The capital markets are often seen as the engine that powers the financial services ecosystem. To keep the engine running at optimal capacity, capital markets firms—including clearinghouses, exchanges and broker-dealers—must watch for changing regulations, proactively anticipate emerging competition and position themselves to deliver on evolving investor preferences. While failing to do so doesn’t necessarily mean they will be left behind, they may become less relevant.
Here are the top six trends RSM has identified as shaping the capital markets sector this year:
1. Technology
Over the past few years, the sector has increasingly relied on cloud technology. We expect organizations will continue to migrate their existing on-premises technology stack to cloud solutions to allow for the efficient processing of large volumes of transactions and flexible storage.
Organizations are also likely to deploy and develop artificial intelligence solutions to enhance their trading algorithms to drive more accurate and faster investment decisions, which will be important as market hours shift closer to a 24-hour model.
With the increased reliance on third parties for cloud technologies and AI, cybersecurity will continue to be a priority to ensure the protection of sensitive financial and investor data.
2. Regulatory compliance
Regulatory compliance will be an ongoing focus for capital markets firms. Although the Trump administration is striving for deregulation, firms are still expected to ensure compliance to promote market integrity and investor protection. For instance, broker-dealers must comply with the Securities and Exchange Commission’s Regulation Best Interest (Reg BI) to provide transparency and foster investor trust, which is also a goal of the Trump administration.
As the financial ecosystem continues to digitize and increasingly relies on third parties to host cloud-based technology, capital markets firms must prioritize initiatives focused on cybersecurity and third-party risk management, as well as audits in those areas.
Broker-dealers should also assess the risks and regulatory requirements for registered index-linked annuities (RILAs), a relatively new investment vehicle that is growing in popularity. Organizations must confirm they consider the impacts of RILAs on their internal operations and provide clients with educational materials to communicate the potential risk and nuances of these products.
3. Market structure
Various market structure changes expected in 2025 will have an impact on the operations of capital markets firms. For instance, the shift to near-24-hour market hours, global T+1 settlement cycles and centralized Treasury clearing will force them to adjust their operating models accordingly.
Near-continuous access to the markets will allow investors to make investment decisions in real time in response to global events, and organizations must ensure they are prepared from a technology and labor perspective to accommodate the longer open market periods. Though T+1 is already in effect on a domestic level for U.S. markets, its deployment on a global scale will require firms with a global footprint to upgrade their systems and processes to handle the faster settlement cycle. And to ensure compliance with the centralized Treasury clearing requirement, organizations must refine their risk management systems and transaction processing procedures.
4. Product capabilities and shifting market preferences
The current macroeconomic environment, paired with changing investor preferences, is creating new opportunities for all stakeholders in the investment world. Asset managers, exchanges and broker-dealers are increasingly launching innovative products targeted not only at traditional institutional investors but also at individual retail investors.
Market shifts since 2020 have broadened opportunities for investors well beyond the wealthiest. Retail investors are increasingly interested in more advanced products such as derivatives, cryptocurrencies and private investments as they seek to further diversify their holdings and increase returns. The availability of more complex products in both the public and private markets is increasing with the growing demand. Organizations offering these complex products must ensure that investors fully understand them.
5. Labor
Capital markets firms will likely face continuing labor challenges in 2025. First, an ongoing shortage of talent with data science expertise will hinder the development of AI, which can be used to support algorithmic trading and foster overall organizational efficiency.
Second, employees’ increased demand for hybrid work environments will force firms to adapt their operations to support employees at home and in the office. Organizations must continue to adapt their technology and communication protocols for employees in multiple locations, while also ensuring robust cybersecurity measures and adequate regulatory compliance.
6. Sector consolidation
Mergers and acquisitions are expected to increase in the capital markets sector. Firms aiming to serve as a “one-stop shop” for clients will prioritize product diversification and expansion into other areas of financial services, which may lead to consolidation across the space. This trend will not only drive operational efficiencies and potentially reduce client acquisition costs but also improve the overall customer experience by offering clients a comprehensive set of financial services through a single source. But as organizations expand their offerings to include different asset classes and financial services solutions, they must be prepared to manage new regulatory complexities.
RSM contributors
Subscribe to Financial Services Insights
Sign up now for a monthly update on the marketplace trends important to financial institutions, capital markets, asset management and other financial services.
