Many of the most important changes in financial market structure in 2017 will be driven by two disruptive factors: technology and Trump.
In a new Greenwich Report, Top 10 Market Structure Trends to Watch in 2017, Greenwich Associates expects that the “Trump Bump” will continue to boost financial markets, and that the incoming administration will move aggressively to “right size” capital markets regulation.
The firm does not expect a full repeal of Dodd-Frank, but the report does present a list of other, potentially radical changes like a softening of the Volcker Rule, a revamp or even repeal of Reg AT, increased scrutiny of Reg NMS, a dramatic slowdown in the move toward public reporting of US Treasury trades, and a complete reassessment of the SEC’s ill-fated ticket pilot.
“Of course, President Trump will have no influence on one of the biggest regulatory events in global capital markets: the on-going implementation of MiFID II in Europe,” says Kevin McPartland, Head of Market Structure and Technology Research at Greenwich Associates and author of the new report.
On the technology front, Greenwich Associates projects that Blockchain will move from proof of concept to reality in 2017, and that cloud computing will become so pervasive that it will soon be known simply as “computing.”
Electronic trading will continue to expand in fixed income, and principal trading firms start leveraging their sophisticated internal platforms by selling technology, providing custom liquidity streams and allowing buy-side firms to completely outsource their trading desks.
“The outlook for capital markets is looking up,” says Kevin McPartland. “Volume-creating events have helped bank revenues improve, and we expect more where that came from. Interest rates are finally rising, albeit slowly, further aiding bank profits, which benefits the market as a whole.”