October 19, 2023


The prospects for a robust recovery of the world’s economy still remain dim, according to the UN’s World Economic Situation and Prospects: June 2023, due to stubborn inflation, rising interest rates and heightened economic and geopolitical uncertainties. 


Of course all these factors remain true, but what if we take a deeper look at specifically how capital markets infrastructure providers (CMIPs) are impacting growth? 

A well-functioning and high-growth economy needs to be backed by adequate and efficient infrastructure, according to a study of the capital market infrastructure in Asia Pacific, reminding us that, “[i]nfrastructure provides the networks that facilitate trade and exchange, increase output capacity, reduce congestion, improve productivity, and lower public and private transaction costs.”

Is legacy infrastructure in capital markets impacting the growth of national economies?

There are two recent examples, however, where the infrastructure behind trading technologies has done the exact opposite of protecting growth as it has endured considerable constraints in the face of events and approaching trends.

Collapse of crude oil

The first example occurred in April 2020, when US crude oil futures collapsed below $0 in the midst of a pandemic-induced oversupply. The inflexibility of legacy tech meant that systems could only deal in positive numbers and were entirely unable to process negative numbers. Any attempt to input negative numbers ran the risk of crashing the entire system.


The underlying difficulty was due to the fact that the legacy systems of financial market infrastructures were designed in the interests of speed and cost, keeping the architecture simple and robust. Moreover, it was unthinkable at the time of their development that oil prices would go below zero or sterling could dip below the dollar. “It’s like trying to explain something that is unprecedented and seemingly unreal,” Louise Dickson, oil markets analyst at Rystad Energy, remarked to Reuters at the time. 


While work-arounds have subsequently been attempted, there is no guarantee that these complex problems can be adequately solved. In fact, whenever stock exchanges do need to implement something new, they have to be extremely careful that changes do not have unintended ramifications elsewhere in the system. Instances have been known in the past where alterations have resulted in extremely large consequences occurring very far from the original point of change – sometimes even in a completely different organisation.

Digitised securities trading

A second example is the increasing popularity of trading digitised securities. Previously, only whole quantities of traditional securities could be traded, yet digitised securities are generally traded in fractions. This trading of fractional quantities has enormous implications for legacy technology trading anything but FX, simply because the data fields for quantities were not designed to handle decimals at all, and price generally limited to two decimals. 


Furthermore, when trading digital securities, infrastructure needs to possess the ability to be integrated into completely different settlement and custody systems – a hugely complicated task when it comes to dealing with legacy technology.

Don’t hold back

Put bluntly, the creaking legacy infrastructure behind our financial exchanges is increasingly unable to cope with modern-day demands. One possible solution would be to spend the majority of investment budget on maintaining legacy infrastructure. Yet can CMIPs honestly convince themselves that this approach is indeed good enough to securely back a well-functioning and high-growth economy – especially at a time when the world needs it most?


Alternatively a new approach can be considered. Modern infrastructure can be adopted, such as a continuous SaaS delivery platform built in a modular fashion. This technology is light to deploy and flexible, and can rapidly scale, providing quicker time-to-market and a better approach to managing risk. Companies can, therefore, take advantage by starting small, testing the market, innovating, pivoting, and eventually, scaling. Further, these technologies can be deployed in parallel with existing legacy systems, allowing an innovative, low-risk, short time-to-market approach to exploring both new asset classes and products, as well as new technologies. 


It’s never too late to start. The world’s economy depends on it. 

For more information

Why Flexibility is Key for the Upcoming EU DORA Regulation

Ever-increasing digitalisation is propelling the world of financial services to act faster and do more than ever before. One side effect of this is the increased risk posed by the failure of critical suppliers. This is the reason EU regulators have introduced the Digital Operational Resilience Act (DORA), which will implement uniform rules for financial entities on operational resilience throughout the EU.

Recent European Elections and Their Implications on Capital Markets

The elections for the European Parliament, held between 6th and 9th of June, could end up significantly impacting capital markets on the continent. This juncture could have the effect of reshaping regulatory landscapes, influencing market stability and altering cross-border economic activities.

Let’s talk

We are looking forward to hearing from you and one of our team members will be in touch.

Let’s talk

We are looking forward to hearing from you and one of our team members will be in touch.

Want to partner with us?

Try our sandbox

Please fill out this form and we will grant you sandbox access shortly


Full-Stack Developer

Please fill out this form and attach your CV, we will get in touch with you shortly