The stock exchange of the future will most likely be dominated by direct access platforms, reducing the traditional role played by brokers and other middlemen, and the arrival of Big Tech companies as issuing venues in their own right.
The five-to-ten year forecast comes from a new paper published by the Swiss Stock Exchange painting eight possible scenarios for the future of stock trading.
The most likely scenario assumes that listed asset classes will remain dominant but that mechanisms for trading shares will move to direct access primary markets, disrupting the business models of brokers and other intermediaries.
The study sees the number and variety of digitalized assets increasing exponentially and a new role for Big Tech as issuing venues to support activity in their ecosystems.
The likeliest scenario also illustrates the key role of new technologies, including artificial intelligence, advanced analytics, big data and cloud computing. According to the study, there will in general be a sharp increase in the level of automation along the entire value chain.
What remains unknown is where IT infrastructure is headed. Will central ledgers be replaced by distributed ledger technology? The authors are not very bullish on permissionless distributed ledgers becoming dominant, but nonetheless believe that they may leave a permanent mark in the securities value chain.
“It is vital to have a clear understanding of the challenges that lie ahead in order to be able to prepare for them today,” says CEO Jos Dijsselhof. “The white paper therefore aims to promote discussion and to inspire reflection on new business opportunities, especially in the interaction between start-ups and traditional players. It is important that we keep the debate on progress open and ongoing.”
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