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Industry roundup: 17 March

Shell directors sued by environmental charity

Environmental law charity ClientEarth has announced that it is taking legal action against the board of directors of Shell for not preparing properly the group for the energy transition away from oil and gas.

In what is believed to be the first action of its kind, ClientEarth alleges that the board’s failure to properly manage climate risk to Shell means that it is breaching its legal duties. It accuses directors of failure to adopt and implement a climate strategy that truly aligns with the Paris Agreement goal to keep the global temperature rising to below 1.5 degrees Celsius by 2050.

“We believe the Board is breaching its duties under the UK Companies Act, which legally requires it to act in a way that promotes the company’s success, exercising reasonable care, skill, and diligence,” the charity said.

Commenting on the action Paul Benson, climate change accountability lawyer for ClientEarth said: “Shell is seriously exposed to the risks of climate change while its climate plan is fundamentally flawed. In failing to properly prepare the company for the net-zero transition, Shell’s board is increasing the company’s vulnerability to climate risk, putting the long-term value of the company in jeopardy.”

The action marks the first time that a company’s board has been challenged on its failure to properly prepare for the net-zero transition. The oil major is being sued under UK law following the decision last December to move its headquarters from the Netherlands to the UK, simplify its share structure, and shorten its name from Royal Dutch Shell to simply Shell.

ClientEarth says that it is pursuing shareholder litigation to compel Shell’s Board to act in the best long-term interests of the company by strengthening Shell’s climate plans.

“Its current strategy and insufficient targets put the enduring commercial success of the company and employees’ jobs at risk and is no good for people or the planet. We want to make sure the Board’s ‘wait and see’ approach to the energy transition does not come at the expense of long-term viability for the company’s stakeholders, including shareholders and employees,” the charity explained.

The charity adds that implementing sufficient targets to reduce its emissions over the next three, five and 10 years to meet net-zero would secure the company’s long-term value while protecting investors’ capital and the climate.

Last May, a Netherlands court in The Hague ordered Shell to reduce its overall emissions – including those from the fossil fuel products it sells – by a net 45% by the end of 2030. The company appealed against the Court’s decision, while its board has since rebuffed parts of the verdict, indicating that it is unreasonable and essentially incompatible with its business.

In a separate development, the pensions board of the Church of England (CofE) wants France’s Total Energies to reconsider plans to retain its assets in Russia, despite the country’s invasion of Ukraine.

While companies such as BP, Shell and ExxonMobil swiftly announced plans to exit Russia and divest from Russian holdings, Total is maintaining its Russian assets, including its 19.4% stake in Novatek, the country’s largest producer of liquefied natural gas (LNG). Total has said only that it plans no further investments into its established Russian projects.

The CofE’s pensions board is now reviewing its shareholdings in Total and has written a joint letter with the Church Commissioners for England to Total’s chief executive Patrick Pouyanné, asking the company to reconsider.

In the letter, chief responsible investment officer Adam Matthews said: “As we watch the daily destruction of a democratic country by Russian aggression and the heroic defence by the Ukrainian people, it is clear that TotalEnergies’ position is incompatible with maintaining a social licence to operate.”

Last month, the Church of England announced it had sold all £20 million of investments in Russian companies in response to what the archbishops of Canterbury and York described as Vladimir Putin’s “act of evil” in Ukraine. The Church Commissioners manage a £9.2 billion investment fund while the pensions board manages a fund worth £3.7 billion.

Europe and Middle East boost for cryptocurrencies

The European Union has rejected a move to ban Bitcoin across the bloc but agreed new draft rules to protect consumers and make cryptocurrency mining more sustainable.

The European Parliament’s (EP) economic and monetary affairs committee (ECON) voted on 14 March on the proposed Markets in Crypto Assets (MiCA) framework, the EU’s legislation for governing digital assets. An eleventh-hour addition to the bill would have limited the use of cryptos powered by the energy-intensive process known as proof-of-work (PoW) but was voted down by the parliamentary committee.

As crypto assets are neither issued nor guaranteed by a central bank or a public authority, they lie beyond the scope of EU legislation which, said the EP can cause “risks for consumer protection and financial stability” and could lead to market manipulation and financial crime. The sustainability of cryptocurrencies is also of concern, with studies suggesting that Bitcoin’s energy consumption equals that of entire small countries.

EP members (MEPs) voted for a uniform legal framework for crypto assets across the EU, including consumer protection measures and safeguards against market manipulation and financial crime.

To reduce the cryptos' carbon footprint, MEPs have asked the European Commission to include crypto-assets mining in the EU taxonomy (a classification system) for sustainable activities by 2025. The draft rules gained 31 votes in favour to 4 against and 23 abstentions. Formal negotiations on the draft framework will now follow.

“With the adoption of the MiCA report, the European Parliament has paved the way for an innovation-friendly crypto-regulation that can set standards worldwide,” said MEP Stefan Berger of the European People’s Party.

Further good news for the industry has come from the Middle East, where the Central Bank of Bahrain recently granted the world’s largest cryptocurrency trading platform Binance a licence to operate in the country, marking the exchange’s first approval in the region. This was quickly followed by an announcement on 16 March that Dubai has also granted Binance a licence. With the exchange having faced strong resistance from several jurisdictions, such as Japan, Germany and the UK, this marks a major step forward.

“Binance is appreciative of being awarded this licence in such a progressive regime, targeting uncompromised governance and market security,” said founder and CEO Changpeng Zhao. The initial regulatory phase of winning a Virtual Asset Licence means that Binance will be able to offer limited exchange products and services to pre-qualified investors and professional financial service providers.

In addition, Binance has assisted Dubai World Trade Centre Authority with developing its crypto regulatory framework and reports suggest that it may set up a headquarters in Dubai.

“These regulatory advancements from the Middle East and the EU show the support that crypto is receiving around the globe, as the industry is proving itself to be an unstoppable force towards mainstream adoption in the long term,” said Marcus Sotiriou, analyst at the UK-based digital asset broker GlobalBlock.

Volante Technologies service to accelerate ISO 20022 compliance

Cloud payments and financial messaging specialist Volante Technologies has launched Volante ISO 20022, described as a value-added service to simplify the complexity of ISO 20022 modernisation for organisations involved in the processing of payment messages, from banks and financial institutions to fintechs and payment service providers (PSPs).

The company says that these organisations face significant headwinds in achieving ISO 20022 message compliance, whether for domestic clearing and settlement or for cross-border payments). Many still rely on legacy systems that cannot be updated to ISO 20022 or require major upgrades to accommodate the new standard and its extended data capabilities.

Gareth Lodge, senior analyst at Celent noted that 87% of global high value clearings will be ISO 20022 by 2025. “This poses acute difficulties for larger financial institutions who operate in multiple countries and regions and must balance a constantly shifting landscape of market infrastructure deadlines with limited IT resources and budgets. Even without legacy constraints, de novo banks and PSPs also face challenges, as they must find ways to differentiate from their established competitors by going beyond compliance to deliver value from ISO 20022.”

Volante’s release adds that the Volante ISO 20022 service enables financial services developers and architects to address these challenges by easily incorporating value-added ISO 20022 modernization capabilities into their applications. The service, built-on Volante’s low-code technology, contains microservices-based APIs for initiation, transformation, and translation of ISO 20022 messages to and from legacy formats.

The APIs can be deployed in an organisation’s data centre or private cloud or consumed as a service in Volante’s secure cloud. For all deployment models, Volante offers a free cloud sandbox enabling customers to test the catalogue of ready-to-consume APIs before using them in mission-critical production applications, facilitating seamless upgrades as standards evolve.

Volante adds that organisations adopting the new service for their compliance and migration programs will be able to extend the life of their legacy systems, protecting their businesses from change. They will also be able to quickly build value-added services based on the extended/rich data features of the standard and accelerate time to market for such services by eliminating hand-coding. Other benefits include improved performance for end-to-end processing, higher straight-through processing (STP), and cost reductions of 60% or more compared to traditional ISO modernization approaches.

Piteco and TAS unite to simplify SWIFT access

Italian software provider Piteco has formed a strategic collaboration with TAS Group, which it says will strengthen its role as an international banking connectivity hub.

Piteco says that the partnership aims to supporting the international growth strategies of corporates by simplifying their access to the SWIFT network with the cloud integration of TAS's Swift Service Bureau with Piteco software providing a single platform capable of providing seamless software-as-a-service (SaaS) access to SWIFTnet.

Use of the cloud guarantees a rapid activation of the service, which becomes plug and play to generate savings for businesses both in economic investment and time required to go live, while ensuring all the security that the cloud can guarantee today. User profiling, access control, segregation of duty, audit log, privacy, authentication methods and active directory / LDAP are among the aspects and functions that Piteco manages in the implementation of its SaaS solutions.

“The simplicity and efficiency of the newly embedded SWIFT access enables faster adoption by smaller companies with a strong vocation for international markets, who need to manage finance in a centralised and automated way,” Piteco adds. “In Italy there are many SMEs expressing excellence and entrepreneurial ability, who look beyond domestic borders, making a decisive contribution to Italian exports.”

 Paolo Virenti, CEO of Piteco, says: “The strategic nature of the SWIFT network is now quite evident. We are talking about a universal, secure interchange infrastructure, with more than 11,000 different member companies in over 200 countries, exchanging over 42 million messages daily. An impressive number, that has been growing also thanks to the digitization imposed by the pandemic.

"The partnership with TAS gives us the opportunity to integrate our software with even more ease with all the banking counterparties in the world. Through the creation of a single platform we are able to simplify our customer management, and complete definitively our identity as an international banking connectivity hub and, above all, an effective tool to support the growth of companies.”

Valentino Bravi, CEO of TAS, adds: "By creating an integrated operating model with an Italian excellence such as Piteco, TAS confirms its role of enabler of payment services for corporates and their integration with the financial industry. This collaboration model confirms the great potential, that in my opinion is still partially unexpressed, available for Italian excellences in the digitalization sector to grasp both in the domestic and international market."

Piteco and TAS Group add that their collaboration will be extended beyond SWIFT connectivity to also include open banking and open finance with the aim of fully exploiting the opportunities offered by Europe’s PSD2 regulation.

Bloomberg launches trading service for emerging markets and corporate bonds

Bloomberg has launched Bloomberg Bridge a new all-to-all intermediated trading service for emerging markets and corporate bonds. The service is supported by intermediation desks at Goldman Sachs and allows users to launch and respond to request-for-quotes (RFQs).

Bloomberg Bridge is scheduled to go live in Europe in the second quarter of this year with longer-term plans to expand into the US and Asia Pacific.

All-to-all trading allows the buy- and sell-side to transact anonymously regardless of firm type with asset managers able to take on a liquidity provider role for each other as well as dealers. It has grown in popularity in recent years: according to research by market intelligence firm Coalition Greenwich it accounted for 12% of corporate bond volumes in 2020, against 8% a year earlier.

Bloomberg said its new service would connect users with its network of around 3,700 institutional investors and dealers. Nicholas Bean, its global head of electronic trading commented:  “As market structure continues to evolve, liquidity is becoming more diverse, and market participants are looking for more efficient ways to execute trades.

“We’re launching Bloomberg Bridge to provide clients globally with new pathways to access the broadest depth and breadth of liquidity. This solution reflects the continued investment in our electronic trading solutions business, as we focus on enhancing existing offerings and bringing innovative products to market.”

Several other platforms and institutions have invested in all-to-all solutions over the past year in response to growing demand for the method of trading. They include Barclays, which joined MarketAxess’ credit all-to-all institutional order book MarketAxess Live Markets last May.

Verto adds 12 more currencies to service

Verto, a global B2B payments platform for small and medium-sized enterprises (SMEs) to pay suppliers, has increased the range of supported currencies that customers can convert between and make payments in. “Verto’s customers can now accept and send payments instantly in 12 new currencies, all from one single and easy to use platform, further eliminating the barriers to cross-border payments,” its release announced.

The company, which completed a US$10 million Series A funding last September added: “The expansion in available currencies to Verto’s users, from 39 to 51, are available across the entire product suite, including e-wallets, creating seamless cross-border solutions for some of the fastest-growing companies worldwide and enhancing the customer experience. Businesses that struggled to make payments to and from countries like Bangladesh, Brazil, Ethiopia, Morocco and Sri Lanka can now benefit from enhanced liquidity, faster payment capabilities and instant local settlement times.”  

Verto reports that in 2021 it onboarded over 7,000 new businesses and processed nearly US$1.5 billion transactions, with the total volume growing by 303%. The company has also grown its team, with 33 new hires since the beginning of last year.  The company “is working to ensure that businesses of all sizes have access to enterprise-grade cross-border payments, FX and banking solutions via its advanced API platform, automating and simplifying payments for businesses.” 

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