In what promises to be an unpredictable year ahead for financial markets, there are a few things everyone can count on: Trading will continue going electronic, workflows will continue automating, markets will continue becoming more transparent, and AI will play a growing role in all these developments.
In a report released today, Coalition Greenwich examines the biggest market structure trends they will be watching in the new year. The Top market structure trends to watch in 2025 include:
• U.S. regulations become more unpredictable: While it’s nearly impossible to predict the regulatory path in 2025, there are a few things most can agree on: Many of the proposed but unpassed rules at the SEC will die or be reworked—including Treasury and repo clearing rules that will at the very least be delayed. In addition, crypto markets will see a lighter regulatory touch and gain regulatory clarity, and many pending cases against the SEC will be dropped or won by the plaintiff.
• Relentless pressure from upstarts: In 2025, incumbents across capital markets will face relentless pressure from a constantly expanding group of upstarts. ATSs will continue to erode on-exchange market share, nonbank market makers will continue picking up market share (and clients) from big banks, and capital markets fintech firms will continue doing both of those and more. These agile newcomers will leverage cutting-edge technology, innovative business models and a customer-centric approach unencumbered by the burdens of legacy technology and operational complexity.
• The ETF train rolls on: Asset managers and owners have discovered that ETFs are an incredible distribution tool for almost everything. Private credit, Bitcoin, Ether, CLOs, money markets, munis, Treasury Bills—the list keeps getting longer. This trend will continue in 2025 as managers use ETFs to access new pools of capital with less effort than traditional methods.
• A TradFi-DeFi love affair: The boundaries between TradFi and DeFi will weaken in 2025 as investors trade crypto via ETFs (and futures and options), bonds via Ethereum, and other assets through whatever mechanisms work best and can get regulatory approval. Whether or not all of finance moves toward DeFi in the decade ahead or these two worlds ultimately coexist with more seamless linkages is too hard to predict, but the TradFi-DeFi love affair has certainly only just begun.
Top market structure trends to watch in 2025 looks at increased spending on operations and compliance tech, new AI-powered quant strategies, how surging demand for derivatives is driving new investment in post-trade processing and other trends.
