Greenwich Associates: Top 10 Market Structure Trends for 2016

Stamford - 5 January 2016

Non-Bank Liquidity, Blockchain, Chat, and a Bond Platform Shakeout are Part of the Story

Greenwich Associates today announced its Top 10 Market Structure Trends to watch in 2016.

“As we enter 2016, U.S. markets will be focused on moving forward with the current market structure, whereas Europeans are bracing for and adapting to new rules,” says Kevin McPartland, Head of Market Structure and Technology Research at Greenwich Associates, and author of the new report. “Meanwhile, global technology innovation will continue to transform markets around the world.”

With the U.S. Federal Reserve finally raising rates and dates for mandated swaps clearing in Europe set, a number of new trends are taking hold while others are moving steadily forward.  Some of the trends covered in the report include:

The liquidity crisis that never was The much-feared fixed-income liquidity crisis never materialized in 2015. With the combination of low interest rates and reduced dealer inventories still in place, the market can expect bouts of volatility and price gapping in 2016, but the odds of a full-blown liquidity crisis are minimal at best.

We stop talking about HFT and start talking about non-bank liquidity Tough bank oversight is opening the door for non-bank liquidity providers, regardless of the technology they use to trade.  In 2016 keep an eye out for non-bank broker-dealers, quantitative hedge funds and traditional investors interacting with one another anonymously via a trading platform, and (of course) principal trading firms.

Corporate bond platforms shakeout While corporate bond trading will remain a growing and dynamic business, expect platform consolidation in 2016, with new successes coming from offerings that tackle the market in more unique ways than simply matching buyers and sellers. 

The chat conversation gets real In 2016 the chat conversation will move beyond the front office to integrated collaboration among technology, operations, legal, compliance, business analysts, and the rest of the enterprise.

The blockchain buzz continues It’s impossible to predict exactly how or in what form the blockchain will impact global market structure, but in 2016 the smartest minds in the fintech world will continue working to harness the technology to save money and reduce risk.


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