In other news, the SEC wants more clearing for US Treasury markets, SBI Digital Markets is born, and BNP Paribas Securities Services taps Citi.
Nasdaq Establishes a Custody Solution for Digital Assets
Nasdaq reports the launch of a new business that it says will “power the digital asset ecosystem.”
The new business “underpins Nasdaq’s ambition to advance and help facilitate broader institutional participation in digital assets by providing trusted and institutional-grade solutions, focused on enhanced custody, liquidity and integrity,” the exchanges company says in a statement.
“Nasdaq Digital Assets builds upon the successful solutions we have introduced in recent years to serve the digital assets ecosystem, including marketplace technology for digital asset exchanges, crypto-native anti-financial crime offerings, and crypto-related index solutions for tradable products,” Adena Friedman, president and chief executive officer, Nasdaq, says in the official announcement.
“The technology that underpins the digital asset ecosystem has the potential to transform markets over the long-term. To deliver on that opportunity, our focus will be to provide institutional-grade solutions that bring greater liquidity, integrity, and transparency to support the evolution,” Friedman.
Nasdaq also reports that its “custody solution will bring together the best attributes of hot and cold crypto wallets through an innovative technology offering, which will provide a high degree of accessibility and scalability without compromising security.”
The offering is “subject to regulatory approval in applicable jurisdictions,” the Nasdaq statement adds. — L.Ch
SEC Pushes Central Clearing for the U.S. Treasury Market
The Securities and Exchange Commission (SEC) is proposing rule changes for the U.S. Treasury market intended to “enhance risk management practices for central counterparties” and pave the way for more clearing of U.S. Treasury securities transactions, officials say.
“The proposed rule changes would update the membership standards required of covered clearing agencies for the U.S. Treasury market with respect to a member’s clearance and settlement of specified secondary market transactions,” according to the SEC’s announcement. “Additional proposed rule changes are designed to reduce the risks faced by a clearing agency and incentivize and facilitate additional central clearing in the U.S. Treasury market.”
“While central clearing does not eliminate all risk, it certainly does lower it. In 2017, however, only 13 percent of Treasury cash transactions were centrally cleared. Thus, I think there is more work to be done with respect to the amount of Treasury activity that is centrally cleared,” says SEC Chair Gary Gensler in a prepared statement.
“Specifically, the proposal would require that clearing agencies in the U.S. Treasury market adopt policies and procedures designed to require their members to submit for clearing certain specified secondary market transactions. These transactions would include: all repurchase and reverse repurchase agreements collateralized by U.S. Treasury securities entered into by a member of the clearing agency; all purchase and sale transactions entered into by a member of the clearing agency that is an interdealer broker; and all purchase and sale transactions entered into between a clearing agency member and either a registered broker-dealer, a government securities broker, a government securities dealer, a hedge fund, or a particular type of leveraged account,” according to the SEC.
As for customer margin concerns, “the proposal would permit broker-dealers to include margin required and on deposit at a clearing agency in the U.S. Treasury market as a debit in the customer reserve formula, subject to certain conditions. In addition, the proposal would require clearing agencies in this market to collect and calculate margin for house and customer transactions separately,” the SEC says. “Finally, the proposal would require policies and procedures designed to ensure that the clearing agency has appropriate means to facilitate access to clearing, including for indirect participants.”
The proposals has been published via SEC.gov and in the Federal Register. The public has about two months to comment before the regulations are officially accepted and an implementation date is set.
MAS Licenses SBI Digital Markets
The Monetary Authority of Singapore’s (MAS) has given the green light to SBI Digital Markets Pte. Ltd. (SBI DM) via a Capital Markets Services (CMS) license.
The official blessing will allow SBI Digital Markets to offer a corporate finance advisory that will deal in capital markets products and provide custody services.
SBI Digital Markets Pte. Ltd. is a subsidiary of Tokyo-based SBI Digital Asset Holdings.
SBI Digital Markets will be “conducting regulated activities … advising on corporate finance, dealing in capital markets products, and providing custodial services,” according to a statement. “SBI DM will be … building an ecosystem targeted directly at the growing demand for public and private institutional digital assets. SBI DM plans to launch its proprietary digital asset securities platform, providing an end-to-end solution to help traditional financial service operators capture growth opportunities fueled by the advent of digital assets.”
SBI DM was created in late 2020 with the ambition of becoming a top-tier Singapore-based digital asset business for financial institutions. It has more than 200 affiliates across 21 markets, per the statement. — L.Ch
BNP Paribas Securities Services Hires for the Americas
BNP Paribas reports the appointment of John Ferrara as head of sales and relationship management for the institutional-investors client segment in the Americas for BNP Paribas Securities Services (BNPPSS), the French bank’s custody division.
Ferrara will be “responsible for driving the growth of our Institutional Investor franchise, and further developing the corridors throughout the Americas regions in partnership with regional and global partners,” the bank says in a statement. Ferrara will be based in New York.
He will report to Dennis Bon, head of BNP Paribas Securities Services in the Americas, as well as to Alvaro Camunas, global head of client development for BNP Paribas Securities Services.
Ferrara is an industry veteran, whose previous posts include Citi and BISAM, both before and after it was acquired by FactSet. — L.Ch