As a result of the ongoing debt crisis in the Eurozone and slowing growth in emerging markets, 2011 turned out to be a relatively difficult year for global capital markets. Most of these macroeconomic issues also persisted in the first half of 2012. In 2011, low confidence led investors to shy away from the riskier equity markets and look for relatively safer bets in the debt markets. Interest in commodities increased among fund houses due to their ability to act as risk diversification tools. Gold emerged as the biggest beneficiary of this trend and continued its bull run in 2011.

The ecosystem for financial intermediaries is currently in a state of flux. Increased volatility, higher reporting obligations, and competitive pressure are resulting in an exponential rise in market data volume. Cost and scale considerations and competitive pressure are forcing intermediaries to forge innovative global alliances. Evolving customer demands for multi-asset and multi-geography trading, the rise of high-frequency trading, and regulatory pressure are driving increased investment in infrastructure upgrades. Even the market structure of the financial intermediaries industry is expected to change with the rising prominence of swap execution facilities. All of these structural changes are expected to have a profound impact on the business and technology strategies of financial intermediaries in the coming years.

This paper is part of our series What You Need to Know: Capital Markets which focuses on emerging trends in capital markets. Please see the companion papers Trends in the Global Capital Markets Industry 2012: Buy-Side Firms and Trends in the Global Capital Markets Industry 2012: Sell-Side Firms.