Consolidation in the asset management sector is not new, but it has reached unprecedented levels.
Financial services industry outlook key takeaways
Fundraising pressures are driving part of the consolidation boom.
Extended trading hours will bring more opportunities to act immediately, which could create volatility.
Financial services trend #1: 24-hour trading implications for capital markets
The New York Stock Exchange (NYSE) is planning to extend trading hours on its Arca exchange to 22 hours a day. This shift aims to provide investors with more on-demand access to the stock market, potentially increasing volatility and changing trading dynamics. The move is expected to be approved despite regulatory delays, and other market players, including clearinghouses, are likely to follow suit. Organizations are advised to prepare for this shift by ensuring adequate workforce, upgrading systems, and deploying AI tools to support traders.
Outlook
Could near-24-hour trading be the future? A look at capital markets implications
Near-24-hour trading may be the future. Here’s what it means for capital markets organizations.
Financial services trend #2: Market forces drive asset manager transactions
Outlook
The great consolidation: Market forces drive asset manager transactions
Market forces are driving consolidation in the asset management space.
In 2024, the industry saw record levels of merger and acquisition activity, particularly in banking, insurance, and wealth and asset management sectors. Asset managers are increasingly consolidating to innovate and expand services, driven by investor demand for diverse product offerings and larger capital allocations. However, fundraising has slowed, prompting managers to attract capital from high net worth individuals. The consolidation trend poses challenges, including higher fees and reduced choices for investors, and complexities in merging firms. Despite these challenges, the trend is expected to continue, with firms needing to adapt to remain competitive.
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