Central Securities Depositories Regulation (CSDR) has the potential to create significant divergence in clearing and settlement rules between the EU and UK, should the UK decide to develop an alternative way of achieving settlement efficiency, according to a new industry report.

The 'Navigating the CSDR Landscape' report, conducted by Funds Europe in association with RBC Investor & Treasury Services, found that 77% of buy side and 79% of sell side entities strongly agree or agree that this is a risk.

"For the moment, the UK is able to sit back and watch. If the UK authorities see significant improvement in market efficiency resulting from the penalty regime in Europe, they may follow suit, but at the moment, it's too early to draw any conclusions," says Dean Rook, head of middle office operations at RBC Investor & Treasury Services.

"In the meantime, there will likely be an element of complexity with assets settling in both CREST, the settlement system for markets in the UK and Ireland, and Euroclear, which settles and clears securities trades executed Industry Survey on European exchanges."

"Where assets are dual-listed on the UK and European exchanges, the impact of transactions settling late on Crest and EEA Domestic markets will be different. This in itself may be an insufficient driving force to align the different markets but is a further example of complexity that, over time, could influence market convergence."

The same report found that lead time was the most common lesson learned from CSDR implementation from buy side (24%) and sell side (23%) respondents when asked to indicate what they learned from implementing the regulation.

The Swiss exchange’s newly launched business unit, SDX Web3, has launched an institutional custody service for crypto assets.

The service will allow institutions to store and transfer crypto assets through a familiar name, without having to deal with the related operational and technical complexities.

The SDX Web3 Custody service includes key storage, transfer execution and monitoring with banking-grade compliance standards, automated reporting and blockchain management.

Initially the service will cover the two key cryptocurrencies, BTC and ETH. SIX said that, based on client demand, it plans to expand into further protocols and other crypto tokens such as stable coins, asset and DEFI tokens.

“We are excited to offer institutions a second market infrastructure grade service after launching non-custodial staking earlier this year,” said Stephan Kunz, head of SDX Web3. “Having laid the foundation, we can now further build out our service offering in the coming months.”

SDX is licensed by Switzerland’s financial market regulator, FINMA, to operate an exchange and a central securities depository (CSD) and offers issuance, listing, trading, settlement, servicing, and custody of digital securities.

The National Securities Clearing Corporation (NSCC), a subsidiary of the Depository Trust and Clearing Corporation (DTCC), has gone live with its Securities Finance Transaction (SFT) clearing service.

The service supports the central clearing of SFTs, both between NSCC full-time members and intermediated by NSCC sponsoring members or agent clearing members. Through these membership and clearing transactions, the solution aims to improve capital efficiency and reduce systemic risk, the company says.

Members will be able to reduce their capital and balance sheet usage by novating their lending and borrowing activity to the NSCC, allowing for greater lending and borrowing capacities.

SFTs must be executed as overnight transactions, so as to maximise capital and balance sheet efficiencies. To reduce the operational burden of this, settlements can pair off daily against new activity with a price differential or mark-to market processed by the NSCC.

The service uses Aurora, Provable Markets’ SEC registered alternative trading system, and FIS’ Securities Lending Processing Platform.

Laura Klimpel, general manager of the Fixed Income Clearing Corporation at the DTCC, says: “Centrally clearing SFTs has the potential to transform the securities lending market for the better, with benefits including new borrowing and lending opportunities for a wide range of counterparties, balance sheet and capital optimisation opportunities, reduced operational burdens such as agent lender disclosure, and lowered systemic risk.”

The platform currently offers a fee holiday for participants to encourage business.

Hong Kong’s stock exchange started its first voluntary carbon credit trading platform in a bid to bolster climate-related products on the back of growing demand.

Carbon credits on the Core Climate platform will come from internationally certified projects, including carbon avoidance, reduction and removal projects, HKEX said Friday. All projects listed will be verified against international standards, such as the Verified Carbon Standard by Verra.

Hong Kong’s new carbon market comes a step behind rival financial hub Singapore, which has three fledging bourses already planned or underway. While the latter is betting on speed and proximity to Southeast Asia’s tropical forests for its supply of credits, Hong Kong will leverage its China connection.

HKEX Co-Head of Markets Glenda So declined to disclose opening day trading volumes, and said the exchange will review the result and feedback about transparency in about a month.

HKEX was still on-boarding clients, including traders from China and around the world, So said. The platform currently offers a fee holiday for participants to encourage business.