Six issues that will define the future of capital markets – BNY Mellon

In the wake of the pandemic and an uneven economic recovery, global capital markets are being transformed by a number of interrelated forces. The following six areas will be key to better understanding the dynamics shaping the future of capital markets, according to BNY Mellon economists.

Democratization of public procurement

“Today, market data is readily available online and new technologies have dramatically reduced the cost of trading and other barriers to entry. This means more people can trade, anytime, from anywhere. Increased market access is a positive development, but it is not without risk. This raises important questions about the resilience of markets and institutions and about investor safeguards, while opening up a broader discussion about financial education.

Better access to new wealth creation opportunities

“New products are being developed that allow retail investors to allocate capital to private market alternatives. Again, challenges arise when opening up these products to a larger community of investors. People need to be aware of the associated risks, which differ significantly from investing in traditional stocks and bonds.

Jamming of public and private markets

“More companies than ever are entering public markets around the world, and yet in the United States, we are seeing companies staying private longer and others choosing to go public to private. This trend is fueled by increased disclosure and regulatory oversight requirements for publicly traded companies, as well as investors’ eagerness to fund private companies. Companies are also exploring other avenues to raise capital and reduce their reliance on stock markets.

Concerns about data and cybersecurity

“Data is becoming an asset class in its own right, and data management infrastructure is a key growth area for traditional financial companies. Institutions are actively looking for ways to leverage analytics to stay agile and promote growth. But questions remain about how companies can safely innovate, benefiting from more agile use of data while mitigating risk.

New roles for financial companies

“Blockchain and distributed ledger technologies have the potential to disrupt core capital market functions, including trading processes, settlement systems, payments, and capital raising. At the same time, regulators and lawmakers are increasingly voicing concerns about cryptocurrencies, raising significant questions about their future viability as an asset class.

Transparency around ESG

“ESG is a top priority for financial companies. As investors, asset owners and companies navigate their roles in supporting the transition to net zero capitalism and stakeholders, important questions remain about the market structures and tools needed to support sustainable investing. .