Citi Securities Services Evolution 2025

24 | Securities Services Evolution 2025 Where will digital liquidity form? “Clients come mainly for the value of the ecosystem and not only for the quality of the technology” Jorgen Ouakine, Head of Digital Assets, Euroclear Back in 2020, DLT looked set to remove the need for bricks-and-mortar infrastructures and to negate the role of custodians. Five years on however, over 52% of our survey respondents expect FMIs to be the core enablers of digital markets (for equities and fixed income); and 29% expect custodians to be the network providers to these markets (Figure 13). The industry now recognizes the crucial role of existing FMIs and custodians as essential enablers and network providers for digital markets. Why this change? A growing body of experience is showing that, while DLT offers efficiency, progress can only be scalable if it is backed by regulated, resilient, trusted infrastructures that have the operational expertise andmember networks necessary for the mainstream adoption. These characteristics set a high standard for new entrants andmake true disruption a much slower process thanmany originally anticipated. Rather than being disrupted or replaced, FMIs are now leveraging DLT to offer functional improvements to their existing members, strengthening their role as central providers of regulated, scalable and resilient infrastructure. Debt issuance and CCP margining are excellent examples, as are the ongoing digital initiatives in collateral tokenization (by the DTCC 24, 25 , and Clearstream / HQLAx 26 ) and in bond issuance (by Euroclear 27 ). By contrast, few new entrants have successfully disrupted the equities or fixed income markets over the last several decades, using any form of technology. Given their highly mature, regulated ecosystems, it is increasingly clear that FMIs will continue their role as the bridge between issuers and investors for years to come. Similarly, custodians look set to maintain their role as global network providers, with 29% of firms (across all profiles) looking to custodians to be the agents of their tokenization. (Figure 13) Given 63% of survey respondents expect to conduct their daily activities in a multi-chain environment by 2030, the role custodians as providers of regulated, network connectivity looks set to grow. Today, global custodians provide consistent access to hundreds of traditional securities depositories around the world, regardless of where they are issued. Tomorrow, these same custodians will have to provide the same, consistent access to tomorrow’s multiple blockchains as a core part of their role and network providers to the world’s asset owners. Things look slightly different in the OTC space, however. Absent of any FMIs, these markets present an opportunity for new venues and providers to bring transformational new network benefits. Up to 67% of our survey respondents expect to see new digital venues form across the funds and private asset ecosystems, with names such as Ondo, Calastone and FundNode all evidence of progress in this space. (Figure 12) In facilitating the shift from decentralized ecosystems to decentralized networks, these and other providers expect to leverage DLT and digital assets to bring standards and consistency to some of the world’s most esoteric markets – delivering cost efficiency and increased liquidity as a result . Figure 12: Fastest growing venues for digital liquidity Question: Looking at digital assets/tokenizationof assets, wheredo you think the fastest growth is going tobeby 2030- and inwhich venues?Please select your fastest growing asset types and their venues. On existing FMIs Through new venues Crypto-currencies Tokenization of private/ alternative assets Tokenization of funds/ Creation of tokenized funds Tokenization of fixed income Native issuance of new securities Tokenization of equities 27% 73% 33% 67% 41% 59% 48% 52% 52% 48% 55% 45%