clearing Corporation (CS DCC) to facilitate Qualified Foreign Institutional Investor (QFII) access to stocks listed on the Beijing Stock Ex change (BSE). It is the first EU bank to make this connection. The bank said that Deutsche Bank China is one of the first global custodian banks to connect QFII with investment opportunities in the onshore securities and futures mar ket.German lender Deutsche followed in the footsteps of Citi China, which was one of the first international banks to develop a link with the CSDCC in Beijing to support clearing and settle ment activities for the BSE. HSBC was the first international custody bank to route a trade to the BSJ on behalf of an offshore investor in January. The trade was executed via China’s QFI scheme by Samsung Securities for its under lying fund Samsung RQFII Trust. The London-headquartered bank also won several custodian mandates during the year to look after ETF in the wider APAC region and in mainland China.

HONG KONG Hong Kong SAR – Cross-Border - Unweighted BNP Paribas Securities Services 7.00 Standard Chartered 5.30 HSBC 5.25 Hong Kong SAR – Cross-Border - Weighted HSBC 7.35 BNP Paribas Securities Services 7.00 Standard Chartered 6.24 Hong Kong SAR – Domestic - Unweighted UBS AG 6.33 HSBC 6.19 BNP Paribas Securities Services 5.90

BNP Paribas hired Stanley Song from Deutsche Bank in April as its co-head of securities services in China. Song is based in Shanghai and reports to CG Lai, chief executive officer of BNP Pari bas China Limited, and Franck Dubois, head of Asia Pacific for BNP Paribas Se curities Services. The French bank was given a QFII custodian and settlement licence in China in 2021.

As mentioned under the China section, the Hong Kong and Chinese exchange now include ETFs in their Stock Con nect trading link, enabling internation al firms to buy Chinese ETFs and Chi nese investors to tap Hong Kong-listed ETFs for the first time. The Hong Kong Exchange (HKEX) appointed in March 2022 an advisor to chief executive Nicolas Aguzin to oversee the group’s expansion in mainland China. Yang Qi umei has re-joined the exchange group as managing director and advisor, hav ing worked at HKEX between 2010 and 2013. In January, Standard Chartered Bank (Hong Kong) agreed to buy RBC In vestor Services Trust Hong Kong Lim ited, to grow its custodian and fund servicing business in this market, and expand into the Mandatory Provident Fund schemes and Occupational Re tirement Schemes Ordinance schemes trusteeship business in Hong Kong. Citi has also been active in Hong Kong, extending its fund custodian and administrator partnership with BEA Union Investment Management, in relation to its first mutual fund re structure comprising five funds into an open-ended fund company (OFC) structure. Fubon Fund Management (Hong Kong) also selected the US bank as service provider for their inaugural ETPs launched in Hong Kong. Citi will act as trustee and will provide Fubon with fund accounting and custody ser vices. The US bank is joins BNP Paribas and HSBC in having made senior hires to strengthen its coverage of southeast Asia.

The Asia Pacific region has grown at a steady clip in recent years, and Japan and Australia, two of the largest mar kets (excluding China) had combined AuM of US$8.5 trillion. Japan is an increasingly dynamic market, and has seen the sub-custody space develop in recentMitsubishiyears.

SUB-CUSTODY GUIDE 2022 | ASIA PACIFICCUSTODY Summer 2022 46 INDIA India – Cross-Border - Unweighted BNP Paribas Securities Services 7.00 SBI-SG Global Securities Services (Société Générale Securities Services) 6.42 Citi 5.28 HSBC 5.24 Standard Chartered 4.70 India – Cross-Border - Weighted HSBC 7.34 BNP Paribas Securities Services 7.00 Citi 6.39 Standard Chartered 4.70 SBI-SG Global Securities Services (Société Générale Securities Services) 4.25 India – Domestic - Unweighted BNP Paribas Securities Services 6.97 SBI-SG Global Securities Services (Société Générale Securities Services) 6.39 Deutsche Bank AG 6.20 Standard Chartered 6.15 HSBC 5.95 The Securities and Exchange Board of India has given the green light to plans for its two largest stock exchanges, the National and Bombay Stock Ex changes, to move their settlement cycle for listed equities to T+1. The phased transition started in February this year, making India one of the first countries to move to next day settlement. Also in February, BNP Paribas Secu rities Services was chosen by Canada’s Alberta Investment Management Cor poration to provide custody, clearing and settlement services for its invest ment in India’s first renewable energy infrastructure investment trust, Vires cent Renewable Energy Trust (VRET). Fund administrators Vistra and Apex Group have received regulatory ap proval to set up operations in India’s new Gujarat International Finance TecCity (GIFT City). INDONESIA Indonesia – Cross-Border - Unweighted Standard Chartered 5.54 Citi 5.44 Indonesia – Cross-Border - Weighted Citi 7.62 Standard Chartered 6.54 Indonesia – Domestic - Unweighted HSBC 6.03 JAPAN Japan – Cross-Border - Unweighted Mizuho Bank Ltd 6.80 Sumitomo Mitsui Banking Corporation 4.70 Japan – Cross-Border - Weighted Mizuho Bank Ltd 7.35 Sumitomo Mitsui Banking Corporation 6.58 Japan – Domestic - Unweighted HSBC 6.18

UFJ Financial Group (MUFG) said it was looking to grow its US custody and global securities lending businesses. The head of the trust division at Mitsubishi UFJ Trust and Banking Corporation (MUTB), the bank’s trust arm, said many of its US clients were from Japan but it had seen ‘much more interest and demand from US-based clients’. State Street has created a new country head role looking after Japan, to reflect its growth in the country. Taro Kuryu zawa has been promoted to the role af ter initially joining State Street in May this year. His addition to the team was the latest in several other senior hires for the asset manager in APAC, with additions in Singapore and India. BNY Mellon has also ramped up activities in Japan, hiring a new head of asset ser vicing and digital for Japan in June. Nomura and Komainu, a digital custodian focused on the institutional market, have partnered to explore the development of a joint venture offering Japanese investors a digital custody service. According to Komainu’s presi dent and acting CEO Henson Orser, the Japanese market is ‘currently under served in terms of service providers for the digital assets market’.

Partnering with you on the journey ahead With our global presence and local expertise, we work side by side with you as your committed financial services partner to deliver a world of opportunity.

PAKISTAN Pakistan – Cross-Border - Unweighted Standard Chartered 5.24 Pakistan – Cross-Border - Weighted Standard Chartered 6.12

SUB-CUSTODY GUIDE 2022 | ASIA PACIFICCUSTODY Summer 2022 48 MALAYSIA Malaysia – Cross-Border - Unweighted Standard Chartered 5.55 HSBC 5.20 Malaysia – Cross-Border - Weighted HSBC 7.28 Standard Chartered 6.55 Malaysia – Domestic - Unweighted HSBC 5.95 A senior representative of one of Ma laysia’s largest states, Sarawak, has said he hopes to learn from UK best practice when it comes to sovereign wealth fund management, as it read ies a similar fund in the state. Premier Abang Johari Openg said in a state ment: ‘Sarawak’s financial position is now quite strong, so we want to gener ate revenue from future surplus funds for the benefit of our future genera tions.’ The Securities Commission Malaysia and Bursa Malaysia Berhad confirmed the final extension of the temporary suspension on short selling to 31 De cember 2021, having initially been in troduced at the start of the Covid crisis and extended several times. Malaysian bank AMMB Holdings Bhd was reported to have been consid ering an offer of up to USD$300 million for its asset management unit AmIn vest, according to Bloomberg. Also looking to sell its asset management business is Thailand’s Kasikornbank, Bloomberg reported. NEW ZEALAND New Zealand – Cross-Border - Unweighted HSBC 5.59 BNP Paribas Securities Services 5.39 New Zealand – Cross-Border - Weighted HSBC 6.60 BNP Paribas Securities Services 3.23 New Zealand – Domestic - Unweighted HSBC 6.17 BNP Paribas Securities Services 6.10 Several banks have made senior ap pointments in this market in recent months.BNPParibas Securities Services has added Iain Martin as head of New Zealand from October 2022. The bank noted it had a ‘fast-growing business in New Zealand’ and was ‘the first to of fer NZX stock market clearing services, which came as a result of winning six new sub-custody clients in the region in the past 24 months’. HSBC also brought in a new head of markets and securities services, Aus tralia and New Zealand in April, while Northern Trust appointed a new head of business for Australia and New Zea land a few months prior. J.P. Morgan selected Clearstream Aus tralia as its sub-custodian for its un listed managed funds and hedge funds in Australia and New Zealand. J.P. Morgan also launched a digital proxy voting platform, Proxymity, in October last year with a view to extending the service to New Zealand this year. Apex Group acquired investment ad ministration services provider MMC in January this year. The acquisition of MMC marks Apex Group’s entry into the New Zealand market with the ad dition of an office of 170 people, based in Auckland.

PHILIPPINES Philippines – Cross-Border - Unweighted Standard Chartered 5.49 HSBC 5.06 Philippines – Cross-Border - Weighted HSBC 7.08 Standard Chartered 6.47 Philippines – Domestic - Unweighted HSBC 5.69 Union Bank of the Philippines has se cured METACO’s digital asset man agement services to further secure for its digital asset custody operations. Named METACO Harmonize, the ser vice helps manage end-to-end digital asset use cases from cryptocurrency custody and trading to tokenisation and smart contract management.

SUB-CUSTODY GUIDE 2022 | ASIA PACIFIC CUSTODY Summer 2022 49 SINGAPORE Singapore – Cross-Border - Unweighted Standard Chartered 5.49 HSBC 5.22 DBS Bank Ltd (formerly Development Bank of Singapore) 4.92 BNP Paribas Securities Services 4.00 Singapore – Cross-Border - Weighted HSBC 7.31 DBS Bank Ltd (formerly Development Bank of Singapore) 6.88 Standard Chartered 6.47 BNP Paribas Securities Services 4.00 Singapore – Domestic - Unweighted HSBC 6.14 BNP Paribas Securities Services 5.85 France’s BNP Paribas Securities Services has made two senior hires in Singapore in recent months: Luc Renard as head of Securities Services for Southeast Asia, and Jen-Thai Ewe as head of client de velopment for Securities Services in Southeast Asia. A statement noted Ewe will drive the bank’s expansion plans in the securities services industry, includ ing global custody, fund administration and other post-trade services. It also picked up two mandates in the past few months: one from First Plus Asset Management to provide fund ad ministration services to the Singaporebased fund manager, and another for funds using Singapore’s Variable Capi tal Company (VCC) structure. London Stock Exchange Group (LSEG) is looking to build a matching venue for non-deliverable forwards (NDFs) in Singapore with the support of the Monetary Authority of Singapore. NDF Matching will launch in 2023, and is a response to ‘the growing demand in the region and increasing electroni fication of FX trading globally. The in tegration of clearing into the design of NDF Matching also enables easier ac cess to the full book of liquidity in the venue for all participants,’ LSEG said in a statement. Singapore Exchange-backed digital securities market ADDX launched in April a service to enable wealth man agers to offer their clients better access to private clients which has already secured the backing of two local firms. ADDX Advantage, which uses block chain and smart contract technology, fo cuses on wealth managers, and aimed at corporate treasuries and family offices. SOUTH KOREA South Korea – Cross-Border - Unweighted Standard Chartered 6.10 Citi 5.36 HSBC 5.28 KEB Hana Bank 4.86 South Korea – Cross-Border - Weighted Citi 7.51 HSBC 7.39 KEB Hana Bank 6.81 Standard Chartered 6.10 South Korea – Domestic - Unweighted HSBC 5.92 SRI LANKA Sri Lanka – Cross-Border - Unweighted HSBC 4.88 Sri Lanka – Cross-Border - Weighted HSBC 6.82 TAIWAN Taiwan – Cross-Border - Unweighted Standard Chartered 5.60 HSBC 5.17 JPMorgan 4.85 Taiwan – Cross-Border - Weighted HSBC 7.23 JPMorgan 6.79 Standard Chartered 6.61 Taiwan – Domestic - Unweighted HSBC 6.15 THAILAND Thailand – Cross-Border - Unweighted HSBC 5.39 Standard Chartered 5.19 Thailand – Cross-Border - Weighted HSBC 7.54 Standard Chartered 7.27 Thailand – Domestic - Unweighted HSBC 6.06 VIETNAM Vietnam – Cross-Border - Unweighted Standard Chartered 6.10 HSBC 5.19 Vietnam – Cross-Border - Weighted HSBC 7.27 Standard Chartered 6.10


PGIM Investments created a new senior European sales manager for Belgium and Luxembourg role in July 2021, hiring former Invesco Asset Management Steve Beckers. He was director for sales covering Belgium and Brussels at the asset manager. BlueBay Asset Management expand ed its team in the Benelux region in February 2022 with the appointment of a new director of business develop ment. The fixed income manager, part of RBC, said the appointment follows several other appointments in North ern Europe as the firm looks to rein force its presence in the region. In May 2022, UK asset manager J O Hambro Capital Management appointed Frédéric Lejeune as its managing director and country head for Frabelux (France, Belgium and Luxembourg). The firm sees ‘significant opportunity in continental Europe and the Frabelux region in particular’. BULGARIA Bulgaria – Cross-Border - Unweighted Citi 5.21 Bulgaria – Cross-Border - Weighted Citi 7.30

BELGIUM Belgium – Cross-Border - Unweighted Euroclear 6.05 Deutsche Bank AG 5.40

SUB-CUSTODY GUIDE 2022 | EUROPE CUSTODY Summer 2022 51 AUSTRIA Austria – Cross-Border - Unweighted Raiffeisen Bank International 6.10 UniCredit 5.83 Deutsche Bank AG 5.25 Austria – Cross-Border - Weighted Deutsche Bank AG 7.35 UniCredit 6.93 Raiffeisen Bank International 6.10 Austria – Domestic - Unweighted BNP Paribas Securities Services 5.68 Austrian investment funds reported AuM of €191.9 billion in 2020, 3.8% high er than the previous year, and a record number, according to the association of investment companies (Vereinigung österreichischer Investmentgesellschaften, or VÖIG). Pension funds manage about 15% of these assets. Wiener Boerse started trading in August 2021 three new crypto-based structured products as the Austrian exchange group continues to widen the scope of its platform. The new products will be backed by Bitcoin, Ethereum and Litecoin, and include the exchange’s first carbon neutral crypto exchange traded prod uct (ETP). The contracts will be traded on the exchange’s multilateral trading facility, Vienna MTF. The physicallybacked and cleared products are struc tured by ETC Group. The market-mak er is Lang & Schwarz. More recently, in June 2022, Amundi Austria took over fintech Finventum from BAWAG P.S.K., a local bank, in response to the growing trend for digi tal money and portfolio management. Finventum owns Savity Vermögens verwaltung GmbH, a robo-advisory platform offering digital asset manage ment services.

BNP Paribas Securities Services 6.79 Euroclear 6.05 Belgium – Domestic - Unweighted KBC Securities 5.89 BNP Paribas Securities Services 5.57 US bank J. P. Morgan went live in Belgium on Proxymity, a communica tions platform backed by a group of top-tier custodians, in October 2021. Originally developed by Citi in col laboration with Computershare in 2018, Proxymity gives clients access to important information regarding meeting announcements and agendas directly from issuers to investors.

BNP Paribas Securities Services 4.85 Belgium – Cross-Border - Weighted Deutsche Bank AG 7.56

CROATIA Croatia – Cross-Border - Unweighted OTP banka d.d. 6.62 UniCredit 5.00 Croatia – Cross-Border - Weighted UniCredit 7.00 OTP banka d.d. 3.97 Croatia – Domestic - Unweighted OTP banka d.d. 6.36 The Croatian central securities de pository will migrate to TARGET2Securities (T2S), a common platform on which securities and cash can be transferred between investors across Europe, in 2023. The Središnje klirinško depozitarno društvo d.d. (SKDD) and the European Central Bank have signed the T2S Framework Agreement, with a view to allowing SKDD participants to settle securities transactions with us ers from 20 other European countries in central bank money.



ESTONIA Estonia – Domestic - Unweighted SEB 5.71 FINLAND Finland – Cross-Border - Unweighted SEB 5.00 Finland – Cross-Border - Weighted SEB 7.00 Finland – Domestic - Unweighted SEB 6.06 BNP Paribas Securities Services 5.19 Nordea’s custody head of sales Teemu Pihlatie moved to Citi in the role of head of securities services for Finland in the summer of 2021. The move fol lows Citi and Nordea agreeing earlier in the year that Nordea would recom mend its existing clients appoint Citi as their new provider of sub-custody services in the region. Nordea had pre viously decided to exit the Nordic subcustody business.

DENMARK Denmark – Cross-Border - Unweighted SEB 5.18 Denmark – Cross-Border - Weighted SEB 7.24 Denmark – Domestic - Unweighted SEB 6.06

CYPRUS Cyprus – Cross-Border - Unweighted BNP Paribas Securities Services 5.13 Cyprus – Cross-Border - Weighted BNP Paribas Securities Services 7.17 Cyprus – Domestic - Unweighted BNP Paribas Securities Services 7.00 Mitsubishi UFJ Financial Group (MUFG) Investor Services opened a new operational centre in Cyprus in March this year to support EU expan sion plans. It added the former chief ex ecutive officer of Hellenic Bank Group in Cyprus, Yannis Matsis, as managing director and head of the office a couple of months later. Matsis will be responsible for the firm’s local asset servicing footprint, growth within the Cypriot market and business expansion activities in Europe and the Middle East, MUFG said.

BNP Paribas Securities Services 5.06

In June, J.P. Morgan signed an agree ment with Euronext Securities Copen hagen to become a direct participant in the Danish market through the local central securities depositary (CSD). It said the move reflects ‘a growing trend of shortening the value chain between issuers and investors’. Euronext said it was seeing ‘growing relevance for in ternational players in the custody busi ness to directly access local markets through direct connectivity with local CSDs’.Ayear prior, J.P. Morgan won a man date from Danske Bank to provide cus tody and depository services for Dan ske Invest Funds, which is managed by Danske Invest Management. The mandate, worth USD$70 billion billion over 140 funds, includes equity, fixed income and alternative investments. In March this year, Euronext Secu rities partnered with Clearstream to provide asset services to Clearstream Banking as investor CSD for the Dan ish market. For Clearstream, the part nership is part of a broader effort to create increased operational set-ups through direct market access, as well as a response to the wider post-trade in dustry’s demand to shorten the value chain.

RBC Global Asset Management and BlueBay Asset Management appointed Rami Salminen to their combined busi ness development team in May 2022 to increase their presence in the Nordics. He previously held roles at NN Invest ment Partners and Alfred Berg Asset Management.

Czech Republic – Cross-Border - Unweight ed Société Générale Securities Services 6.61 Citi 5.28 Czech Republic – Cross-Border - Weighted Citi 7.40 Société Générale Securities Services 5.01 Czech Republic – Domestic - Unweighted Société Générale Securities Services 6.55

Swiss cryptocurrency custody firm Metaco is growing its partner network, having inked recent deals with French giants Société Générale’s digital asset subsidiary SG Forge and BNP Pari bas Securities Services to provide them with digital currency custody support.

GERMANY Germany – Cross-Border - Unweighted Deutsche Bank AG 5.80 BNP Paribas Securities Services 5.20 Germany – Cross-Border - Weighted Deutsche Bank AG 8.12 BNP Paribas Securities Services 5.14 Germany – Domestic - Unweighted BNP Paribas Securities Services 6.28 Industrials stocks were the mostshorted names in Europe earlier this year as short sellers shifted their focus from UK to German shares, new data has shown. Short-position data from intelligence firm SEI Novus based on aggregate short positions in European Securities and Markets Authority-reg ulated countries showed that indus trials remained in the spotlight last month. The top three countries with the greatest short exposures were the UK, Germany and France. Global securities finance revenues totalled USD$1.16 billion in the sec ond half of 2021, a 16% year-on-year rise, according to IHS Markit. European equity lending revenues were flat in the second half of 2021 though revenue in Germany declined 45% YoY with average fees down a 52% drop from H2 2020. Fast forward to May 2022, and activi ty in Germany picked up, with ‘strong securities finance returns’.

GREECE Greece – Cross-Border - Unweighted BNP Paribas Securities Services 6.10 HSBC 5.44 Greece – Cross-Border - Weighted HSBC 7.62 BNP Paribas Securities Services 6.10 Greece – Domestic - Unweighted BNP Paribas Securities Services 6.03 Eurobank 6.03

The previous year, CACEIS was se lected to provide asset services for the funds of Épopée Gestion, an invest ment management company special ising in private equity and real estate investment. The mandate covers custo dian banking, registrar, middle-office and fund administration services.


The same month, French state-owned investment firm Caisse des Dépôts et Consignations renewed its partnership with BNP Paribas Securities Services, with the latter providing custody ac count-keeping services as part of an ex tended mandate with the French pub lic financial institution that carries out tasks in the public interest. The French bank’s securities services arm invested also invested in Proxymity, a Londonheadquartered fintech that powers an investor communications platform to connect issuers, intermediaries and in vestors through a digital network.

FRANCE France – Cross-Border - Unweighted BNP Paribas Securities Services 5.41 Deutsche Bank AG 5.30 CACEIS BANK 4.90 France – Cross-Border - Weighted Deutsche Bank AG 7.42 CACEIS BANK 6.86 BNP Paribas Securities Services 6.36 France – Domestic - Unweighted CACEIS BANK 5.85 BNP Paribas Securities Services 5.84 The French central bank, the Banque de France tested the use of a Central Bank Digital Currency (CBDC) in connection with T2S. The Banque de France simu lated CBDC tokens on a public block chain, and as soon as the tokens were successfully transferred from SEBA Bank to Banque Internationale Luxem bourg, LuxCSD delivered the securities in T2S. One of Europe’s most active markets also saw its fair share of industry activ ity. In March 2022, State Street appointed Société Générale Securities Services’ former global head of sales, marketing and solutions, Christophe Baurand, as its country lead for France. He held previous roles at Lyxor Asset Manage ment and Société Générale CIB.


On the people side, PGIM Investments said it plans to expand its business into Italy and appointed Alessandro Aspesi as its country head, in March this year. Aspesi has held previous roles at Co lumbia Threadneedle Investments and UBS Global Asset Management. Stuart Parker, president and chief executive officer of PGIM Investments, noted that the firm had ‘previously utilised the dis tribution capabilities of a local partner in Italy but now could ‘enter the market directly using PGIM’s European distri bution efforts to continue to strengthen our existing partnerships’.

ITALY Italy – Cross-Border - Unweighted BNP Paribas Securities Services 5.94 Société Générale Securities Services 4.92 Italy – Cross-Border - Weighted BNP Paribas Securities Services 7.08 Société Générale Securities Services 6.88 Italy – Domestic - Unweighted Intesa San Paolo 6.00 BNP Paribas Securities Services 5.84 One of Southern Europe’s largest mar kets, Italy, has also seen some activity in recent months. Euronext Securities Milan announced the acquisition in March 2022 the vari ous business functions of Milan-head quartered Spafid. The central securities depository (CSD) Monte Titoli will ac quire Spafid’s General Meetings, Des ignated Representative, and Sharehold er’s Registers activities. The firm said this would account for solutions used by approximately 200 clients. More recently, Clearstream was se lected by Italian online broker Directa to provide investors with access to its global funds portfolio. Clients will be able to access Clearstream’s funds suite of more than 190,000 international funds in 50 jurisdictions globally.

In the summer of 2021, CNPR, the Italian pension fund for accountants, expanded the partnership it had with BNP Paribas Securities Services to pro vide securities lending services includ ing global custody services to its €2 bil lion of assets.

HUNGARY Hungary – Cross-Border - Unweighted UniCredit 5.12 Citi 5.04 Hungary – Cross-Border - Weighted UniCredit 7.17 Citi 7.05 ICELAND Iceland – Cross-Border - Unweighted Landsbankinn hf 5.13 Iceland – Cross-Border - Weighted Landsbankinn hf 7.17 IRELAND Ireland – Cross-Border - Unweighted Citi 5.45 HSBC 5.18 Ireland – Cross-Border - Weighted HSBC 7.24 Citi 5.45 Citi added in May Cilian O Gogain as head of securities services for Ireland as part of a trio of senior appointments in May this year. O Gogain will lead the ef fort to expand the bank’s market share in custody, funds and execution services across the Irish franchise. In March, HSBC appointed Laura Trimble as CEO and head of wholesale banking for Ireland. She will oversee HSBC’s commercial banking, global banking and securities services busi nesses in Ireland. In January, J.P Morgan hired HSBC’s former head of business development and client management Europe, Mi chelle Butler, as its new managing direc tor, head of sales, UK and Ireland. Over the course of the year, Northern Trust won a couple of custody mandates in Ireland: Omba Investments Irish Collective Asset-management Vehicle (ICAV) to support its new Irish UCITS funds, and Pendal Group to provide a range of asset servicing to its businesses across Australia, the UK and Ireland.

LATVIA Latvia – Domestic - Unweighted SEB 5.57 LITHUANIA Lithuania – Domestic - Unweighted SEB 5.85

One of the key M&A deals in the past year came (partly) out of the Nether lands, with Goldman Sachs announcing it was acquiring NN Investment Part ners (NN IP) from NN Group for €1.6 billion. NN IP, a European asset manag er based in the Hague, with around $355 billion in assets under supervision and $70 billion in assets under advice, of fers a range of equity and fixed income products, with a heavy focus on ESG.

BNP Paribas Securities Services 5.19


NORWAY Norway – Cross-Border - Unweighted SEB 5.03

Achmea Investment Management selected BNY Mellon in July 2021 to provide AIFMD fund depositary and global custody services for investment funds with combined AUM of nearly €20 billion.

Norway – Cross-Border - Weighted SEB 7.04 Norway – Domestic - Unweighted SEB 5.93

Apex Group will buy Darwin Deposi tary Services, a provider of depositary services to alternative investment funds based in the Netherlands. Darwin will have access to Apex’s custody, digital banking and ESG rating and advisory services.BNP Paribas Asset Management (BNPP AM) announced in April it had completed its acquisition of a majority stake in Dutch asset manager and spe cialist lender Dynamic Credit Group. This brings the division’s total assets under management to €20 billion. The French lender’s securities servic es arm was selected by Teslin Capital Management in July 2022 to provide investment and fund administration, and reporting bank and global custody services for its €1.2 billion global assets. Wealth manager Van Lanschot Kempen (VLK) also chose the bank to provide custody services for its subsidiary, Kem pen Capital Management. VLK’s Lux embourg and Dutch business, which are covered by the deal, have a combined €6 billion in assets.

NETHERLANDS Netherlands – Cross-Border - Unweighted Deutsche Bank AG 5.38 BNP Paribas Securities Services 4.85 Netherlands – Cross-Border - Weighted Deutsche Bank AG 7.52 BNP Paribas Securities Services 6.79 Netherlands – Domestic - Unweighted BNP Paribas Securities Services 5.58 CACEIS BANK 5.00

LUXEMBOURG Luxembourg’s public pension fund Fonds de Compensation (FDC) has ap pointed Germany’s Union Investment to manage its global sustainable equity strategy. The FDC had put several port folio management mandates out to ten der via a public process, including the mandate for a global equity strategy with a sustainability-oriented manage ment approach worth about €1 billion. The FDC’s mission is to manage the compensation reserve of Luxembourg’s general pension scheme, deriving an ef fective return while diversifying risk. E Fund Management (Hong Kong) appointed HSBC to provide servicing solutions for its existing Luxembourg UCITS in the summer of 2021. The part nership expands HSBC’s servicing of E Fund’s current funds business outside of Asia. The European Depositary Bank (EDB) appointed David Claus as CEO and as a member of the board of directors, in June. He held a prior role as Luxem bourg country head for BNY Mellon. In April this year, BNP Paribas Securi ties Services business announced a cus tody mandate win from Luxembourg state bank Spuerkeess worth €16 billion in assets. The client will also use BNP Paribas’ newly expanded broker-to-cus tody solution in Europe to execute and settle trades on behalf of its retail clients.

A few weeks prior, fund administrator Apex appointed ex-European Fund Ad ministration executive Frédéric Bilas as chief executive officer of its Luxembourg business. The firm said he would be re sponsible for driving the group’s growth in the country to place Apex at the fore front of fund services in Luxembourg. US custody giant State Street named Andreas Niklaus as head of Luxem bourg last year. Niklaus joined State Street in 2003 to manage the Depotbank, where he has served as chief operating officer since 2006.

SWEDEN Sweden – Cross-Border - Unweighted SEB 5.64 Sweden – Cross-Border - Weighted SEB 6.67 Sweden – Domestic - Unweighted SEB 6.08

SEB appointed Stefan Räni to the new role of strategy and business develop ment lead within cash and sub-custody, in January this year. A former Danske Bank executive, he will spearhead efforts to grow SEB’s share of the Nordic subcustody market.

POLAND Poland – Cross-Border - Unweighted ING 6.10 BNP Paribas Securities Services 5.63 Poland – Cross-Border - Weighted ING 6.10 BNP Paribas Securities Services 3.38 Poland – Domestic - Unweighted BNP Paribas Securities Services 5.90 The Central Securities Depository of Poland (Krajowy Depozyt Papierów Wartościowych, or KDPW) said in Octo ber 2021 it was offering 13 temporary fee reductions in clearing, recording of securities and corporate action process ing until the end of the year. Maciej Trybuchowski, KDPW presi dent, said: ‘The reduction of clearing fees will provide savings to brokers and custodian banks. The reduction of fees for recording of securities and corporate action processing will provide savings to issuers, investment funds and paying agents. The total estimated amount of the reductions is more than PLN 4 mil lion (ca. 0.9 EUR million) in Q4 2021.’

The 3rd Swedish National Pension Fund (known as AP3) has appointed Staffan Hansén as CEO. The state pen sion system has nearly €50 billion of AuM. Hansén joins from SPP Pension & Försäkring where he is CEO.


BNP Paribas Securities Services 5.19

Switzerland – Cross-Border - Unweighted Credit Suisse 5.65 UBS AG 5.28 Switzerland – Cross-Border - Weighted UBS AG 7.38 Credit Suisse 6.71 Switzerland – Domestic - Unweighted BNP Paribas Securities Services 6.07 SIX Securities Services 6.03 A pioneer when it comes to digital cur rencies, Switzerland’s SIX Digital Ex change (SDX), has managed the firstever tokenisation of equity shares in a


PORTUGAL Portugal – Cross-Border - Unweighted BNP Paribas Securities Services 4.80 Portugal – Cross-Border - Weighted BNP Paribas Securities Services 6.72 Portugal – Domestic - Unweighted Millennium BCP 6.56 BNP Paribas Securities Services 5.06 ROMANIA Romania – Cross-Border - Unweighted Société Générale Securities Services 6.74 Citi 5.38 Romania – Cross-Border - Weighted Citi 7.52 Société Générale Securities Services 4.04 – Domestic - Unweighted Société Générale Securities Services 6.90 SERBIA Serbia – Cross-Border - Unweighted UniCredit 4.91 Serbia – Cross-Border - Weighted UniCredit 6.87 SLOVAKIA Slovakia – Cross-Border - Unweighted Citi 5.40 Slovakia – Cross-Border - Weighted Citi 7.55 SLOVENIA Slovenia – Cross-Border - Unweighted UniCredit 5.47 Slovenia – Cross-Border - Weighted UniCredit 7.66 SPAIN Spain – Cross-Border - Unweighted BNP Paribas Securities Services 5.61 Société Générale Securities Services 5.44 BBVA 5.33 Spain – Cross-Border - Unweighted BNP Paribas Securities Services 6.64 Société Générale Securities Services 6.09 BBVA 5.77 Spain – Domestic - Unweighted CACEIS BANK 6.56 Société Générale Securities Services 6.30 BNP Paribas Securities Services 5.73


The Spanish central counterparty (Bolsas y Mercados Españoles Clearing, or BME Clearing) and counterpart, the Swiss Central Securities Depository (SIX SIS) will be connected and jointly support their clients’ their collateral needs. BME Clearing members that are also SIX SIS participants will be able to post securi ties collateral directly into BME Clear ing’s collateral account across the SIS platform.

The BME was also in the news in Feb ruary after it launched a digital proxy voting service for shareholders’ meetings through its central securities depository Iberclear. Madrid’s stock exchange said the platform is powered by Proxymity, and connects participant entities and is suers in a centralised way to speed up the efficiency of voting processes at shareholder meetings.

A key senior move this year was the departure of Aberdeen Standard Invest ments’ investment director Matthew Chessum, in July. The UK asset manager has re-allocated securities lending and collateral responsibilities to staff in re sponse to his departure. In additional to leaving Aberdeen, Chessum said he will also step down from the International Securities Lending Association board and the Bank of England securities lend ing committee, effective immediately.

TURKEY Turkey – Cross-Border - Unweighted Deutsche Bank AG 5.71 BNP Paribas Securities Services 5.48 Citi 5.13 Turkey – Cross-Border - Weighted Citi 7.18 Deutsche Bank AG 6.78 BNP Paribas Securities Services 4.99 Turkey – Domestic - Unweighted BNP Paribas Securities Services 6.18 UKRAINE Ukraine – Cross-Border - Unweighted Citi 5.04 Ukraine – Cross-Border - Weighted Citi 7.05 UNITED KINGDOM United Kingdom – Cross-Border - Unweighted Citi 5.30 HSBC 4.98 United Kingdom – Cross-Border - Weighted Citi 7.42 HSBC 6.01 United Kingdom – Domestic - Unweighted CIBC Mellon 6.00 BNP Paribas Securities Services 5.95 BNY Mellon 5.33

SUB-CUSTODY GUIDE 2022 | EUROPE CUSTODY Summer 2022 57 fully regulated CSD based on distributed ledger technology (DLT). Tokenised pri vate shares are transferrable in the form of dematerialised intermediated securi ties on the SDX DLT platform according to Swiss law, the exchange said in a state ment.Still in the digital realm, SEBA Bank will provide digital asset custody and brokerage services, to clients of LGT Bank, a Swiss private bank. SEBA Bank was granted a licence to act as a custodi an bank for Swiss collective investment schemes a few months prior. US giant Northern Trust gained regula tory approval in June 2021 to offer cus tody, depositary, transfer agency and an cillary services to institutional investors and managers in Switzerland. The new Depotbank service will be led by former RBC Investor and Treasury Services ex ecutive Marco Wiegmann.

In mandate news, Schroders won a man date from Nest to manage the UK pen sion scheme’s private equity allocation. The Schroders Capital team, the private assets arm of the UK asset manager, has created a bespoke fund for Nest, making it one of the first UK defined contribution schemes to invest directly into private equity. Nest, which represents a third of the UK workforce, will fold the private equity investments into its existing de fault retirement date funds. France’s AXA Investment Managers has appointed HSBC as its UK provider of global custody and fund depository services. HSBC will service AXA’s UK UCITS fund range. Fund services firm AMX has launched a climate reporting solution to help pension funds meet their changing re porting requirements. The firm, which connects investors, asset managers and service partners, said earlier this year that its AMX Zero solution is a low-cost climate reporting hub to help pension trustees address fragmented climate data and lack of standardised reporting.

Aviva Investors has ramped up its ESG expectations from the companies that it invests in, Mark Versey, chief executive officer of Aviva’s asset man agement arm, wrote in his annual let ter to chairs. The asset management firm added that it would hold boards and individual directors accountable at companies that are not demonstrating sufficient urgency in relation to climate, biodiversity and human rights.

BNY Mellon Investment Management appointed Matt Shafer to the newly cre ated role of head of European distribu tion, effective January 2022. The US bank’s asset management arm said in a statement on Wednesday afternoon that he will oversee the firm’s UK and Euro pean businesses. State Street’s Alex Lawton, senior managing director and head of securi ties finance in Europe, the Middle East and Africa, left the bank last year, while James Day was promoted to head of se curities finance. Day, based in London, joined State Street in September 2020, when he was named managing direc tor, global head of securities finance product development.

Standard Chartered recently appoint ed Andy Ross as global head of prime and financing, financing and securities services and financial markets head in the UK. The former head of LSE Group’s interest rates market CurveGlobal will start the role on August 1.

Mitsubishi UFJ Financial Group (MUFG) has appointed Fabianna Del Canto, formerly of Barclays and Gold man Sachs, as its head of UK, Eastern Europe, the Middle East and Africa. In 2021, HSBC’s asset management arm (HSBC AM) appointed Christine Chow as head of stewardship and en gagement. Her appointment was ef fective October 1 and she is based in London reporting to Stuart Kirk, global head of responsible investing and re search.


SUB-CUSTODY GUIDE 2022 | MIDDLE EAST & AFRICA CUSTODY Summer 2022 59 BAHRAIN Bahrain – Cross-Border - Unweighted HSBC 4.75 Bahrain – Cross-Border - Weighted HSBC 6.65 FState Street and First Abu Dhabi Bank (FAB) have partnered to share custody duties for institutional investors in the Middle East and North Africa (MENA), as of July 2021. According to a statement, clients will have access to State Street’s ‘suite of front, middle and back office ca pabilities, in addition to its extensive data management and analytics solutions, which seamlessly integrate with FAB’s regionalised suite of securities services products, local expertise and regional di rect custody network. FAB will become State Street’s sub-custodian in countries including Bahrain, Saudi Arabia and the United Arab Emirates, and State Street will become FAB’s global custodian. Jersey-based Crestbridge received in May this year a fund administration li cence in Bahrain to extend its operations in the jurisdiction for fund managers. The approval comes from the Central Bank of Bahrain, as Crestbridge restruc tures its Bahrain business, separating its trustee and fund administration busi nesses into separate units. BOTSWANA Botswana – Cross-Border - Unweighted Standard Chartered 4.83 Botswana – Cross-Border - Weighted Standard Chartered 6.75 Botswana – Domestic - Unweighted Standard Bank 5.71 COTE D’IVOIRE Cote D’Ivoire – Cross-Border - Unweighted Standard Chartered 4.00 Cote D’Ivoire – Cross-Border - Weighted Standard Chartered 5.60

EGYPT Egypt – Cross-Border - Unweighted HSBC 4.97 Citi 4.79 Egypt – Cross-Border - Weighted HSBC 6.95 Citi 6.71

NN Investment Partners said there are opportunities to capitalise on the green transition and stated that emerging markets such as Hungary, Chile and Egypt have issued ESG-related bonds as the demand for these products in creases. GHANA Ghana – Cross-Border - Unweighted Standard Chartered 4.47 Ghana – Cross-Border - Weighted Standard Chartered 6.26 Ghana – Domestic - Unweighted Standard Bank 5.60 Société Générale Securities Services outlined earlier this year plans to boost its custody offering in Africa by invest ing in Société Générale Ghana. The bank said that, through a connection to the SWIFT interbanking network, it is looking to offer international stand ards in the management of securities instructions and transactions. It said it would combine its knowledge of the local market with SGSS’s expertise in the securities business to strengthen its custody solution. A Bank of Ghana’s Financial Stability 2020 report found that total AuM in the African nation grew 8% in 2020 to GHC 30.58 billion (USD$3.6 billion), most of it originating from pension funds.

MOROCCO Morocco – Cross-Border - Unweighted Citi 5.22 Morocco – Cross-Border - Weighted Citi 7.31

MAURITIUS Mauritius – Cross-Border - Unweighted HSBC 4.82 Mauritius – Cross-Border - Weighted HSBC 6.75

KUWAIT Kuwait – Cross-Border - Unweighted HSBC 5.38 Kuwait – Cross-Border - Weighted HSBC 6.31

SUB-CUSTODY GUIDE 2022 | MIDDLE EAST & AFRICACUSTODY Summer 2022 60 ISRAEL Israel – Cross-Border - Unweighted Citi 5.00 Bank Hapoalim 4.79 Israel – Cross-Border - Weighted Citi 7.00 Bank Hapoalim 5.82 Israel – Domestic - Unweighted Bank Leumi 6.10 Bank Hapoalim 5.14 JORDAN Jordan – Cross-Border - Unweighted Bank of Jordan 5.93 Standard Chartered 4.96 Jordan – Cross-Border - Weighted Standard Chartered 6.94 Bank of Jordan 5.22 Jordan – Domestic - Unweighted Bank of Jordan 6.78 KENYA Kenya – Cross-Border - Unweighted Standard Chartered 5.13 Kenya – Cross-Border - Weighted Standard Chartered 7.17 Kenya – Domestic - Unweighted Standard Bank 5.98 Kenya could emerge as a mature in vestment market in the next three years, Shikkoh Malik, head of group fi duciary and fund services at Standard Chartered, told Global Investor Group in June last year. “If one looks at the way the markets evolve…maturity normally comes on the back of banking and capital mar kets, followed by the downstream sup port ecosystem. Kenya is at that level where it has crossed that threshold, hence, it is looking beyond capital mar kets to ensure there is maturity across the food chain,” he said. “As per our assessment, one could look at a shorterterm horizon of two to three years for the downstream element of the market to mature and support enhanced activ ity.”

NAMIBIA Namibia – Cross-Border - Unweighted Standard Bank 4.43 Namibia – Cross-Border - Weighted Standard Bank 6.20

NIGERIA Nigeria – Cross-Border - Unweighted Standard Bank 4.94 Nigeria – Cross-Border - Weighted Standard Bank 6.92 FMDQ Clear, Nigeria’s largest clearing house, was admitted as an observer to the Global Association of Central Counterparties (CCP12), which has 41 members globally, in October last

As one of the largest markets in the MENA region, Saudi Arabia has seen a ramping up of activity in the past year.

On the industry side of things, sev eral major international banks have ramped up their activities.

In April 2021, Riyad Capital part nered with BNP Paribas Securities Ser vices to provide joint global custody, fund services and consolidated data management services in the Kingdom of Saudi, ‘the first partnership of its kind in the Kingdom and the region’.

In August 2021, BNY Mellon and Saudi-based SNB Capital said that institutional clients now have access to securities services capabilities in Saudi Arabia. The US custody bank announced in October of last year that it had entered into an alliance with the newly-named SNB Capital. Under the new part of the agreement, SNB would provide its local market exper tise and leadership, as well as applying its adoption to new technological and regulatory developments, whilst BNY Mellon would provide global custody, asset servicing, data and technology capabilities.FirstAbuDhabi Bank (FAB) appoint ed Rainer Kasch in April this year as managing director and head of its secu rities services business in Saudi Arabia. Based in Riyadh, he is responsible for managing FAB Capital’s direct custody business in the country.

OMAN Oman – Cross-Border - Unweighted HSBC 4.89 Ukraine – Cross-Border - Weighted HSBC 6.84 QATAR Qatar – Cross-Border - Unweighted HSBC 5.47 Qatar – Cross-Border - Weighted HSBC 6.43 RWANDA Rwanda – Cross-Border - Unweighted Standard Chartered 4.64 Rwanda – Cross-Border - Weighted Standard Chartered 6.50 SAUDI ARABIA Saudi Arabia – Cross-Border - Unweighted HSBC 5.69 Saudi Arabia – Cross-Border - Weighted HSBC 6.75

For its part, Northern Trust appointed Kholoud Al Dosari as country head for Saudi Arabia a few weeks later. James Wright, the head of EMEA Asset Own ers at the custodian noted that ‘Saudi Arabia is an important strategic market for Northern Trust’.

The president of the Association of Asset Custodians of Nigeria, ‘Biodun Adebimpe, said in an interview that the national custody industry had been affected by the Covid 19 pandemic. ‘We’re custodians of investment securities and to the extent that tougher economic environments make it difficult for people to save and invest, the custody industry will be affected,’ he said. ‘On the foreign portfolio investors (FPIs) side as well, the story has been the same, if not worse. With Nigeria’s FX earnings significantly impacted by the pandemic and low-yield environment, we have seen a record decline in our assets under custody. He also noted that the ‘contributory pension space had grown to ‘over N11.5 trillion (USD$22 billion) despite the pandemic and the attendant recession’.

SUB-CUSTODY GUIDE 2022 | MIDDLE EAST & AFRICA CUSTODY Summer 2022 61 year. This will help ‘enhance market development, capacity building and knowledge sharing opportunities and better equip FMDQ Clear to foster growth and development in the Nigerian financial market’.

On the regulatory side, it has ap proved amendments to its short selling and securities borrowing and lending regulations as it looks to allow all types of investors to participate in the ac tivities. In a joint statement, the Saudi Stock Exchange, Tadawul, and the Se curities Depository Centre Company, Edaa, approved several amendments to short selling regulations and secu rities borrowing and lending regula tions. Through the amendments, Tad awul and Edaa are hoping to develop a consistent regulatory environment with the international best practices.

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Michael Wright, senior manager of securities lending at Nedbank, noted the “interesting” growth in demand for pledged collateral, a model South Africa has been trying to move away from for some time. He continued: “South Africa has tried over the last five years to move away from pledge and now the international market is looking at pledge as a way to manage their risk-weighted assets.”

SUB-CUSTODY GUIDE 2022 | MIDDLE EAST & AFRICACUSTODY Summer 2022 62 SOUTH AFRICA South Africa – Cross-Border - Unweighted RMB 6.10 Nedbank Limited 6.03 Standard Chartered 4.63 South Africa – Cross-Border - Weighted Standard Chartered 6.47 RMB 6.10 Nedbank Limited 4.21 South Africa – Domestic - Unweighted Nedbank Limited 5.96 RMB 5.44 Standard Bank 5.00 Standard Chartered 4.00 TP ICAP’s Liquidnet has made a ma jor push into South Africa by securing nearly 20 asset managers and pension funds as clients, representing the key liquidity providers in local rand de nominated debt. Through partnering with its owner TP ICAP, Liquidnet’s member community will now have ac cess to new liquidity in the South Afri can bond market. Mark Russell, global head of fixed income at Liquidnet, added: “With 72% of South Africa bonds owned by domestic investors, we recognise the incredible value these firms will bring to the platform for the benefit of all in the Liquidnet community.” Collateral optimisation and diver sity will be a big theme in the South African securities finance market go ing forward, according to Hitesh Har duth, head trader on the lending desk at Standard Bank. He told attendees of a Global Investor Group event last year: “Companies seek better ways to optimise their collateral and we see a number of opportunities for securities lending for breaking down silos and mobilising company assets.”

African capital markets are rich in investment opportunities. Navigating the culturally diverse markets is not without complexity though. That’s why you need a partner with insightful experience and vast coverage of the continent. As Africa’s largest custodian, by assets under custody, market coverage and investment solutions, we are uniquely positioned to partner you in navigating this continent, so rich in opportunity and potential. That’s why Standard Bank is your leading African bank for banks.

TANZANIA Tanzania – Cross-Border - Unweighted Standard Chartered 4.04 Tanzania – Cross-Border - Weighted Standard Chartered 5.65 TUNISIA Tunisia – Domestic - Unweighted Société Générale Securities Services 7.00 UGANDA Uganda– Cross-Border - Unweighted Standard Bank 6.23 Standard Chartered 4.93 Uganda– Cross-Border - Weighted Standard Chartered 6.90 Standard Bank 3.73 Uganda – Domestic - Unweighted Standard Bank 5.80 UAE UAE – Cross-Border - Unweighted HSBC 5.71 UAE – Cross-Border - Weighted HSBC 6.78 Dubai bank Emirates NBD and BNY Mellon have partnered to allow in ternational investors greater access to the UAE. Under the terms of the deal, Emirates NBD customers will be able to access BNY Mellon’s global custo dy, asset servicing, data and technol ogyUScapabilities.assetmanager


On March 9, Dubai approved the virtual assets law and established the Dubai Virtual Assets Regulatory Au thority (VARA), which will regulate the sale of virtual assets and virtual tokens, whilst also being responsible for regulating and authorising virtual asset service providers. Komainu, a hybrid custodian backed by Japanese bank Nomura, has se cured provisional regulatory approval from VARA. It will be able to provide digital asset custody services for insti tutional clients in the region.

ZAMBIA Zambia – Cross-Border - Unweighted Standard Chartered 4.18 Zambia – Cross-Border - Weighted Standard Chartered 5.84 ZIMBABWE Zimbabwe – Cross-Border - Unweighted Standard Chartered 4.69 Zimbabwe – Cross-Border - Weighted Standard Chartered 6.57

State Street Global Advisors has launched two global ac tive equity funds in the UAE. The State Street Global Value Spotlight Fund and the State Street Global Opportuni ties Equity Fund are actively invested to build a concentrated portfolio of 30 to 40 securities and aim to generate long term capital growth by allocating to global equities. The announcement follows news a year prior that US cus tody giant State Street had formed an alliance with First Abu Dhabi Bank (FAB) to offer enhanced securities ser vices to clients in the Mena region in countries including the UAE, Saudi Arabia, Bahrain and Egypt. Digital assets have also arrived in the UAE, with several recent an nouncements to that effect. Hex Trust is looking to move out of Asia for the first time as it opened its first Middle East office in Dubai in April, part of the digital assets custodian’s regional diversification strategy.

Speaking to Global Investor, Alessio Quaglini, chief executive officer and co-founder of Hex Trust, said there is a huge market up-for-grabs in the Mid dle Eastern crypto space, which has a regulatory framework that can attract companies, and allow them to be prof itable and operate globally.

We can already see a big shift in the sentiment coming from markets, and central banks raising rates aggressively and responding to significant inflation threats.

I’ve been with RBC Investor & Treasury Services for 12 years. In my current role, I’m responsible for the product development and management of a global suite of foreign exchange products and execution services ranging from FX standing instructions to passive currency overlay, and everything in between. I have an amazing team around me whose mission is to provide trusted FX solutions to clients that deliver transparent execution, operational efficiency and leading digital experiences. As a starting point, could you tell us a bit more about how recent interest rate movements have impacted and will potentially impact investors, and the way they manage currency risk in these portfolios? We’re at a crossroads in the markets where the very low interest rate environment we’ve all become accustomed to is coming to an end. We can already see a big shift in the sentiment coming from markets, and central banks raising rates aggressively and responding to significant inflation threats.When you look ahead, there’s a difficult job for policymakers trying to set monetary policy that is going to help dampen or contain all these inflationary pressures while trying to minimise the damage to economic growth. We’re going to have to get used to this so-called new normal rate environment.Inmanyways, the environment we are moving into is probably much more in tune with long-term historical standards than the last period - by that, I mean rates in the region of three, four or five percent. But if we turn this back, what does this mean when we think about currency risk management? Firstly, we need to look at how differences in interest rates are going to become a much more central factor in currency hedging decisions. For example, if we look at hedging a US dollar asset position to Europe, which is something a lot of people are looking to do now because EUR/ USD is so close to parity, people are looking to take advantage of that US dollar strength. Standard FX forwards markets are pricing in that by the end of this year US interest rates are going to be 2.5% higher than Europe. That’s really because the market is forecasting the Fed is going to ratchet up at a much faster pace than the European Central Bank (ECB). In that scenario, that interest rate differential is going to add 2.5% cost on an annualised basis to hedging a USD exposure back to euro. Those differences are going to have a greater weight in your decision making.Theother point I would make is that we need to plan for much more volatility in interest rate forecasts: the market is finding itself in unfamiliar territory where it’s having to price in a long series of rate increases into the future.Wecan expect plenty of price fluidity and uncertainty around these predictions as we move forward from here: you only have to look at the ECB yesterday [on 21 July]. The whole market was expecting 25 basis points, and they delivered 50. Currency hedgers who lock in long-dated contracts are going to find themselves much more exposed to this interest rate risk than they might have anticipated.

Amelie: It’s my pleasure to sit down today with Mark Hogg, Head of FX Product at RBC Investor & Treasury Services, who is here with me to discuss a very timely topic: managing currency risk in investor portfolios. Welcome, Mark - could you give our listeners a bit of background on what you do?

THOUGHT LEADERSHIP: RBC Investor & Treasury Services Summer 2022 64 CUSTODY

Fluid dynamics

Global Investor/ISF speaks to Mark Hogg, Head of FX Product at RBC Investor & Treasury Services – for the full video of the conversation, see page 64.

A last word is that I think we can expect continued significant volatility in spot rates. The search for yield has always driven currency flows and that’s going to accelerate now. Overlay that with uncertain central bank actions and volatility in markets more generally, as all asset classes adjust to this new environment, and we’re in for a period of potentially big moves in FX rates in the months ahead.

This is something we give a lot of thought to. We try and group our queries and challenges into themes, and stay in front of them and ensure that our solutions deliver real utility for our Someclients.ofthemore common enquiries we get include product oversight, and access to data, transaction level data. You really need a range of solutions to cater for different user groups. Some clients are very sophisticated, and they simply want access to raw data on an API. Some prefer scheduled reporting via email or SFTP. Others like a dashboard, and the ability to log in and have it all presented or bundled with nice tools and ways to visualise the data. You must cater for all these different user groups.

If you’re an investment manager, then I would say make it easy for your clients to access your products in a currency-hedged format so that they can be empowered to tailor their own appetite for investment risk.

One way to do that is to spread the risk over a global portfolio of fixed income securities in search of more stable and predictable returns. In that scenario, we’d be focused on the currency risk component of translating those foreign currency bonds back to the home currency as this can be a very significant driver of risk and returns. It’s reasonable to think we might see more demand for product providers to deliver currency hedging, or currency-hedged solutions in that space to give investors the choice of currency risk and separate that out from their chosen asset class. We’ve just talked about specific asset classes but if we look at specific markets: for asset owners and their investment managers, what are some that are going to become less/more appealing because of these currency moves? FX markets are testing ranges that we’ve not seen in major currency pairs like GBP vs USD, for example: right now, it’s hovering around lows we haven’t seen since the Brexit vote. You must go all the way back to the 1980s to see the pound lower against the dollar. A lot of people have been watching EUR vs USD recently and traded that parity: you must go back 20 years since the last time we saw that. These are the types of big moves that really impact long-term investment returns when you invest in foreign currency assets. We could also look at emerging market currencies where some of these moves are even bigger - more popular markets like Brazil, India, Turkey and South Africa. Their currencies continue trending lower in the long term. While you might expect that being in these markets might mean you experience good or higher returns in local currency terms, you’re certainly losing ground in your own currency by the time you’ve factored in the depreciation of that local currency into your decision making. We’d encourage asset allocators to think of this: it’s not only about where you invest and what asset class you chose. An investor could make a great return on investment only to see those gains drain away by negative translation back to their base currency. A better question that could be asked is: should we be thinking about separating those decisions into asset and currency and then manage the risk appetite for each component separately?Ifyou’rean investment manager, then I would say make it easy for your clients to access your products in a currency-hedged format so that they can be empowered to tailor their own appetite for investment risk. They might say: I want to invest in US equities, but I don’t want US dollar exposure. Allow them to make that decision to separate those things. When clients come to you, what are some of the common queries you get from them when it comes to managing this category of risk?

Another common theme that we see

Most equities and fixed income portfolios are returning big losses year-to-date.Interestrates and bond yields are starting to increase, in some cases to levels not seen for many years, so the relative attractiveness of fixed income is much more interesting for the average investor. This could bring fresh inflows into fixed income security funds. I also expect that some investors might have capitulated and literally been scared off equities, having experienced significant short-term losses. It might be the first time they’ve experienced that, so they are reassessing their risk appetite, what they’re looking at, and maybe going forward, looking at lower volatility investment options.

If we look specifically at investor portfolios: how are these reacting to interest rate rises and related currency risk? Do you expect any shift towards a particular asset or asset class? It’s been a difficult time for investors.

THOUGHT LEADERSHIP: RBC Investor & Treasury Services Summer 2022 65 CUSTODY

Amelie Labbe, Global Investor, speaks to Mark Hogg, Head of FX Product at RBC Investor & Treasury Services. This article is provided for general information only and does not constitute financial, tax, legal or accounting advice, and should not be relied upon in that regard. To the full extent permitted by law, neither RBC Investor & Treasury Services nor any of its affiliates or any other person accepts any liability whatsoever for any direct, indirect or consequential loss or damage arising from any use of the information contained herein by the recipient or any third party. ® Trademark of Royal Bank of Canada. Used under licence.

There are many intelligence and dataled insights that can be extracted from these processes providing the correct process is in place. The last point I would make is consciously decide what you’re good at. Where currency risk management isn’t a core competency within your organisation, or not mission critical to your investment strategies, then partner with an expert whose job it is to do this. Choose a partner that does all the basics well, and manages your day-to-day operations, pain and hassle-free.

I would also recommend staying on top of technology and innovation. Digital technology solutions have been great at automating workflows and processes, but they can be a bit of a black box. Be careful not to sacrifice control or oversight. If it’s done right, you can get the best of both worlds.

THOUGHT LEADERSHIP: RBC Investor & Treasury Services Summer 2022 66 CUSTODY is around execution performance. For that we enlist the support of specialist transaction cost analysis providers, and that update was a very popular component or add-on to our currency hedging product. We also see that while demand for currency hedging continues to rise, a lot of clients want to understand variance in hedge performance - requiring more support to understand the various drivers and the components for performance between a currency-hedged and unhedged investment. It can take quite a great deal of complex analysis to answer those questions. On the surface intuitively, it’s a straightforward topic but it’s quite a detailed process to get it right. A lot of clients are looking for support in that space. You just mentioned complex analysis. To finish our chat this morning, what kind of guidance can you give asset owners who want to manage currency risk and their related hedging programmes, dependent on individual risk appetite? It goes without saying but you must pay attention to all your costs. For example, don’t only focus on execution fees or overly simplified KPIs. The quality of the core market execution, the core market rate is just as execution may end up costing more than a small fee compared with a competitive market rate that’s transparent and referenced off an independent benchmark or supported by transaction cost analysis. Always aim for the lowest all-in cost outcome. Be honest and rigorous in measuring and attributing all your costs. The actual market execution cost of a trade in terms of spread to mid is just a small part of the overall cost of a trade. You need to factor in all the direct and indirect overhead costs involved in running a currency management function.


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Sui Chung, chief executive of CF Benchmarks, told Global Investor: “For funds who set their Net Asset Value in New York time, the ability to synchronise their futures activity in tandem is an important part of reducing hurdles for institutions looking to enter the market and helps develop the overall market further as reference points on regulated venues catch up with demand across regions.”

Lim said: “The ability to arb these different instruments is important as institutions look to apply multiple strategies across asset classes so we see this as very much in line with the evolution of the market in recent months.”McCourt agrees that traders are seeking to replicate strategies in other asset classes across their portfolios as they look to position themselves for more uncertain markets.

“There is still a lot of momentum around the CME Group cryptocurrency product offering, despite some of the drawdown in prices that we have seen with respect to the underlying spot markets,” McCourt said.

The first US Bitcoin exchange traded fund (ETF) launched in October, issued by ProShares. That was followed by the Valkkyrie Bitcoin Strategy ETF and, on JuneJoshua21. Lim, head of derivatives at Genesis Global Trading, told Global Investor: “As a US centric firm, it’s great to see the shift in the centre of gravity for these retail investment vehicles as the market develops further.”

The contracts were an extension of existing BTIC equity index products offered by the firm, and will encourage innovation in structured products in the US after the emergence of regulated exchange traded funds (ETFs) in the region, according to the firm. “The New York settlement period is the second most popular period in the 24 hour crypto market, and is the traditional market close for equities, structured products and ETFs in other asset classes,” Tim McCourt, global head of equity and FX product at CME, told Global Investor. “What the expansion means is that those clients can hedge for inflows and outflows against a transactable print and a tradeable product that they can hold on their balance sheet or in their inventory. “That should further empower their product innovation where they are already offering those type of products and transactions to their existing customer base.”

“Increasingly we are finding that clients like to trade the futures and spot basis as an outright strategy,” he added. “They track the futures rich or cheap to the underlying index and look at the pricing of that basis as largely a function of time and embedded yield that needs to be extracted on that asset.

CME, the premier regulated exchange for cryptocurrency derivatives, reported in the second quarter a record 106,200 lots in open interest and average daily contracts traded at 57,400 contracts.

CME Summer 2022 69 CUSTODY

Trading experts agree the emergence of New York settled cryptocurrency contracts will help develop the market and spur structured product issuance in the US, despite the continuing downward volatility in the spot markets.

We have observed with the pricing of other BTIC contracts, such as equities, that there is an assumed cost of carry that can be either positive or negative and which reflects other risk variables and“Thiscosts.means that with BTIC on BTC and ETH futures people can express a view not only on the priced-in yield of the underlying asset but also the other idiosyncratic risks embedded in the assets such as storage, custody or insurance fees. We will eventually see traders looking to isolate these variables independent of spot price movement throughout the day.”

Efforts to attract institutions to crypto platforms have intensified despite high profile issues in the wider universe of altcoins and stablecoins, drawing global regulatory scrutiny. CME Group went live in late July with extended functionality for its Basis Trade at Index Close (BTIC) crypto futures, referencing Bitcoin and Ether futures, allowing settlement at 4pm in New York. CME launched the London settled contracts on September 27, allowing customers to trade the basis between the future and spot price at settlement.

The expansion into crypto and extension into New York time made sense as the exchange has seen sustained interest in its BTIC contracts increase. CME BTIC volumes across equity index and crypto futures increased 36% in the second quarter, to 58,700 lots. The CME contracts build on its longstanding collaboration with rate provider CF Benchmarks, and reference the New York settled versions of the CME CF Bitcoin Reference Rate (BRRNY) and Ether-dollar Reference Rate (ETHUSD_NY) benchmarks. The indexes were launched in February.

New York settled derivatives to drive US crypto innovation

Genesis executed the first New York settled block trade after the BTIC functionality went live in July, and was also the facilitator for the first trade on London settled contracts in September (for Akuna Capital).

US-settled crypto contracts will likely help the evolution of digital assets, writes Radi Khasawneh.


“As with all commodity markets, par ticipants in the carbon removal market need data to better understand the mar ket and make decisions,” said CEO Antti Vihavainen. “That is what we mean with the word transparency. The indexes create a price signal that will help corporate buyers budget for and invest in innovative removals. Prices in future trades can reflect changes in the price index.”

CORC Carbon Removal Price Indexes track the price of removing carbon from the atmosphere based on Puro Standard methodologies. There are different ways to do this so the CORC Carbon Removal Price Index family consists of a composite index, that tracks the price of all CORC transactions, as well as specific indexes for biochar and bio-based construction materials. As the volume of transactions from other methodologies of removing carbon from the atmosphere increase, more indexes will be added to the family, helping us understand emerging trends in the

By Elba Horta, Co-Founder at Carbon removal markets, like financial markets, fluctuate. The cost of remov ing one tonne of carbon from the atmos phere can go up and down – and thanks to the Carbon Removal Price Index fam ily, launched by Nasdaq and earlier this year, we can now track these movements.Here,wetake a deeper look at the for tunes of the carbon removal markets and examine the trends which are starting to emerge.TheCarbon Removal Price Index fam ily tracks CORCs – CO2 Removal Certifi cates.’s suppliers remove car bon from the atmosphere by developing carbon net-negative processes or prod ucts. These removals are then verified by an independent third party based on the Puro Standard and one CORC is issued per tonne equivalent of carbon dioxide re moved from the atmosphere. Companies wishing to help tackle the climate crisis then buy these CORCs to support their net zero claims. When a claim is made, the company retires the CORC in the Puro Registry, where it is made visible to the public to ensure these removals are not used against further claims in the future.

If we look to the future, it is possible there will be even more demand for carbon offsets and removals that could lead to upward price pressures. Under Article 6 of the Paris Agreement, coun tries will be allowed to authorise offsets as Internationally Transferred Mitigation Outcomes in the future. The aim here is to avoid double counting, whereby the offsets are counted as part of the coun try’s own emissions reduction targets as well as those of the country in which the buyer is situated. But the unintended consequence is that there will be compe tition between countries and companies for the same emissions reductions and removals, which could stimulate de mand significantly. A lack of high-quality credits is the main challenge facing the voluntary car bon market. is addressing this by using a rigorous verification process. Its two-step, lab-tested verification is un dertaken in partnership with third-party auditors.Thesemeasures are comparable to rig orous financial auditing processes and ensure that supplied carbon removals provide real and long-term removal of CO2 from the atmosphere for buyers, ne gating the need to re-purchase removals down the line. As new carbon removal innovations come to the market, investors can also use the indexes as a benchmark for working out the price of potential carbon credits. New projects could also use the indexes as a way to estimate carbon rev enue and in doing so, assess future risks.

Theindustry.generaltrend for all the indexes in the family is upward. CORC suppliers negotiate prices with buyers, taking into account multiple factors such as loca tion and methodology used, to come to an agreement on how much CORCs are worth.CORC prices across the indexes are ris ing and the CORC Biochar Price Index has risen particularly sharply. This tracks the price of sequestering one tonne of CO2 in the form of biochar, a charcoal-like substance that is made by heating agri cultural or forestry waste in a controlled process that uses very little oxygen, called pyrolysis. The resulting product locks in carbon in a solid form that cannot then easily escape into the atmosphere. To be verified as a CORC, biochar has to seques ter carbon for at least 100 years.

Before Nasdaq and published the CORC Carbon Removal Price Index, there was no transparency about pricing in the engineered or tech-based carbon removal market.

The CORC Bio-based Construction Ma terials Price Index, which tracks CORCs generated from the sale of long-lasting wood elements in building construction, has seen a less dramatic rise, but even so, the price is still rising. Latest figures from the marketplace show they have risen by around $2 (£1.65) to $3. The offsets on offer from Noritec Holzindus trie went up from €25 to €27, while Moe lven Glulam offsets rose from €24 to €27 and Norway-based Are rose by €2.50 to €26. Under the Puro methodology for biobased construction, bio-based removal carbon credits are guaranteed for a mini mum of 50 years. The rise is seen perhaps most starkly in the three years between’s first ever CORC auction in May 2019, when the volume weighted average price per CORC was €26.92, and the average CORC price in May of this year: €76.74. One of the main drivers of this up ward trend are net zero pledges. In 2020, the number of companies making these pledges doubled to 1,565, representing $12.5 trillion in annual revenues. Through the Net-Zero Asset Managers initiative, 128 signatories representing $43 trillion in assets have committed to supporting companies’ net-zero ambitions.

The fluctuating fortunes of the carbon removal market

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