What will the stock exchange of the future look like in a rapidly changing financial world? SIX has drawn up a white paper summarizing eight possible scenarios for the future of the securities value chain. The white paper also discusses the strategic implications of these scenarios.
SIX today published the white paper «Future of the Securities Value Chain», illustrating eight possible scenarios for the future of the stock exchange over the next five to ten years. The white paper is based on a wide variety of internal and external sources used by SIX: workshops, expert interviews and text analyses. The paper also intentionally included experts who are not part of today’s securities value chain or the financial industry so that they could critically analyse and challenge the processes and approaches used today.
The most likely scenario: listing remains a sign of quality, intermediaries come under pressure, digital assets skyrocket
The scenario deemed most likely by the white paper assumes that listings will continue in the future. Listed asset classes will remain dominant, as investors continue to believe that a listing on a regulated exchange and admission to trading are a sign of quality. Thanks to automation and digitalization, the direct costs of listing fall sharply. The study also sees traditional brokers and other intermediaries coming under a great deal of pressure in this future scenario. Since issuers and investors have direct access to primary markets on which securities are issued, intermediaries will no longer be absolutely necessary. In the meantime, third parties have started offering these services. The study sees the number and variety of digitalized assets (digital representation of rights to real assets) increasing exponentially. The likeliest scenario also illustrates the key role of new technologies, including artificial intelligence, advanced analytics, big data and cloud computing. According to the study, there will in general be a sharp increase in the level of automation along the entire value chain. What remains unknown is where IT infrastructure is headed. Will central ledgers be replaced by distributed ledger technology (DLT)? The authors of the white paper are certain that both models can be successful only in a regulated environment with registered (permissioned) users.
“It is vital to have a clear understanding of the challenges that lie ahead in order to be able to prepare for them today,” says CEO Jos Dijsselhof. “The white paper therefore aims to promote discussion and to inspire reflection on new business opportunities, especially in the interaction between start-ups and traditional players. It is important that we keep the debate on progress open and ongoing.”
The “Future of the Securities Value Chain” white paper is the first in a series of white papers that SIX will publish on a regular basis.
The white papers are supported visually with a “Picture of the Future”. The picture is aimed at distilling the findings of the study and clearly illustrating the connections and interdependencies.
A summary of the white paper, the “Picture of the Future” and the complete study can be downloaded from website at six-group.com/research.