Michael Hughes is Head of Capital Markets Business Consulting, Capgemini.
What was the highlight of 2024?
The way that the industry came together to successfully implement the move to shorten the securities settlement cycle to T+1 in North America was noteworthy.
The final few months in the lead up to the May 28th go-live weekend was particularly impressive as firms accelerated their adoption of proposed industry best practices. For example, immediately after the go-live, DTCC, which played a central role in coordinating the industry’s readiness, reported that over 94% of transactions were affirmed by 9:00 PM ET on the trade date, up from 73% at the end of January. While this indicated an improvement in operational efficiency, more importantly, perhaps for the long-term, instant capital efficiency benefits were felt across the industry as clearing fund requirements decreased materially. Critically, this was all achieved without a widely feared spike in settlement fails rates.
Despite the measurable progress, there is still much more left to do. We continue to see a need for many firms to increase automation levels to support this change sustainably. Furthermore, there were some unresolved issues including details surrounding FX timings and the treatment of multi-asset instruments like ETFs. Overall, as the accelerated settlement lens moves eastwards towards the UK and Europe in 2027, the 2024 North American experience gives us plenty of reasons to be optimistic.
What surprised you in 2024?
Given the levels of investment that we have seen from industry players, the fact that generative AI would continue to grow in scale across capital markets in 2024 came to no one’s surprise. However, the accelerated rate at which it has increased influence across all parts of financial institutions, outside of dedicated Gen AI programs and centers of excellence, has been eye-catching. Moreover, in many instances these advances have been driven at a grassroots level, with employees increasingly embracing the technology for themselves and employers reacting to this trend.
Across the community, adoption of these tools has become increasingly widespread. Firms have been able to successfully drive internal productivity increases at scale, which in turn, emboldened them to further explore opportunities to leverage the technology in client-facing scenarios. We see this continuing to grow through 2025, with increased use of advanced Gen AI analytics likely to support research, investment decisions and portfolio management with the wider aim of enhancing revenue generation.
What trends are getting underway that people may not know about but will be important?
The capital markets post-trade service provider landscape has been a dynamic environment in recent years, with a regular flow of new acquisitions, consolidations, partnerships, investments and product launches. Central Financial Market Infrastructures (FMIs) and large-scale traditional service providers are increasingly collaborating with FinTechs and their client community to create industry solutions.
This is heartening to see as these firms are likely to play an increasingly important role in helping financial institutions to reduce their cost bases. The cost of post-trade processing has remained stubbornly high over the last 15 years, despite significant attempts by firms to increase efficiencies through independent automation programs and growing their offshore components.
A fundamental shift towards industry collaboration and cost mutualization will help avoid duplication, concentrate expertise, drive common industry standards and ultimately remove cost from the ecosystem.
With their broad networks of clients and ability to impact the whole trade lifecycle from front-to-back, FMIs are well placed to play a leading role in driving this effort going forward.
A Year of Progress and Promise: Reflecting on 2024
By Jim Hyde, NYSE
2024 STA Chair
As 2024 draws to a close, it’s a natural time to pause and reflect on all we’ve achieved together. On behalf of the STA Board of Governors and staff, I want to extend my deepest gratitude to all members, sponsors, partners, and speakers who contributed to our success this year. Your engagement and support are the foundation of our success, and we could not have accomplished so much without you.
2024 has been a year of milestones and meaningful change at both the national and regional levels. Our 91st Annual Market Structure Conference in Orlando was a tremendous success, blending insightful discussions with unique networking opportunities in a vibrant resort setting. Additionally, I’m thrilled to report that our affiliates organized over 75 in-person events throughout the year — a testament to our commitment to fostering education, community, and collaboration within our industry. The launch of our newest chapter, STA Arizona, further expanded this reach, marking a significant achievement in our work to serve securities industry professionals across the country.
On the wider stage, the outcome of this year’s elections will bring significant changes to our nation’s capital. In particular, the appointment of Rep. French Hill, a former banker, as the new Chair of the House Financial Services Committee appears a positive sign for those desiring highly informed regulation for our industry. More broadly, leadership changes across both parties could add an element of unpredictability to the legislative process. Looking at the executive branch, the nomination of Paul Atkins as SEC Chair seems to portend a stark departure from the previous administration. These developments promise new challenges and opportunities for our industry, and STA remains committed to advocating for policies that support robust, fair markets.
While there is much uncertainty ahead, we look to the future with great confidence. As most of you know, Julie Andress, Managing Director, Institutional Equities at KeyBanc Capital Markets, will serve as our incoming 2025 Chair. Following many years working alongside Julie on the STA Board, I can personally attest to her exceptional leadership skills and longstanding dedication to our mission, which will ensure STA’s continued success and innovation. As we enter 2025 under Julie’s leadership, we also look forward to expanding our Women in Finance committee, strengthening our affiliate-driven Young Professionals initiatives, and reinforcing our communication channels to better serve our members. Beyond that, we’re excited for our 92nd Annual Market Structure Conference (October 15-17, 2025), which will return to Washington DC on the heels of our successful Orlando event.
Serving as your Chair in 2024 has been both an honor and a privilege. It’s been inspiring to witness the passion and dedication of everyone involved in making STA a success. I’m confident that, under Julie’s leadership and with the collective energy of our community, STA will continue to drive positive change and deliver value to our members in 2025 and beyond. Hopefully, you can attend at least one of our national or regional events to experience this value in person.
As we embrace the holiday season and the promise of a new year, I encourage you to take time to reflect on our shared accomplishments and enjoy the moments that matter most with your loved ones. Thank you for an incredible year, and I wish you all a joyful holiday season and a prosperous 2025!