The head of the world's largest stock exchange believes that the markets are facing a wave of financial technology start-ups seeking to enter the public markets. Lynn Martin, President of the New York Stock Exchange (Nyse), said at the „Money 20/20“ industry conference in Las Vegas that she could „not give a date“ for such a wave, as the entire IPO market was only just beginning to recover after a difficult phase. However, the improved overall economic environment, and the major interest rate cuts by the Federal Reserve in December, give reason to believe that the rush to the trading floor will be significantly stronger in the coming year than in the current one.

In the first nine months of 2024, initial public offerings in the US already raised significantly more than in the whole of last year: Consultancy firm EY calculates the volume at 27.3 billion dollars, compared to 22.2 billion dollars in 2023. Analysts at Bank of Montreal Capital Markets expect the value to be between 40 and 50 billion dollars next year.

„So far, it's mainly big names with a strong history of growth and profitability that are taking advantage of springtime, for IPOs and entering the market,“ said Martin. Fintechs, on the other hand, have suffered more from economic upheavals and are therefore still facing greater uncertainty. The strong economy will need to persist for the situation to ease – though she says that the US economy is in better shape than many consumers realise. „We are still paying far too high prices in the supermarket, but key sectors such as banking and manufacturing have been in good shape despite deep macroeconomic shocks,“ said Martin.

The economic environment is currently brightening further, while the markets are in a phase of tremendous disruptive innovation. Artificial intelligence (AI) also took centre stage at „Money 20/20“ as one of the key trends for the financial sector, which expects massive benefits in know-your-customer processes and fraud prevention. It also promises efficiency gains in areas such as credit underwriting.

According to Martin, AI has already been a key tool for the Nyse for ten years. It is used to screen the 750 billion electronic messages received by the exchange every day, including buy and sell orders, for unlawful activities.

Meanwhile, it remains hard to understand how inefficiently many parts of the capital market work. Martin pointed out that securities transactions in the United States have only been settled one day after the trade (T+1) since the middle of the year; previously, as is currently the case in Europe, it took two days and, until 2017, even three days.

Martin also notes the plans recently announced by the New York Stock Exchange to extend trading hours on its digital platform Nyse Arca to 22 hours five days a week, with a view to greater functionality.

The market operator is following the lead of the US central securities depository and counterparty DTCC (Depositary Trust and Clearing Corporation), which is able to offer full clearing of all trades during this period. „At some point we could move towards round-the-clock trading, but for now we want to make sure that the new system works,“ Martin emphasised.

In addition to technological innovations, the depth and liquidity of the US capital market enables a significant expansion of trading hours. Martin also sees the latter factors as a decisive reason for fintechs to enter the public markets. Those who list their shares create the conditions for more sustainable growth, and a more efficient use of capital in the long term, through buybacks or mergers and acquisitions. However, the outcome of the US elections and the consequences for the overall economic outlook remain an important factor for the further IPO activity of fintechs.