Weekly news up to 26/07/2024
Issue #39
Hello everyone and welcome to the latest edition of GreySpark Insights.
Please do not hesitate to contact us with any questions or comments you may have. We are always happy to elaborate on the wider implications of these headlines from our unique capital markets consultative perspective. Happy reading!
💥Top story
Image: Electronic Payments International
📰Newsflash
📈Buyside
Franklin Templeton taps BlackRock’s Aladdin for OMS
Investment manager Franklin Templeton has become the latest buyside firm to integrate BlackRock’s flagship order management platform Aladdin. The integration, which will begin in Q2 2025, will allow Franklin Templeton to access investment data via a single platform to “enable scale, provide insights and support business transformation.” Several other investment managers such as Royal London Asset Management, are either in the process of transitioning or have recently transitioned onto the Aladdin platform in the last year.
BlackRock to buy UK data group Preqin for $3.2 bn
BlackRock has agreed to buy UK data firm Preqin for £2.55 billion in cash. BlackRock, which manages more than $10 trillion, is seeking to capitalise on a boom in demand from investors for alternative assets, which includes private equity, tokenised assets and infrastructure. In a statement, BlackRock noted that the acquisition would complement its Aladdin technology business by bringing together data, research, and investment process for fund managers. Preqin is expected to generate about $240 million of recurring revenue in 2024 and has grown approximately 20% per year in the last three years.
📉Sellside
Goldman Sachs Plans Further Tokenised Projects
Goldman Sachs has revealed plans to venture further into the world of tokenisation this year. The company’s global head of digital assets Matthew McDermott told Fortune that it is planning the launch of three tokenisation projects this year. Without giving specifics, the general consensus is that Goldman will target the US fund sector and European debt markets. A tokenised asset marketplace is also set to be launched, which will increase trading speeds and the types of assets that can be used as collateral. Goldman is of course no stranger to tokenisation; it has already issued tokenised debt for both The European Investment Bank and Hong Kong Monetary Authority, in addition to launching a tokenisation platform.
BBVA opens global cybersecurity centre in Mexico
BBVA is opening a global cybersecurity centre in Mexico as part of an alliance with IT services company Telefónica Tech, aimed at boosting its defences against heightening cyber security threats. The new site will mirror the bank's existing Spanish cybersecurity hub and will incorporate technologies in artificial intelligence and process automation for the detection and prevention of cyber crime. Sergio Fidalgo, BBVA's global CISO, noted BBVA’s goal of being a bank that is increasingly secure and prepared to respond to all types of attacks and to offer the best service to customers with the best security guarantees in the market.
✴️Digital transformation
Cboe Europe new VWAP crossing service to launch in Q4
Cboe Europe has confirmed plans for the launch of its new volume weighted average price (VWAP) crossing service for equities at the end of 2024. Due to launch in the fourth quarter, the VWAP-X service will be made available through block trading platform Cboe BIDS Europe and will give users a greater chance of sourcing and matching liquidity at a forward benchmark price. Trades will be reported in real time as off-book on-exchange executions. They will be centrally cleared through Cboe Europe’s clearing model. While this workflow is common in the US, Cboe’s new service will be the first of its kind to launch in Europe.
FIX Trading Community and GDF bid to build messaging gateway for digital assets
Global Digital Finance (GDF), a members’ association promoting digital assets in financial services, has unveiled a partnership with the FIX Trading Community. The initiative aims to upgrade existing financial infrastructure to interact with distributed ledger technology by facilitating interoperability across traditional financial systems and blockchain-based platforms. The bodies say the alliance is dedicated to enabling seamless messaging between traditional finance and digital securities, such as regulated institutional tokenised real-world assets including bonds, loans, securities lending, alternative investments, repo, and money market funds. The culmination of the Alliance’s efforts will be the publication of a white paper summarizing the sandbox testing outcomes, insights gained, and recommendations for enhancing FIX to accommodate digital assets.
📱Technology trends
Revolut earns UK banking licence
The Prudential Regulatory Authority (PRA) has granted a banking licence to global neobank Revolut in the UK. Three years in the making, Revolut's bid for a UK banking licence had been held up by issues over compliance, its repeated failure to file accounts on time and scalability problems, with Revolut now having roughly 42 million global customers to manage. Regulatory fears have also eased with Revolut announcing a record profit before tax of $545 million in 2023. Revolut now enters the ‘mobilisation’ stage, also referred to as ‘Authorisation with Restrictions’, a common step for many new banks in the United Kingdom. Once full authorisation is received, Revolut will be able to offer mortgages and credit cards.
Eurex expands crypto derivatives suite with the launch of Ether futures and options
Eurex is set to expand its crypto derivatives portfolio with the launch of FTSE Ethereum index futures and options on 12 August 2024. The move builds upon the launch of FTSE Bitcoin index futures and options last year, falling in line with Eurex’s goal to offer secure access to cryptocurrencies in a regulated market environment. According to the exchange, there is significant trading and hedging demand from institutional and professional customers for Ethereum, as reflected in record trading volumes in derivatives and other investment products. Earlier this month, the Securities and Exchange Commission approved the first spot Ethereum exchange-traded funds.
🧑⚖️Regulatory developments
Crypto bank Silvergate pays $63m to settle regulator charges
The parent company of crypto-focused bank Silvergate has agreed to pay $63 million to settle US regulatory charges about its anti-money laundering programme and the losses sustained during the collapse of FTX. Silvergate Capital Corp., was charged by the Securities and Exchange Commission with misleading investors about the strength of its bank secrecy act and AML compliance programme and the monitoring of crypto customers. In addition, the company and former executives were charged with misleading investors about the company’s losses from expected securities sales following the collapse of FTX. Silvergate allegedly failed to detect nearly $9 billion in suspicious transfers among FTX and its related entities.
GIX trading platform the first green securities exchange to file with the SEC
The Green Impact Exchange (GIX) is on course to becoming the first sustainability-focused securities exchange in the US to file with the US Securities and Exchange Commission (SEC), and if approved, could begin operations in early 2025. GIX submitted a formal application on 9 May 2023, outlining plans to operate a fully automated electronic trading platform for the trading of listed equities, which is comprised of companies that make a “binding commitment” to set, implement, measure, and achieve sustainability goals while being transparent with investors. Crucially, companies can dual-list and be recognised on GIX without giving up their primary listing exchange. GIX is currently awaiting full approval from the SEC.
📊Chart of the week
Opportunities and challenges of AI for finance - the impact of the technologies on financial intermediation, insurance, asset management, and payments.
Source: BIS, (large width as appropriate)
🐤Tweet of the week
This week, global neobank Revolut received its UK banking licence after three years of toil, offering overdrafts, savings and products to its 9 million customers here. This is a huge moment for UK fintech and Revolut.
What makes this moment even more significant is that a licenced bank in the UK is now offering crypto trading services. Sure, several banks in the UK support crypto-related transactions such as making deposits to crypto exchanges or receiving money from selling cryptos, but before Revolut, did not offer crypto trading. The fact users can now log into the Revolut platform and access banking services and crypto trading in one place speaks volumes of the integration between traditional finance and cryptocurrencies.
📄GreySpark insight
Our latest report, titled Trends in ESG Technologies 2024, is now available on our website.
The report is the second in a series designed to examine and explain aspects of the rise in importance of assets that feature environmental, social or governance (ESG) components.
Intended as a primer on the development, current state and likely future of the ESG sector, the reports highlight different aspects of the sector and their importance to market participants. In the latest report GreySpark assesses the challenges faced by financial institutions (FIs) in creating and managing ESG assets. In particular the report looks at how asset and investment managers can use technology to enhance their ESG strategies and product offerings while meeting both regulatory requirements and market demand for sustainable investments.
The report describes mature ESG technology solutions and how they facilitate ESG integration and the supply of ESG products and services for buy- and sell-side FIs, including:
• ESG Data Providers
• ESG Data Management Solutions
• ESG & Climate Risk Management Solutions
• ESG Performance Analysis and Management Solutions.
Discover more here.