Tokenized Securities: 10% of Post-Trade Market by 2030?
Tokenized Securities Expected to Handle 10% of Post-Trades by 2030
A recent Citi survey suggests that stablecoins and tokenized securities are poised to capture a significant share of the global post-trade market. The report predicts that 10% of global post-trade market turnover will be handled through these digital assets within the next five years.
The projection comes from Citi's Securities Services Evolution report, which highlights bank-issued stablecoins as a key enabler for collateral efficiency, fund tokenization, and private market securities.
The survey polled 537 custodians, banks, broker-dealers, asset managers, and institutional investors across the Americas, Europe, Asia Pacific, and the Middle East. Notably, over half of the respondents indicated their firms are piloting generative artificial intelligence (GenAI) for post-trade activities.
The post-trade market is crucial for verifying, executing, and finalizing securities trades. This shift towards digital assets follows increased interest from Wall Street in stablecoins, spurred by recent regulatory developments in the U.S.
Digital Assets Nearing a Tipping Point
Citi's report indicates a significant progression in digital asset adoption since 2021, moving from initial experimentation to strategic implementation. While the industry hasn't yet reached a full tipping point, the bank suggests it's rapidly approaching.
“After years of groundwork, the global post-trade industry looks set for a period of transformation in speed, cost and resilience on an international scale.”
Survey participants identified liquidity and post-trade cost efficiencies as primary drivers for investments in digital ledger technology (DLT). A majority believe that blockchain will significantly impact these areas within the next three years.
Citi stated, “More than half of the survey’s respondents are clearer than ever that the ability of DLT to increase the velocity of securities around the world’s capital markets can have major impacts on their funding costs, financial resource requirements and operating costs before 2028.”
Regional Variations in Digital Asset Growth
Expectations for digital asset growth vary across different regions. The U.S. anticipates a higher adoption rate, with 14% of market turnovers predicted to be conducted using digital or tokenized assets by 2030. In comparison, Europe projects 10%, and the Asia Pacific region forecasts 9%.
Citi attributes the increased optimism in the U.S. to recent regulatory changes.
The Role of Generative AI
Generative AI is also expected to play a significant role in the post-trade market. 57% of respondents reported their organizations are piloting GenAI for post-trade operations.
Specifically, 67% of institutional investors are using GenAI for post-trade reconciliation, reporting, clearing, and settlements.
Currently, the most prevalent use case for GenAI is onboarding, with 83% of brokers, 63% of custodians, and 60% of asset managers leveraging the technology to enhance efficiency.
“In a world where faster, cleaner onboarding literally means money, this use case appears to be a perfect starting point and an opportunity to bridge the gap between retail and institutional clients,” Citi said.