What’s Driving Change in Cleared and Uncleared Derivatives Markets and How Can Firms Future-Proof Their Collateral Ecosystems?

Capital markets have been through a tumultuous 2025 and the year is not yet even halfway over. In reaction to market uncertainty, volumes and volatility have soared as investors act amid an emerging global trade war. Meanwhile, regulatory change and technology innovations continue to accelerate the pace of market evolution.

This is particularly true for cleared and uncleared derivatives markets, which have ridden the crest of volatility and trading volumes while adapting to ongoing regulatory initiatives and emerging use cases for tokenization, digital assets, blockchain and AI. These trends are continually reshaping the clearing and collateral landscape—in turn, leading market participants to consider the changes they need to make to overcome today’s challenges and position for future opportunities.

Increasingly, banks, brokers and buy-side firms are assessing their technology strategies and current enablement in areas like collateral management and mobility, intraday risk monitoring, repos and securities lending, real-time analytics, standardization and digital assets. With more changes to come in 2025 and beyond, these organizations must size up their digital architecture, cloud enablement and how prepared they are to contend today while capitalizing on tomorrow.

The headline to 2025 has been market volatility. This seesawing turbulence has led to frenzied trading sessions, driven primarily by tariffs, retaliatory tariffs and a general upheaval in global trade policy entrenched over decades—but also macro trends like interest rate uncertainty and inflation. In turn, clearing volumes have exploded, especially as more asset classes become centrally cleared and investors utilize derivatives as trading or hedging instruments:

• The Depository Trust & Clearing Corporation (DTCC) announced that its Fixed Income Clearing Corporation (FICC) subsidiary processed over $11 trillion in U.S. Treasury transactions on April 9, 2025, marking the highest volume in FICC’s history. FICC processed 1.2 million transactions that day, a 23% increase from the previous peak of 978,000 transactions experienced just two days prior on April 7.
• LCH reported its credit default swaps (CDS) clearing house reached a notional cleared volume of in Q1 2025 that surpassed its total notional cleared volume for US and European CDS in all of 2024 ($952 billion). That included a record one-day notional cleared volume of €456 billion set on March 20, a 55% increase from the previous record on Sept. 20, 2024.
• Eurex reported a 14% rise in OTC clearing notional outstanding volumes in March of €38.8 billion. Average daily cleared volumes for interest rate swaps (IRS) surged by 149% and 109% for overnight index swaps. 
   

Regulation has been a primary driver of this change, steadily growing the scope of cleared products and clearing venues (ex., Uncleared Margin Rules now being fully phased in). One major upcoming regulatory milestone is the central clearing mandate for U.S. treasuries and repurchases, recently extended to come into force at the end of December 2026 for cash transactions and June 2027 for repos. Additional regulatory changes include EU EMIR 3 enforcement likely impacting clearing members by mandating active accounts for eligible derivatives, accelerated ISDA SIMM calibration and new UMR new mandates in Mexico, India and China.

Beyond that, markets themselves are evolving. T+1 settlement in North America has compressed post-trade processing times and created some logistical headaches for global investors as most of the rest of world’s capital markets look to align (e.g., EU and the UK timing T+1 implementation for October 2027). The rise of 24-hour trading is set to further revolutionize markets (with Nasdaq recently announcing its proposal to support 24/5 by 2026) and participant clearing operations. Additional change drivers also include:

• New margin methodologies with accelerated time to market
• Increased ETD volumes and need for intraday clearing metrics
• Cloud infrastructure, cloud-enabled data lakes and digital transformation
• Increased need for interoperability to solve platform fragmentation
• Global central counterparty clearinghouses (CCPs) implementing data lakes
• Collateral and liquidity optimization, portfolio margining
   

The confluence of change drivers, volatile markets and regulatory expansion has in turn raised a number of blockers to optimized operations. Scale, agility and efficiency are difficult to achieve when constricted by limited resources, outdated technology and/or lack of standardization. Variance and complexity lead directly to costs and market firms are looking at how new innovations can help solve these challenges, allowing them to optimize for today and future-proof for tomorrow.
 

Collateral management, for example, has been one area of experimentation and innovation. The exchange of collateral is an essential risk management mechanism. As the volume of exchanged collateral grows, so too does the value of streamlined and intelligent internal processes.

Many drivers are putting the focus on the collateral management function: new clearing programs are being implemented for emerging asset classes (like cryptocurrencies and crypto derivatives); more instruments are coming under central clearing mandates; uncleared derivatives positions are more likely to be covered by a CSA, increasing the volume of exchange collateral; and more margin is being collected— including crypto derivatives for which ISDA initial margin methodologies will apply.

What does this all mean for firms? There’s much greater emphasis on inventory transparency, collateral mobilization, risk management, optimization and automation. These capabilities are essential to reducing risks in all clearing environments, but particularly for bilaterally exchanged collateral, which can benefit most from standardization and operational simplification.

Firms need to know in real time what securities they have, which form is the most cost effective and how quickly collateral can be mobilized. Technology and tokenization have become key to transforming collateral management operations, enabling firms to enhance the speed and efficiency of collateral mobility while also aligning with future trends, like atomic settlement. Blockchain and distributed-ledger technology, for instance, both offer ways to simplify collateral flows, increase security and deliver capital and operational efficiencies.

Banks, brokers and buy-side are at a critical junction. The pace of change is accelerating and they must position their own operations to align with where the industry is decisively heading. While it’s too soon to predict exact timelines, innovative developments promise to alter the fundamentals of the collateral function. DTCC announced a digital collateral management platform in April. The blockchain-based platform is designed to leverage tokenized collateral management to increase mobility, liquidity and enable further digitalization of its clearing ecosystem. Other advances in the industry include:

• The Canton Network project (operated by blockchain solution provider Digital Asset), which has shown promise in helping to bring secure, public chain synchronization to disparate global systems: In 2024 Canton Network supported the five digital bond issuances on three separate platforms totaling more than $1.1 billion.
• Project Agorá, a group launched by Bank for International Settlements (BIS) to explore tokenization for wholesale-cross border payments. Eurex is participating along with the Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York.
   

Digital assets, blockchain and AI will be gamechangers in the clearing and collateral spaces. But first, firms must ensure they have the right technology in place to facilitate the scale and sophistication needed to support these new transformative tools and capabilities. While there is no predefined timeline, we can except an accelerated adoption of new technology and the time to prepare is now.

Collateral optimization—and overall modernization—requires robust and future-proofed technology infrastructure enabling cloud transformation, AI initiatives, data management, automation, intraday analytics and real-time monitoring. Businesses with siloed solutions, fragmented networks and manually intensive systems may struggle to realize the potential of capital markets technology in improving their operations, resiliency and risk management.

Assessing technology readiness is vital, as the collateral and clearing functions need optimization at every step of trade lifecycle. To set the best foundation for operational efficiency and change management, modern platforms need to offer:

• Integrated cross-asset support combining risk, clearing, collateral, inventory management and post-trade processing
• Intraday updates, 24/7 clearing, “follow-the-sun” approach
• Tools designed for collateral optimization and client services
• Holistic coverage of collateral and margin use cases: UMR, OTC and ETD clearing; cross-margining enabler
• AI, cloud, agile upgrades and tokenized assets
• SaaS-enabled foundation for digital and cloud transformation
   

Market participants are faced with reality they need to modernize, and quickly. But intensive change efforts require resources and expertise that firms would ideally direct toward core competencies and revenue-creating activities. Modernization will place new demands on firms that must then balance change with their day-to-day operations.

That makes vendor relationships and client community all the more important. The right partner not only provides firms with leading capital markets technology but also the knowledge, experience and R&D investment they need to drive true modernization and cloud transformation, as well as forums to connect with their peers.

Nasdaq Financial Technology is helping firms achieve these outcomes with Nasdaq Calypso, an integrated cross-asset, OTC and ETD clearing solution that includes trade connectivity, processing, collateral management and optimization, margin calculation and reconciliation.

Beyond functionality, we’re providing clients with a pathway to modernization and digital assets readiness through a fully managed SaaS offering that delivers security, operational agility, continuous innovation and cloud enablement with optimized total cost of ownership (TCO). To learn more about Nasdaq Financial Technology, follow here.