Chris Jackson, global head of equity strategy and head of equities, EMEA, Liquidnet
As we look ahead to 2025, we see it as a transformative year in how and what we trade. A convergence of trends is set to disrupt traditional norms and create opportunities for those that are thinking ahead.
Our members tell us their industry is adapting to the pressures from indexation, prompting strategic mergers to achieve scale, and diversification into asset classes such as fixed income, derivatives, interest rate products, energy and commodities. This evolution demands agility from dealers who are being asked to adapt, creating opportunities to diversify skills and foster the exchange of specialist knowledge.
The liquidity and market structure landscape across asset classes is also shifting. New entrants are reshaping traditional markets like equities and creating new ones like crypto. The dominant delivery mechanism for this liquidity will be electronic and automated. For our members, the challenge will be navigating these new sources of liquidity while applying common best execution principles to the process. For asset managers, maintaining quality execution expertise in this changing landscape will be critical for sustained fund performance.
Andy Mahoney, managing director, EMEA, FlexTrade
Market structure across asset classes has started to cross-pollinate increasingly, with workflows widespread in one asset class now cropping up as “innovations” in others. The overriding theme that will develop significantly in 2025 is the desire to connect liquidity providers with consumers in as direct a manner as possible.
We’ve already seen the first signs emerging in 2024 with the rise of direct-to-buy-side connectivity, where liquidity providers of various types create private, curated price streams for the buy-side, who can then engage at their discretion. For some providers, notably those born in the deeply interconnected world of FX, this is nothing new, and they come with the native ability to widen spreads in response to various factors. For others, disclosing closely held liquidity is a more uncomfortable proposition, which is where technology providers will need to step up in 2025. Reducing the information asymmetry between liquidity provider and consumer will be critical to enabling both sides to engage willingly.
As this trend evolves, having a single entry point to the market – regardless of asset class – will become crucial. Lessons learned from one asset class can be ported to others without reinventing the (algo!) wheel. A flexible automation framework capable of operating across asset classes while observing the nuances of each will enable firms to transition to the long-anticipated model of a “true” multi-asset trader.
Chris Bruner, chief product officer, Tradeweb
The end of 2024 finds markets more interconnected than ever, as technology continues to shape multi-asset class execution in response to increasing demand for a unified, one-stop approach to trading across different products, geographies and client channels. This development has helped prime financial markets for the advent of a distributed ecosystem that democratises global financial markets and facilitates seamless, efficient and scalable interoperability for market participants.
As investors continue to seek greater exposure to digital assets, emerging technologies such as blockchain could further drive electronification across newer adjacent markets. We will, therefore, be focused on exploring how these technology solutions could be harnessed in different regulatory environments to meet growing market demand.
Bianca Gould, head of fixed income and equities EMEA at BNY
Consolidation within the industry has increased the focus on operational efficiencies and we see this trend continuing into 2025. Clients are looking to reduce the overall number of partnerships they need to maintain. BNY’s multi-asset execution offering, with an execution-to-custody proposition and middle office support, is well-positioned to solve for many of our clients’ challenges across the trade lifecycle by utilising our trade execution solutions.
BNY is working across the enterprise globally to enhance our ecosystem to be more for our clients. As the industry continues to focus on this topic, BNY is innovating to ensure that in addition to providing our core trade execution function, we can offer various operational efficiency solutions.
Kevin O’Connor, global head of sales, portfolio solutions, State Street Global Markets
State Street’s industry research in 2024 revealed that outsourced trading is an emerging trend that is providing users with a distinct advantage over the rest of the market. Those research findings provide proof of the many benefits of outsourced trading including efficiency gains, cost reductions, and improved investment performance. It’s no wonder then that we found from our survey of 300 global institutional investors that the vast majority of current users are “satisfied” or “very satisfied” with their experience and plan to expand usage.
As we move into 2025, State Street expects to see greater adoption and global expansion of outsourced trading especially by larger firms in search of higher investment returns and cost efficiencies. While we expect adoption across regions, expansion plans are particularly prevalent in EMEA, and according to our research, funds of all sizes are planning to expand their use of outsourced trading in that region. We also expect to see more firms expand their usage across asset classes, outsourcing more complex asset classes such as derivatives, foreign exchange, and swaps.