Greenwich Associates, LLC recently released its “15 for ’15,” a list of 15 market structure trends for investors to watch in 2015. Here’s the 15 trends they believe will shape the financial markets in 2015.
1. Rates And Volatility Rising: Analysts believe the Fed will finally raise interest rates in 2015, and trading volume should pick up as a result.
2. U.S. Banks Get A Real Taste Of Base III: American banks will have to disclose their Supplementary Leverage Ratios for the first time in 2015, which could expose some banks’ hidden weaknesses.
3. Lack Of New Corporate Bond Regulations: Despite aggressive rhetoric by the SEC, analysts predict there will be no major new regulation of the corporate bond market in the near future.
4. In Corporate Bond Trading, Only Evolutionary Changes: Analysts believe that e-trading of corporate bonds will continue to grow in 2015, but they do not expect major structural changes to the market.
5. Client UST Trading Creeping Into Dealer-To-Dealer Land: While half of client U.S. Treasury trading took place electronically in 2014, the tight spreads generated by automatic market makers could make anonymous trading more appealing to traders in 2015.
6. Cash Equities -- Tough Business With A Glimmer Of Hope: Expectation of higher volatility and higher trading volume in 2015 gives analysts hope that the broker-dealer business will continue to recover.
7. The Unbundling Debate In European Equities Raging On: According to analysts, the ESMA and the FCA have proposed an unbundling of all research advisory services that would make U.S. regulatory scrutiny of equity markets look like “child’s play.”
8. Futurization Getting A Boost: As cash gets put back to work when interest rates rise, swaps market participants will be driven to lower initial margin futures trading.
9. NDF Clearing Mandate Impacts The Futures Market: Despite a legal mandate, the CFTC has yet to take action regarding non-deliverable forward (NDF) clearing.
10. The Fight To Make FX Fixings Continuous: In light of the 2014 forex-fixing scandal, analysts believe that the setting of daily forex prices could be modified and adapted to suit modern trading.
11. European Mandatory Clearing Coming On Scene: Mandatory client clearing will be coming to Europe for the first time in 2015, but analysts believe Europe will avoid many of the mistakes the U.S. made when implementing the rule.
12. Continuing Reduction Of U.S. Swap-Clearing Members: Analysts believe that lack of profitability in swaps-clearing will lead more major American banks to drop the service all together.
13. ETFs And Index Funds Beating Up On Active Management: Analysts believe that a growing concern with management fees will lead even more investors to opt for funds over active management.
14. Cloud Computing Moving Closer To Business As Usual: Now that security and compliance concerns have been eliminated, Wall Street is embracing the processing power and flexibility of cloud computing.
15. The Instant Messaging War: Competitors continue to battle over control of Wall Street’s primary instant communication mechanism.
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