Mercantile economic policies, shifting geopolitical alignments and the dizzying advances in artificial intelligence are unsettling investors and decision makers, even as markets hover near record highs. The quotidian salvo of announcements is challenging even the steadiest hand to focus on the longer term.
Sitting across more than 40 private meetings and panels, I had access to the mindset of businesses, investors and policymakers. Here are three of my takeaways.
The equity market-structure renaissance continues
The SEC is moving quickly to ensure the U.S. equity market structure renaissance continues. The commission is reviewing legacy regulations, such as the Order Protection Rule, embracing tokenization and distributed ledgers, streamlining processes across multiple regulators with “mutual recognition,” and promoting the idea of “innovation exemptions” for next-generation technologies.
The SEC’s more creative and collaborative approach should foster continued growth in, and greater competition among, innovative offerings benefiting all participants. For example, AI-enhanced trading venues, algorithmic strategies and analytics platforms should lead to significant improvements in market efficiency via better liquidity sourcing and reduced execution costs. Liquidity itself, long a complaint among institutional investors, could even increase with the rise of tokenized securities and distributed ledger technologies. Along with the potential 24/7 trading, these innovations could attract a broader range of investors and provide more liquidity-sourcing opportunities.
The Commission will need to find the right balance between encouraging innovation and ensuring market stability and investor protection. But under this new regime, equity markets are likely to become more efficient and liquid, fostering a vibrant ecosystem with a diverse range of participants. The renaissance continues, with technology playing a central role in shaping the future of equity market structure.
Tokenization finds its killer app
The tokenization conversation is at least 10 years old, but it only now seems that the market is close to finding its first killer app. While tokenization could prove to be the perfect technology solution for private equity, real estate and other illiquid assets whose processing infrastructure remains largely manual, its impact on those industries in the short term remains muted. Tokenized, high-quality collateral, however, is shaping up to be a 2026 game changer.
Moving highly liquid U.S. Treasuries and similar cash equivalents on chain allows asset transfers to settle in minutes and unwind in hours, versus overnight and over weekends via the market’s current infrastructure. This newfound speed can prove critical in times of market stress (intraday margin call, anyone?) and when trading outside of normal U.S. banking hours. Already fast-trading markets want to move faster.
Which brings us to 24/7 trading. While the utility of the expanded trading hours is hotly debated among institutional market participants, preparing for around-the-clock trading is a must. Although some might be OK with pre-funding margin accounts on Friday for weekend trading, most won’t want to tie up funds unnecessarily. That’s where tokenized collateral comes in.
Investor benefits from bond-trading venue competition accelerate
We’re no longer talking about the evolving electronification of the bond market—the bond market IS electronic. While buy-side demand catalyzed the move to electronic trading, it was the incredible innovation and investment from competing trading venues over the past decade that made the change possible. That fierce competition keeps innovation coming while driving execution fees lower. Land grabs for portfolio trading, all-to-all, dealer-to-dealer, and even traditional RFQ trading have pushed some venues to offer everything from volume discounts and rebates to fee holidays and prices slightly lower than the competition. But while price matters, diversification by asset class, product, region, execution style, and client type are all key to continued trading venue growth.
Regulatory reduction simultaneously spurs innovation and creates risk
The excitement about capital markets innovation and growth in 2025 was palpable, compared to the year before. Digital assets, prediction markets, equity and fixed-income market structure, and other items on the 2024 regulatory agenda went from battlegrounds to centers of innovation, as the SEC and CFTC changed their tones under the new administration. A pledge to reduce regulations while also providing clarity in emerging areas has given platform builders and their potential users the confidence to move forward.
But we’d be remiss not to think about the potential for the exuberance to become irrational. Finding the balance between markets that self-police and over-burdensome regulation is notoriously tricky. While most cars can stay on the winding road with no guardrails, consequences are catastrophic for the one that drives a little too fast and goes over the cliff. So, while we’re excited about what we’ve seen in the past 12 months and for what is to come in the next year, we’re keeping a cautious eye out for speeding cars.
AI disruption: from micro to macro
AI dominated private sector discussions – as it does markets. If recent annual meetings were preoccupied with whether AI would transform industries, the 2026 debate focused on how to implement AI at scale.
Yet with scale comes complexity. Conversations on governance, cybersecurity risk and market structure were increasingly candid. There was a more balanced view that productivity gains can outweigh near-term organizational friction when adoption is thoughtful – though financial regulators still shudder at probabilistic models running some core processes.
Rethinking diversification
Faced with deep uncertainty on the market paradigm, the desire to diversify was strong. Amongst hedge funds, gold, silver, platinum and copper were high up conviction lists. “Quiet quitting” of US assets, as Katie Koch of TCW put it, was discussed. But strategic asset allocation shifts take time.
Risk appetite remains, but time horizons have shortened. Managers of several large asset pools I met were keen to free up liquidity to retain flexibility. So it was striking at one private breakfast how frank the exchange was between some large asset owners who were frustrated by the lack of distributions from large private-equity portfolios. I suspect this adds ever more pressure to find solutions via secondary and continuation vehicles if exits don’t accelerate.
The junk starts washing out of private credit
Private credit was red hot in 2025. Assets in search of private credit investments flooded nonbank lenders that, in turn, had no shortage of lending opportunities to deploy their cash. And while banks occasionally threw shade at private lending, they were also attracting assets and lending in the private market via credit lines to nonbank lenders or through funds of their own.
Despite the positive benefits of private credit for investors and borrowers, its allure has created a gold rush among less experienced market participants, resulting in inevitably poor investment decisions (see Tricolor) among newer entrants. We expect much of the froth to be cleared from the market by the end of 2026, hopefully via increased market transparency, money-losing fund closures and failed searches for alpha, rather than disastrous blowups and fraud.
Banks and brokers are mindful of disintermediation
Regulatory changes to capital, clearing and collateral have resulted in significant changes to the economics of the derivatives business. Brokers and their clients have changed their trading behavior and looked to optimization tools to blunt the effect of these new costs. Those efforts helped mitigate increased costs but also left open the possibility that other strategies would emerge to absorb this trading and clearing capacity.Ultimately,
these dynamics will lead to a private credit market with fewer gold chasers and more strong, established intermediaries that encourage lending competition, improved access to capital for businesses and new investor opportunity.