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Industry roundup: 18 April

Société Générale to improve liquidity and operational trades through Saphyre

France-based multinational investment and financial services company, Société Générale’s (SocGen) Global Markets division announced it will use Saphyre’s capabilities to introduce new fund onboardings and efficiencies. Saphyre, a fintech company that uses patent-approved AI technology to solve pre-trade setups and post-trade issues for many financial institutions, will enable SocGen with straight account setup processing to reduce time to market and provide immediate liquidity and seamless post-transaction allocation and settlement.

According to Saphyre, their automated process reduces risks, inefficiencies and costs by eliminating manual tasks for both buyers and sellers. Additionally, the Saphyre platform reportedly reduces the time it takes to set up a new fund significantly while providing all the updated data related to the fund per the report.

Saphyre explained that their platform stores data and documents, eliminating the need for clients to retrieve or resend information. This accelerates the flow of data in a digitally structured way, making it understandable by legitimate financial trading partners. Companies should be able to assess risk more quickly and gain real-time ready-to-trade status for each account, eliminating 70-75% of redundant or inefficient post-trade activities.

Gabino Roche, CEO and Founder, Saphyre, commented that by supporting SocGen’s middle and back-office operations for onboarding and maintenance, the community of buy-side firms can also gain operational benefits and speed to market.

Iran to compete in the crypto market with its CBDC “Crypto-Rial”

The Islamic Republic of Iran continues to promote its "Crypto-Rial", but Iran’s Communications Deputy Minister Reza Bagheri Asl stated that the country has no plans to accept bitcoin or other (non-national) cryptocurrencies as payment. The Central Bank of Iran (CBI) announced that it has notified banks and lenders about the regulations of its Crypto-Rial digital coin, which is Iran's potential central bank digital currency (CBDC). The report suggests that the rules cover the minting and issuance of this digital currency. It was stipulated in the specifications that the Crypto-Rial will be minted, with the maximum supply to be set only by the CBI.

Bagheri Asl further commented that the use of foreign currency is outside the scope of Iran's financial sovereignty and will be illegal. However, Iranian officials have revealed that cryptocurrencies must be regulated and banking systems must be monitored to avoid risks to citizens, similar to the stock market.

Russian companies and banks may make unexpected profits by delisting depositary receipts

According to reports, Russian companies and global banks, including BNY Mellon, Deutsche Bank, Citigroup and JP Morgan, could yield profits if Moscow plans to remove Russian corporate depositary receipts from the foreign exchanges. Depositary receipts, certificates issued by banks representing shares of foreign companies traded on the local stock exchange, enable investors to invest in foreign stocks in their own regions and time zones.

Delisting these depositary receipts may result in unexpected profits to these groups.  Although the situation is still somewhat unclear, the potential for benefits arises from fees that bank issuers of depositary receipts can contractually charge investors if they terminate the product. According to Reuter’s calculations, fees may potentially reach hundreds of millions of dollars.

Moscow, faced with western sanctions, is organizing to remove Russian company depositary receipts from foreign exchanges and convert them to local Russian securities to reduce foreign control over these companies. Reports indicate that there are more than 30 depositary receipts on Russian companies such as Gazprom, Rosneft, Lukoil and Norilsk Nickel issued by BNY Mellon, Deutsche Bank, Citigroup and JP Morgan that are trading in the US and European markets.

Typical agreements stipulate that depositary receipts can be cancelled by the issuer or investor. In this case, the investor usually receives cash from the sale of the underlying shares, but has the right to hold the shares instead. The report stated that typically, banks charge an administration fee, costing approximately US $0.05 per receipt, that may be shared with businesses.

Reuters further added that Western sanctions can make it difficult for banks to transfer funds to some businesses. Additionally, the Moscow Stock Exchange and Central Bank of Russia banned foreigners from selling Russian stock.

Due to these limitations, banks find it difficult to cancel receipts if investors, looking to reduce their exposure to Russia, ask. Due to the recent lifting of custodian restrictions, BNY Mellon, Citi and JP Morgan have resumed the cancellation process. However, foreign banks are still unable to sell stocks, so investors must hold them instead. For this reason, concerned investors require a Russian account that many do not have according to data reports. JP Morgan commented that if the new law is passed, clients may be able to open a Russian account under unspecified circumstances.

Russia’s Chamber of Commerce proposes cryptocurrency payments with African nations

In the midst of sanctions limiting Russia's international trading capacity, Sergey Katyrin, President, Chamber of Commerce and Industry of Russia, has proposed a plan for cross-border payments in cryptocurrencies and Central Bank Digital Currencies (CBDCs). Katyrin submitted a formal proposal to the Russian Prime Minister Mikhail Mishutin to help strengthen economic relations with African countries.

According to a report from the Russian News Agency, TASS, Katyrin stated that the Ministry of Finance, along with the central bank, should ensure the conclusion of intergovernmental agreements with African nations on the use of national and cryptocurrencies in mutual payments and settlements. The proposal suggests the two divisions create a new payment/settlement mechanism for import/export payments, including cryptocurrencies. Moreover, Katyrin emphasized that the development of this kind of cooperation with friendly regions is of paramount importance for the Russian Federation.

The report indicated that the Central Bank of Russia is sceptical about the use of cryptocurrencies to circumvent sanctions. Still, the Finance Ministry looks to legalize them and develop its own crypto market infrastructure. As of last Friday, the Russian Ministry of Finance is actively working on a final crypto regulation bill.

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