The first wave of gen-AI use cases across capital markets technology has sparked widespread energy and excitement about its future potential. At the same time, it has triggered a sense of urgency across infrastructure providers globally that they must act now to avoid being left behind.

Market operators face two critical questions today. Firstly, what is the right operating model and the critical capabilities they want to develop and maintain in-house or source from external providers? And secondly, how do they ensure that they will have access to these advanced capabilities, given the extraordinary level of energy and compute capacity that will be required to power their markets in the future?

If we look ahead to capital markets over the next two decades, the future of trading infrastructure will be built on a fabric of interconnected markets with a common data architecture, seamless connectivity throughout the ecosystem of exchanges and participants, minimal latency, and advanced AI-powered tooling.

Operators don’t have long to embark on their data and tech modernisation journey to get there, and we’re proud to be supporting so many of our infrastructure clients on this path. 

Gideon Mann, global head of AI technology, Millennium 

What was cutting-edge generative AI (GenAI) in early 2024 will look outdated over the next twelve months. Successful organisations will adopt a long-term GenAI strategy, balancing immediate applications with the flexibility to adapt to future innovations in this space.  

In the investment management sector, the diversity of challenges allows us to identify some of the most promising applications of GenAI. These are likely to result from a collaborative approach between technologists and their end users including investment professionals, legal, compliance and finance teams, among others. We have seen early applications of GenAI in the areas of market observability, risk assessment and operational efficiency. In 2025, organisations will be looking to scale the use cases that have shown the greatest potential. 

Jamil Jiva, global head of asset management, Linedata 

As we leave 2024 behind, artificial intelligence is set to transform industry practices. From risk management and regulatory compliance to predictive analytics and cybersecurity, AI promises to bring a new era of transparency, efficiency and innovation to the finance ecosystem. 

The widespread adoption of Explainable Artificial Intelligence (XAI) in risk assessment and management systems marks a decisive turning point. This technology is finally lifting the veil on the ‘black box’ of algorithms behind AI inference systems, offering a clear understanding of AI decision-making processes. This creates an opportunity for financial institutions to renew and reinforce the confidence of customers and regulators while improving the accuracy of their risk models. 

Nick Wood, AI product manager, FINBOURNE  

While AI clearly has the potential to enhance operating margins and reshape the asset management industry, serious adoption remains slow. This hold up is largely due to a lack of confidence in the incumbent data management processes, which need to be designed to support AI technologies.

While AI can certainly act as a feature and capability in an overall workflow, firms must be able to explain the models and trust the quality of the underlying data to get there. With AI showing so much promise, prioritising modern data infrastructures to address data quality concerns will be a priority for many asset managers next year. 

Jim Kwiatkowski, chief executive, LTX (a Broadridge company) 

This year, the fixed-income market experienced notable advancements, with credit market volumes reaching an average daily volume of $49.8 billion, reflecting a 23% year-over-year increase. This growth is projected to continue into 2025, fuelled by a steady increase of credit e-trading. 

Looking ahead, AI is poised to play a pivotal role in bond trading, transforming how fixed-income traders, analysts and portfolio managers process and leverage the growing volume of data from electronic trading. By enabling streamlined access to vast, disparate datasets, AI enhances decision-making in areas like bond selection, trade list construction and protocol optimisation. As AI adoption scales, the market can expect a more vibrant secondary trading environment characterised by improved pricing, enhanced liquidity, and stronger overall performance. 

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Gil Guillaumey

The offering offers new methodology to conduct investment portfolio risk calculations and produce predictive analytics, based on advanced machine learning. As well as improving execution time, the offering will also reduce costs, said Nasdaq. 

Users of Calypso include: banks, insurers, and other global financial institutions looking to process front-to-back office treasury workflows, manage risk, and meet regulatory reporting obligations.   

Gil Guillaumey, senior vice president and head of capital markets technology at Nasdaq, said: “All financial institutions trading OTC derivatives are required to perform increasingly complex calculations to meet internal risk controls and regulatory mandates. Maintaining the necessary infrastructure and systems can be outrageously expensive, inefficient, and increasingly impractical regardless of cloud elasticity strategies.” 

Nasdaq combines its machine learning technology with a specific form of mathematical modelling – via its XVA Accelerator – which also “significantly” reduces the amount of physical infrastructure required to run the relevant calculations.    

With this technology, the Nasdaq Calypso risk analytics suite is able to rapidly adjust during times of heightened volatility and fluctuating interest rates. 

Guillaumey added: “The sheer scale of computing power required to meet the most demanding regulations, alongside the strategic benefits of more accurate real-time analytics, is driving a profound rethink about how we can leverage AI to reduce the cost of compliance.” 

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Sean Hoover

The offering – already available in the US and Canada – will give clients access to EU shares on Nasdaq Europe. 

Speaking to the TRADE earlier this year, Sean Hoover, PureStream chief operating officer, said: “Subscribers and clients have both made it clear that the unique value of streaming in the US is something that they would welcome in Europe.

“We are excited about our partnership with Nasdaq, who has publicly announced its intent to roll out our streaming order types in Europe later this year, subject to the necessary approvals.”

Specifically, PureStream enables access to latent algorithmic liquidity using liquidity transfer rates – all in line with the volume goal of each strategy. 

Currently, Nasdaq is the only venue in Europe offering this. There has been a lot of discussion surrounding the race for first mover advantage in Europe’s emerging crossing network landscape in recent times.  Despite low European volumes, these venues offer increased choice and competition for institutional investors looking to achieve more effective outcomes.

Several European exchanges are underway with plans to bring out offerings of this ilk throughout the course of the year, The TRADE understands, while some other US alternative trading systems (ATS) – as well as PureStream – are also preparing to make the crossing over the Atlantic.

Within Europe there have been some significant moves rumoured. Talk of Aquis launching a new TWAP and VWAP trajectory crossing capability this year has been widespread, while Cboe has confirmed plans for the launch of its new volume weighted average price (VWAP) crossing service for equities at the end of this year.

Read more: Cboe BIDS VWAP-X: Introducing venue-based trajectory crossing to Europe

The tool uses open-ended liquidity transfer rates to substantially improve the process of price and liquidity discovery – minimising institutional investors’ market impact. 

PureStream’s solution is aimed at helping both the buy- and sell-side when executing long-term trajectory orders – pairing trading interests in open-ended streaming batches, meaning traders do not need to rely only on sourcing liquidity on a single point-in-time basis. 

Read more: PureStream: The disruptor venue determined to make waves in the institutional liquidity landscape

Nikolaj Kosakewitsch, senior vice president and head of European equities and derivatives at Nasdaq, said: “This launch underscores our commitment to offering world-class platforms that support the evolving needs of the global capital markets. PureStream on Nasdaq Europe will provide greater choice of trade execution mechanisms to our clients and help institutional investors navigate the European trading landscape.”

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Named Nasdaq Rates Trader, the new interface is aimed at enhancing the trading experience by offering access to Nasdaq’s data and trading functionality as part of a “front-end and feature advanced” workspace.

“We are thrilled that Nasdaq has selected valantic FSA to modernise their fixed income trading interface,” said Andy Browning, head of electronic trading at valantic FSA.

“This partnership underscores the strength of our next-generation electronic workflow solutions and our commitment to delivering differentiated value to the global trading community.”

The new interface is expected to begin beta testing in February next year. The official go live is due to take place in October 2025.

“We are excited to partner with valantic FSA on our journey to modernise markets and this strategic initiative to enhance the trading experience for our fixed income clients will be an important milestone on the way,” said Fredrik Ekström, head of fixed income Europe at Nasdaq.

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The expanded partnership will also include an extension of Nasdaq’s market surveillance partnership with IDX, alongside an agreement to enhance IDX’s index business to help foster a global capital markets ecosystem.

Nasdaq already has a range of technology partnerships across the Indonesian financial system, including providing surveillance technology to Indonesia’s Financial Services Authority, OJK; the technology platform that underpins Indonesia’s central securities depository, KSEI; and its Calypso treasury solution to Bank Indonesia.

IDX’s decision to modernise its underlying architecture echoes strategic pillars set out by OJK to ‘develop a robust, stable, and sustainable capital market that can support the ongoing development of the Indonesian economy’.

“With this trading system and technology infrastructure upgrade, we envisage becoming more competitive and staying attractive for both domestic and international investors,” said Sunandar, director of information technology and risk management at IDX.

“We believe this partnership will speed up the modernisation advancement of the Indonesia capital market while supporting sustainable economic growth.”

Nasdaq’s platform supports trading in traditional asset classes as well as digital assets, offering the flexibility to support IDX’s plans to increase the number of products and services it offers to clients.

Elsewhere, by bringing new architecture to the Index business IDX will be able to quickly design and launch new indices.

“Nasdaq is playing a critical role at the heart of Indonesia’s modernisation story,” said Magnus Haglind, head of marketplace technology at Nasdaq.

“[…] By supporting the development of a deep and sophisticated capital markets ecosystem in Indonesia, we can help deliver growth and prosperity across the country and wider region.”

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As part of the move, Nasdaq will integrate its clearing platform, Nasdaq Real-Time Clearing, into FIA Tech’s Trade Data Network.

The Trade Data Network combines trade data from the buy-side, brokers, clearing houses and clearing members into a common framework, establishing a shared source of clearing activity for participating firms.

The integration of Nasdaq’s clearing platform will increase the volume and quality of post-trade data available to FIA Tech’s members, alongside providing central counterparty clearinghouses (CCPs) using Nasdaq’s clearing platform and end-users with the ability to carry out improved risk analysis, operate with greater capital efficiency, and lower overall risk exposure.

The functionality will help reduce systemic inefficiency across the global post-trade network, according to the two firms.

“There is a global necessity to upgrade legacy post-trade technology platforms, and interoperability must sit at the heart of the new global framework,” said Magnus Haglind, senior vice president and head of products, marketplace technology at Nasdaq.

“A consistent operating model for data, systems and processes can deliver substantial benefits to market participants through more efficient use of capital and a more resilient operating model.”   

FIA Tech’s Trade Data Network offers market participants and post-trade service providers the tools to bolster middle- and back-office processes, including trade-date clearing, give-ups, fee and commissions management, while also helping eliminate reconciliations across these functions. 

The post-trade landscape is expected to experience it’s biggest shake up in years with the shift to T+1 settlement going live today, 28 May.

Read more: T+1 settlement: The seismic post-trade change impacting the trading desk

“Nasdaq’s integration of its strategic Real-Time Clearing system into the Trade Data Network will increase standardisation and network adoption,” said Nick Solinger, president and chief executive of FIA Tech.

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The offering, which is powered by BMLL, provides T+1 consolidated best bid and offer (CBBO) data for Nordic and Baltic equity markets.

The consolidated order book consists of all lit quotes across the primary venues and MTFs that trade Nordic and Baltic securities with the corresponding original place of listing.

Nasdaq Ventures invested in BMLL in its Series B round which took place in Q4 2022. The availability of BMLL data via Nasdaq Data Link builds on top of the two firms’ existing relationship.

Read more: BMLL raises $26 million to finance North American expansion

Nasdaq Data Link is a cloud-based technology platform offering access to over 250 data sets, available via API. It provides actionable intelligence and is used by over 800,000 professionals, including analysts from data-driven organisations, hedge funds and retail brokerages.

The offering allows investment banks and brokers to identify addressable liquidity to enhance data and analytics processes and add value across research, algo optimisation, trading analytics and risk parameters.

Issuers are also able to analyse how products and listings compare to peers and competitors across different venues and currencies.

Elsewhere, systematic traders can identify simplify data collection for equity and ETP stock performance across different trading venues.

Data is made available T+1 for Nordic and Baltic markets and will be available on Nasdaq Data Link in multiple supported formats.

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Alessandro Romani, vice president and head of European derivatives at Nasdaq, explained: “The new index future offering is part of Nasdaq Europe’s strategy to support investors with a liquid and diversified product for the Nordic region combined with our strong commitment to ESG.” 

The solution is aimed at asset managers, retail investors and ETP issuers. According to Nasdaq, it will make it possible for investors to gain exposure in the Swedish small cap market and simplify investment strategies through consolidating a diversified portfolio of small cap stocks into a single instrument.

Specifically, the futures on the small index segment can be used as instruments for: cash management, hedging, and creating and trading ETPs and structured products.

In addition, the screening criteria allows investors to make decisions which are aligned with ESG outcomes.

Marcus Plyhr, portfolio manager at Norron Asset Management, said: “This is an excellent product that can be used in our long-only equity funds, as well as for hedging purposes in our absolute return funds. With this innovative setup and great liquidity, we will be able to hedge our funds in a better way than through any other relevant product existing on the market.”

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At the end of the trading day yesterday, Nasdaq’s post-mortem highlighted that the pre-trading issue affected trading for those using Rash and/or FIX as well as customers connected directly via OUCH or FLITE.

Read more: The TRADE sits down with executive director of FIX Trading Community, Jim Kaye, to discuss the ins and outs of market outages

“As a result [of the issue] customers connected directly to the matching engine via OUCH or FLITE were disconnected and unable to send new orders or cancel open orders. Customers using Rash and/or FIX received unacknowledged/rejected orders during the issue and were unable to cancel resting orders. During the issue, the matching engine was unavailable and no orders were executed,” said the exchange.

The connectivity issue was first addressed by Nasdaq Stock Market at 4.55am yesterday, 18 March, before the exchange confirmed in an update that the issue was specifically related to its core matching engine.

Almost an hour after its initial communication, Nasdaq was continuing to investigate the matching engine issue continuing to affect connectivity to the exchange. At 5.37am the venue shared a statement that order sent using RASH FIX engine were not being acknowledged currently.

Read more: ESMA publishes recommendations for trading venues in the event of a market outage

This subsequently led to the unacknowledged orders on Rash FIX being cancelled back to customers as Nasdaq took corrective action, including taking steps to “cancel on disconnect triggered when the matching engine came back up if a port was configured for COD”.

By 7.15am Nasdaq had resolved the issues with its matching engine with “all systems operating normally”.

The number of outage incidents across the globe has continued to grow in recent times, with these market disruptions exacerbating the ongoing analysis by regulators to ensure stricter processes in these instances.

In June 2023, SIX Swiss Exchange experienced its worst outage for over 10 years, halting trading for three hours, while later in the second half of 2023 the London Stock Exchange (LSEG) experienced two outages on AIM stocks between October and December.

Other previous outages include Nasdaq’s Nordic markets which closed on 16 November 2022 without an auction, while marketplaces of the European exchange operator, Euronext, also suffered a three-hour interruption to trading on 19 October 2020, while Deutsche Börse also experienced two separate outages during 2020 due to software glitches.

The outages are likely to spur on ongoing analysis by regulators globally over the stability and resilience of exchanges and procedures during market outages – specifically as regards their communications.

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The exchange operator has signed a deal with one of the largest institutional brokers in Thailand – Kiatnakin Phatra Securities (KKPS) – and expects the development to act as a launchpad for further deals with banks and broker-dealers in Asia as it looks to expand its platform further in the region.

The deal builds on an existing relationship between the pair, with KKPS already using Nasdaq’s Trade Surveillance technology.

Nasdaq’s platform provides a live view of risk across proprietary and client trading portfolios – new functionality added at the start of Q2 last year to help traders manage extreme market conditions. At the same time the exchange added fixed income securities to the platform including government bonds, corporate bonds and convertible bonds.

The platform aims to deliver new functionality and capabilities to all clients every three weeks, Nasdaq confirmed in a statement.

“Nasdaq is playing a pivotal role at the heart of Thailand’s market modernisation story, supporting the development of a deep and sophisticated ecosystem of capital market participants,” said Magnus Haglind, SVP and head of marketplace technology at Nasdaq.

“Institutional grade technology is a critical enabler of well-functioning markets, which ultimately help drive inclusive growth and prosperity across the wider economy. A key component of that is having a risk platform capable of navigating increasingly complex markets, which also serves as a great competitive advantage, unlocking overnight liquidity, improving capital efficiency, and protecting underlying clients.”

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