FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.

“Emerging” technologies are no longer emerging, they have arrived. From artificial intelligence to digital assets and tokenization, technologies that just a few years ago seemed like they were pushing the limits of possibility are now becoming embedded in financial market structure.

As yesterday’s emerging tech matures and takes root, it is making markets faster, more efficient and more dynamic than even the most optimistic tech boosters could have envisioned just a decade ago.

The evolution of technology from cutting edge to mainstream is accelerating in step with the innovation cycle overall. The 500+ financial services companies participating in Broadridge’s 2025 Digital Transformation & Next-Gen Technology Study expect to allocate 29% of their total IT spend to technology innovation over the next two years— an increase of seven percentage points from last year’s study. Firms are spending more, and a large part of that extra spending is aimed squarely at integrating technologies like AI and the blockchain into workflows and markets. That industry-wide focus is compressing the amount of time it takes for emerging technologies to mature into everyday tools.

Trigger Events

Throughout history, rapid technological advances have often been triggered by important events or crises. That was certainly the case in 2024, when the U.S. Securities and Exchange Commission shortened the trade settlement cycle from two business days (T+2) to one.

To make the shift to next-day settlement, market participants were forced to adopt new technologies and approaches that automated parts of the trade cycle and enhanced data management and analytics. Firms worked internally to develop and deploy better and more centralized data systems, as well as robotic process automation (RPA) and other post-trade automation solutions. The move to T+1 also prompted firms to make wider use of cloud computing and SaaS solutions from external technology providers. That adaptation has in turn made it easier for firms to adopt and integrate other new external technology solutions down the road.

Despite all this great innovation, capital markets are still plagued by trade breaks, failed settlements, and other complex operational frictions that will not be acceptable in a T+0 environment. The fact that the SEC is already looking at this inevitable next step is providing capital markets firms with additional incentive to continue experimenting with and adopting emerging technologies.

Specifically, firms are introducing artificial intelligence applications with the potential to drastically reduce and someday perhaps even eliminate most of that inefficiency. Capital markets firms have already deployed AI Agent workers that autonomously identify, research, and remediate the most high-volume operations tasks—and solve them independently. 

And that’s just the tip of the AI iceberg. Nearly three-quarters (72%) of firms participating in the Broadridge study are making moderate to large investments in GenAI this year, up from 40% in 2024. These firms expect their AI investments to pay off most in the areas of enhanced employee productivity (68%), better reporting (51%) and reduced operational costs (50%).

This rapid integration of AI represents one of the best examples of how quickly emerging technologies can gain widespread acceptance today. As individual employees incorporate AI into everyday tasks, they are becoming more comfortable with the technology and more familiar with the sometimes radical enhancements AI models and applications can deliver when embedded into workflows.

The Digital Assets Revolution, Driven by DLT

Meanwhile, another formerly “emerging” technology is poised to have possibly an even more revolutionary impact on capital markets. As we speak, digital assets and tokenization are helping banks and broker dealers unlock billions of dollars of liquidity and cost-savings. Those benefits could expand exponentially based on the massive levels of investment now flowing into distributed ledger technology (DLT).

In 2024, 59% of the firms participating in the Broadridge study said they planned to make moderate to large investments in blockchain/DLT in the next 12 months. In 2025 that share jumped by 12 percentage points to 71%.

Even at prior levels of investment, distributed ledger technology (DLT) has already produced big benefits to capital markets firm, including delivering the “Holy Grail” of repo markets: “intra-day” repo trades. Same-day repo trades were virtually impossible before the advent of the blockchain. Today, these DLT-enabled trades are saving the sell side billions of dollars per year. 

This is just the tip of the blockchain iceberg. CBDCs and other stable coins are already beginning to transform how cash gets transferred around the globe and even within firms.

DLT allows for near instantaneous settlement—a leap that cuts costs, reduces counterparty risk and can potentially free up trillions of dollars in capital. The process of tokenization has the potential to unlock continuous 24/7 trading with real-time settlement.

By eliminating so many of the barriers and so much of the friction found in the traditional market structure, tokenization can also democratize capital markets, drawing in retail investors and investors from countries and areas who previously lacked access. This influx could in turn vastly expand market liquidity as new investors enter the market.

The Next Wave of Innovation

Of course, such radical changes to the way capital markets operate will create challenges for brokers, custodians and other central players in the traditional market structure. It’s possible that this looming threat could represent another of those epoch-defining trigger events. Or perhaps the next trigger event will arise from the ongoing shift to central clearing for trades of U.S. Treasuries. The industry’s need to make massive operational change to facilitate that shift could well produce a new wave of innovation that firmly embeds a host of previously novel technologies into the market structure, and sets the stage for the next generation of “emerging” technologies.

Tom Carey is Corporate Vice President, President of Global Technology and Operations at Broadridge