Speaking at the Singapore FIX Trading Community conference, FIX Southeast Asia Multi-Asset Trading Conference 2025, Winnie Khattar, APAC Head of Market Development, BlackRock and Larry Tabb, Director: Market Structure Research, Bloomberg, LLP looked back over the year in US and APAC markets, and considered how markets might evolve in response to the many changes happening at once.
APAC markets experienced unprecedented volumes and index levels this year, with markets such as Korea and Japan reaching new highs. Japan noted all-time record turnover in October, average $50B a day in the equities market. Investors hunting liquidity were actively trading at the close of day, making use of liquidity aggregation in the closing auctions with lower price impact, making this mechanism more relevant than ever before.
Volatility too tested previous limits and is likely to remain high over the short term, as geopolitical news and US-driven macro sentiment continues to roil markets, said Ms Khattar. “The good news is that market turbulence has tested the resilience of platforms and systems across exchanges and the street,” she said.
ETFs continued to grow as a proportion of most APAC markets, with volumes up on both primary and secondary markets. On high volatility days, ETFs accounted for over 50% of total trading activity on tape in the US. In Asia, Japan-listed ETFs traded 2.6x average volume on secondary markets this year. We continue to see strong retail participation in APAC markets, with growing demand for innovative exposures such as global active and crypto based ETFs.
24/5 trading has been much talked about this year but remains a retail play for now. Lack of regulation and little interest from institutional investors is likely to see this remain the case for some time. “To ensure market integrity and investor confidence in extended trading hours, robust frameworks are essential – covering regulation, risk controls, transparent reporting, and liquidity mechanisms that uphold market quality,” Ms Khattar said.
Retail engagement in APAC is highly diverse, shaped by local market structures and regulatory frameworks. Ms Khattar pointed to Japan as having adopted a deliberate, long-term strategy to deepen retail participation in capital markets, prioritising investors over short-term trading. Through initiatives like NISA, a tax incentive scheme, the government has encouraged households to shift cash from savings into diversified investment solutions. “These programs are designed to deliver outcomes retail investors value – balanced exposure to regional and global market within well-structured funds – supporting wealth creation and financial resilience,” she said.
Balancing the retail market’s appetite for risk with the need to protect ‘mom and pop’ investors is a core theme in the US this year, as prediction markets have sprung up almost out of nowhere, said Mr Tabb. “Investing has always been separate to gambling, but this past year the wall has come tumbling down,” he said. “Prediction markets are bringing gambling to folks’ retirement accounts – do we really want to give the punter betting on football games 10x leverage on SPX? I don’t think that’s a good thing.” The panel agreed that while regulators in APAC are yet to tackle prediction markets, they are likely to take a relatively conservative approach.
Fixed income markets also matured this year with the electronification of India’s government bond market, and progress on enhanced transparency to be delivered through the consolidated tape in Europe. These developments will boost efficiency and scalability of markets, in turn improving liquidity and reducing impact costs. India’s move to digitise access to government bonds marks a transformative step, vastly improving access to India’s onshore bond market. Indian and Korean government bond inclusion into benchmark indices further supported volume growth, and this momentum will continue to build with further indexation of these markets.
Tokenised bonds, which have been issued by Thailand, the Philippines and Hong Kong, have attracted interest and proven the model can work, but secondary markets are still traded by voice due to lack of liquidity. “Our current financial markets are functioning on decades old infrastructure, with incremental upgrades over the years. Money transfer still takes a long time to get to where it needs to be due to legacy infrastructure, time zone, cut-off times, reconciliation processes and more,” Ms Khattar said. “Tokenisation can address many of these challenges by enabling instant delivery and payment when transacting tokenised bonds, funds, and stablecoins. This allows money and assets to move quickly and smoothly, improving operational efficiency and giving investors immediate access to their investments. However, achieving this outcome will require significant investment in infrastructure and technology.”
While tokenisation of bonds makes sense, wholesale tokenisation of capital markets workflows is unlikely to be coming any time soon, Mr Tabb said. “For equities for example we have market makers trading back and forth every microsecond – do you really want to be moving money back and forth as well? How do I go short? Do I really want to be moving cash all around the place intraday? The mechanics just don’t work right now,” he said. “Add to that the absolutely massive risk of moving several trillion of AUM into a new back office – if that goes wrong at one of the big asset managers it’s a black swan event. Is gaining a day or two in the trade cycle worth the risk?”
The use of tokenised funds for collateral was an opportunity that would likely be worth the investment for APAC specifically, said Ms Khattar. “Tokenised collateral solutions have the potential to transform capital markets in Asia by enabling near-instant settlement of USD cash and other assets,” she said. “Unlike the US and Europe, where USD cash collateral settles on a T+0 basis, APAC markets due to time zone difference have a one-day lag to settle USD cash on T+1, resulting in an extra day of exposure and funding costs. Tokenised collateral solutions can alleviate this one day of funding costs, significantly lowering cost of collateral for the industry.”
The move toward tokenisation in APAC is likely to be cautious, with each regulator and market taking individual approaches and balancing investor protection needs with market freedom and innovation. “I think we’ll see tokenisation occurring alongside tradfi for decades yet – building new systems off to the side and seeing how they go,” Mr Tabb said. “There won’t be a landmark shift where everything is tokenised.”