WEBVTT - BlackRock on Crypto, Tokenization and Future ETFs 0:00:01.160 --> 0:00:06.040 Exchange traded funds are continuing their unstoppable trajectory across global 0:00:06.040 --> 0:00:11.280 financial markets, fundamentally reshaping how capital is allocated, but the 0:00:11.280 --> 0:00:15.520 way investors use them is shifting rapidly. No longer simply 0:00:15.600 --> 0:00:19.440 viewed as a vehicle for broad passive exposure, ETFs are 0:00:19.440 --> 0:00:23.680 increasingly being deployed by both institutional and retail investors to 0:00:23.800 --> 0:00:28.440 express nimble and tactical views and navigate volatile market environments. 0:00:29.120 --> 0:00:31.720 So what are the new innovations driving the next wave 0:00:31.760 --> 0:00:35.199 of ETF adoption and how does Asia fit into this 0:00:35.280 --> 0:00:40.120 evolving global landscape. You're listening to Asia Centric from Bloomberg Intelligence. 0:00:40.520 --> 0:00:43.680 I'm John Lee in Hong Kong. Joining us today is 0:00:43.720 --> 0:00:47.440 Samara Cohen, global head of market Development at black Rock, 0:00:48.080 --> 0:00:51.520 Nicholas Peach, head of APAC I Shares, and we also 0:00:51.560 --> 0:00:55.600 have Rebecca sin head of APAC Funds Research for Bloomberg Intelligence, 0:00:55.800 --> 0:00:58.680 as a special co host. All three are dialing in 0:00:58.760 --> 0:01:04.679 directly from I shared is ETF Certification conference in Singapore. Samara, Nicholas, Rebecca, 0:01:04.840 --> 0:01:05.720 welcome to the show. 0:01:05.760 --> 0:01:07.800 Thank you, thank you, thank you for having us. 0:01:08.720 --> 0:01:11.840 Rebecca, can you set the stage, just give us some numbers, 0:01:11.920 --> 0:01:16.080 just how big is the global ETF industry and also 0:01:16.120 --> 0:01:16.600 in Asia. 0:01:17.120 --> 0:01:20.720 So the ETF industry has skyrocketed. We're now globally at 0:01:20.720 --> 0:01:23.560 more than twenty two trillion dollars and in Asia Pacific 0:01:23.600 --> 0:01:26.039 alone we're at two point five trillion dollars, So that's 0:01:26.080 --> 0:01:30.040 a lot of money that's going into ETF. Bloomerig Intelligence 0:01:30.200 --> 0:01:32.440 estimates that by twenty thirty five we're going to reach 0:01:32.480 --> 0:01:36.400 more than fifty trillion in assets, and that's only across ETFs. 0:01:36.400 --> 0:01:38.880 For mutual fund it's one hundred trillion, So that's a 0:01:38.920 --> 0:01:41.600 lot of money that's going into ETF's alone. But in 0:01:41.640 --> 0:01:44.720 Asia Pacific we're seeing tremendous growth. You're on hear from 0:01:44.840 --> 0:01:47.559 last year. Asia Pacific has grown the most at forty 0:01:47.600 --> 0:01:50.800 three percent in assets under management. Now, what's really unique, 0:01:50.800 --> 0:01:53.280 and that's why we thought we would record today in Singapore, 0:01:53.400 --> 0:01:56.720 is that Blackrock is hosting I believe their thirteenth annual 0:01:57.040 --> 0:01:59.960 I Shares certification, and this year it's very unique. They've 0:02:00.080 --> 0:02:02.080 change the color, they've changed the logo and it's called 0:02:02.240 --> 0:02:05.560 level Up because the investors have really leveled up to 0:02:05.680 --> 0:02:08.360 level two point zero. And with that, maybe we start 0:02:08.360 --> 0:02:10.760 with Nick, what are some of the key takeaways that 0:02:10.840 --> 0:02:12.960 you're hearing from investors and what do you want investors 0:02:13.000 --> 0:02:14.200 to know from the certification? 0:02:14.560 --> 0:02:18.040 Sure, thanks, Rebecca, Well, I think really one of the 0:02:18.120 --> 0:02:20.799 questions we are all trying to answer here as part 0:02:20.880 --> 0:02:24.320 of this certification event, you went over the numbers of 0:02:24.360 --> 0:02:27.120 how fast ETF usage is growing. You know, it's not 0:02:27.200 --> 0:02:30.640 just it's not just increasing, it's accelerating, and so one 0:02:30.639 --> 0:02:33.839 of the big questions we're answering is why is that right? 0:02:33.919 --> 0:02:39.040 Because despite the world looking very different and the financial 0:02:39.120 --> 0:02:41.880 rails that we operate on continuing to evolve, a lot 0:02:41.919 --> 0:02:45.679 about the ETF has not changed the transparency, the liquidity, 0:02:46.680 --> 0:02:50.000 and the access that it provides for investors. And yet 0:02:50.160 --> 0:02:52.880 you're still seeing this tremendous growth and these tremendous new 0:02:52.960 --> 0:02:54.760 use cases. And that's really what we're spending our time 0:02:54.800 --> 0:02:56.360 exploring here today over two days. 0:02:56.639 --> 0:02:59.560 And Smart you mentioned this morning in your speech about 0:02:59.600 --> 0:03:01.519 the ETA and how it's a different vehicle. Maybe you 0:03:01.560 --> 0:03:03.200 can share some of your thoughts from this morning. 0:03:03.720 --> 0:03:04.000 Yeah. 0:03:04.040 --> 0:03:07.040 Absolutely, And Rebecca, I have to say I love that 0:03:07.120 --> 0:03:11.679 you noticed our new brand identity. In addition to kind 0:03:11.720 --> 0:03:14.200 of the visual impact of it, the thing I like 0:03:14.320 --> 0:03:17.440 best is the tagline we're using for I shares globally, 0:03:17.520 --> 0:03:21.040 which is the market is yours. And the reason I 0:03:21.080 --> 0:03:23.600 love that is I think the reason ETFs have been 0:03:23.639 --> 0:03:27.760 so successful is that they give investors the confidence to 0:03:27.840 --> 0:03:31.079 participate in markets more so than they ever have before. 0:03:31.200 --> 0:03:33.400 And as you heard me mention earlier, I had the 0:03:33.440 --> 0:03:36.160 opportunity to speak at Bloomberg invest a few weeks ago 0:03:36.240 --> 0:03:38.960 in New York, and the president of the New York 0:03:38.960 --> 0:03:42.760 Stock Exchange, my friend Lynn Martin, called ETFs the most 0:03:42.800 --> 0:03:47.800 important innovation in financial technology of the past quarter century. 0:03:48.680 --> 0:03:50.520 I totally agree with her. I think it was much 0:03:50.520 --> 0:03:52.640 cooler coming from her than it would have been coming 0:03:52.680 --> 0:03:55.400 from us. But I think the reason it's so important 0:03:55.520 --> 0:04:00.760 is that ETFs have enabled so much broader participation markets. 0:04:01.120 --> 0:04:03.840 I think what I love about ETF is, ultimately it's 0:04:03.840 --> 0:04:05.680 a lego block. It's a building block that you can 0:04:05.760 --> 0:04:09.320 use to create almost anything that you can imagine. And 0:04:09.520 --> 0:04:12.440 this is the thirteenth annual I Share certification, but I've 0:04:12.480 --> 0:04:15.440 been attending pre COVID, so I was in one of 0:04:15.480 --> 0:04:18.440 the early adopters of this, and what was interesting was 0:04:18.440 --> 0:04:20.839 that when we first had the I Share certification. It 0:04:20.920 --> 0:04:23.880 was about what is an ETF, how do you use it? 0:04:24.520 --> 0:04:26.760 Why is it a wrapper? We were having a conversation 0:04:26.760 --> 0:04:29.560 about ETF versus mutual fund. But I think right now 0:04:29.760 --> 0:04:31.560 we're at level two point zero and maybe Nick, you 0:04:31.560 --> 0:04:33.960 can share some of the stats on the growth that 0:04:34.000 --> 0:04:35.520 you've seen in the survey that you guys did and 0:04:35.560 --> 0:04:36.440 what you were surprised by. 0:04:36.560 --> 0:04:39.080 Absolutely, and you couldn't be more right. 0:04:39.520 --> 0:04:42.560 We do attendee survey before the event and one of 0:04:42.600 --> 0:04:45.200 the questions is how familiar are you with ETFs, And 0:04:46.040 --> 0:04:49.240 this year seventy percent of the attendees said they were 0:04:49.279 --> 0:04:52.760 either had a good understanding of ETFs or an excellent 0:04:52.880 --> 0:04:54.200 understanding of ETFs. 0:04:54.440 --> 0:04:56.600 So the days of ETF one oh one are gone. 0:04:56.760 --> 0:04:58.640 And you know, I think you use the term lego block, 0:04:58.640 --> 0:05:02.080 we use the term toolkit. Or they've gone from exposure 0:05:02.160 --> 0:05:06.480 vehicles to really a core tool in how investors are 0:05:06.480 --> 0:05:08.920 constructing their portfolios today, no matter what it is they're 0:05:08.920 --> 0:05:09.320 trying to do. 0:05:10.120 --> 0:05:13.640 So I think if we look at ETFs, there's practically 0:05:13.680 --> 0:05:18.240 an ETF about everything now, active, passive, crypto, fixed income. 0:05:18.240 --> 0:05:20.440 Maybe we can share what you're seeing from investors. 0:05:20.760 --> 0:05:24.080 I'm happy to and I'm dating myself here, but still 0:05:24.120 --> 0:05:27.520 sticks in my head. Apple had a campaign when they 0:05:27.520 --> 0:05:30.040 released the iPhone three G called there's an app for that, 0:05:30.760 --> 0:05:33.440 And every time I think of ETFs these days, I think, well, 0:05:33.440 --> 0:05:34.400 there's an ETF for that. 0:05:34.520 --> 0:05:36.080 Right For a portfolio use case. 0:05:36.680 --> 0:05:40.960 To give you some specific examples, I think when investors 0:05:41.000 --> 0:05:44.640 build portfolios, they always have a certain amount of their 0:05:44.640 --> 0:05:49.400 assets in cash, right, whether it's for liquidity purposes or 0:05:49.880 --> 0:05:52.520 whether it's because they've just received more money from investors. 0:05:53.240 --> 0:05:56.000 And historically that cash has just sat in a bank 0:05:56.040 --> 0:06:00.880 account at a custodian and earned frankly somewhat inspiring rate 0:06:00.920 --> 0:06:04.839 of return. But now what we've seen is an incredibly 0:06:04.839 --> 0:06:10.080 popular strategy is that cash now gets deployed into an ETF, 0:06:10.120 --> 0:06:13.440 into an ultra short duration treasure ETF, for example, which 0:06:13.440 --> 0:06:17.640 in very popular products. And that's because you know, interest 0:06:17.720 --> 0:06:22.200 rates are non zero, portfolio construction is very competitive, every 0:06:22.279 --> 0:06:25.480 basis point matters, and the ability to deploy capital quickly matters, 0:06:26.040 --> 0:06:28.760 and so in the fixed income space, that's one of 0:06:28.800 --> 0:06:32.720 the use cases we've seen. There's also the access story, right, 0:06:32.920 --> 0:06:35.359 you've your referenced digital assets. I mean, I think you 0:06:35.400 --> 0:06:38.200 know our Bitcoin strategy is a tremendous example of where 0:06:38.200 --> 0:06:40.480 an ETF is providing access to an asset class that 0:06:40.600 --> 0:06:41.920 was really difficult. 0:06:41.520 --> 0:06:42.640 To access previously. 0:06:43.040 --> 0:06:46.159 But also as that ecosystem evolves, now there's a way, 0:06:46.200 --> 0:06:49.320 for example, to get exposure to staked ethereum, which is 0:06:49.360 --> 0:06:52.120 a very different bet on you know how you would 0:06:52.160 --> 0:06:56.479 approach digital assets. And then finally what we term as 0:06:56.800 --> 0:07:01.520 outcome or active ETFs. So if you like your portfolio, 0:07:01.760 --> 0:07:04.560 you like your exposures, but you'd like a little bit 0:07:04.560 --> 0:07:08.360 of extra yield, perhaps some downside protection. Previously you really 0:07:08.400 --> 0:07:11.000 just had to use derivative options to do that, but 0:07:11.120 --> 0:07:14.520 now it's expressible in the ETF wrapper in a very 0:07:14.560 --> 0:07:16.920 cost efficient, liquid way. So those are just a few 0:07:16.920 --> 0:07:20.360 examples of those options. Those tools in your toolkit just 0:07:20.360 --> 0:07:21.680 didn't exist previously. 0:07:21.840 --> 0:07:24.600 I think another thing that's interesting is that there's literally 0:07:24.640 --> 0:07:26.920 an ETF for everything. So for instance, you mentioned the 0:07:26.960 --> 0:07:31.160 defined outcome the strategy, and now it's very very popular. 0:07:31.240 --> 0:07:33.600 Whether you're in the retirement phase or if you're building 0:07:33.600 --> 0:07:35.960 your wealth, you can find a product that's suitable for you. 0:07:36.360 --> 0:07:39.200 And if we look across the fun flows, we've hit 0:07:39.400 --> 0:07:42.280 record numbers this year and last year we've hit record 0:07:42.320 --> 0:07:46.320 numbers and assets under management, record launches, and record fund flows, 0:07:46.520 --> 0:07:48.240 and so it just shows you that the adoption is 0:07:48.280 --> 0:07:52.120 growing significantly across the board. Whether you're an investor that's 0:07:52.160 --> 0:07:54.600 just starting to use ETF or an investors that is 0:07:54.640 --> 0:07:58.840 approaching retirement, there's really an adoption for everyone somorrow. 0:07:58.880 --> 0:08:03.760 I also saw you at the Gloomberg invest but via video. 0:08:04.160 --> 0:08:06.160 I did see you talk a lot about the innovations, 0:08:06.160 --> 0:08:09.720 and Nick mentioned quite a few new atfs. He mentioned bitcoin, 0:08:09.800 --> 0:08:13.640 fixed income ETFs, digital assets. Where are the most exciting 0:08:13.760 --> 0:08:16.320 piece of innovation in ATFS going forward? 0:08:17.480 --> 0:08:21.240 Well, I think the most exciting innovations are the ones 0:08:21.520 --> 0:08:25.200 Rebecca said, building blocks. Nick said, tools in the toolkit. 0:08:25.600 --> 0:08:28.880 I think of VTF says portfolio infrastructure. I'm kind of 0:08:28.920 --> 0:08:32.360 a market plumber by trade. I think what is the 0:08:32.360 --> 0:08:37.040 most interesting right now is ETFs that help construct the 0:08:37.160 --> 0:08:42.680 most resilient, relevant portfolios for the macro and market environment 0:08:42.760 --> 0:08:46.240 that we're in right now, and also, to Rebecca's point, 0:08:46.880 --> 0:08:50.040 really help do that in a way that individual investors 0:08:50.080 --> 0:08:56.280 can customize for their specific time horizons. Liquidity needs risk tolerance, 0:08:56.600 --> 0:08:59.200 and I think that's important because there's a lot of 0:08:59.360 --> 0:09:02.560 like pype and flash in terms of what can go 0:09:02.720 --> 0:09:06.400 into an ETF, and certainly bringing my global perspective to this, 0:09:06.559 --> 0:09:10.160 I think looking at the huge product proliferation that has 0:09:10.240 --> 0:09:15.200 characterized the US ETF landscape, I don't think that's necessarily 0:09:15.600 --> 0:09:19.520 what should get investors the most excited about ETFs. On 0:09:19.559 --> 0:09:23.760 the forward, what's important is ETFs that offer ways to 0:09:24.320 --> 0:09:29.120 better access the bond market, historically extremely hard for individual 0:09:29.120 --> 0:09:32.959 investors to access, particularly in a diversified way. So one 0:09:32.960 --> 0:09:35.480 of the things that's quite interesting for me being here 0:09:35.640 --> 0:09:39.600 in Singapore and just visiting the Asia region overall, is 0:09:39.600 --> 0:09:43.360 that you have a set of sophisticated investors who are 0:09:43.480 --> 0:09:46.680 accelerating their use of ETFs with a lot of the 0:09:46.800 --> 0:09:50.520 global learnings that are in place from other markets, and 0:09:50.559 --> 0:09:54.680 so in particular, the expertise that the industry has developed 0:09:54.679 --> 0:09:59.120 with respect to fixed income ETFs is incredibly exciting at 0:09:59.120 --> 0:10:02.599 this moment in time. And to your point, the bitcoin 0:10:02.800 --> 0:10:06.760 ETPs also, and I should say, you know, when we 0:10:06.800 --> 0:10:09.439 think about doing something into itive, we always start with 0:10:09.520 --> 0:10:12.480 what's the investment thesis? And for us, we really became 0:10:12.600 --> 0:10:16.840 convinced four or five years ago that allocations to bitcoin 0:10:16.960 --> 0:10:20.640 could be an uncorrelated source of return, a diversifier, and 0:10:20.720 --> 0:10:23.800 a portfolio. That's the type of thing that's really exciting 0:10:23.880 --> 0:10:27.400 for us to be able to provide in a portfolio toolkit. 0:10:28.120 --> 0:10:31.400 So maybe if we go off the piping of it. 0:10:32.200 --> 0:10:34.600 There's been a lot of talk about tokenization of ETFs, 0:10:34.640 --> 0:10:35.720 how do you see that evolving? 0:10:36.559 --> 0:10:41.760 Well, tokenization of ETFs is ah and tokenization of equities, 0:10:41.800 --> 0:10:46.160 I should say broadly, is a very live conversation, particularly 0:10:46.440 --> 0:10:50.920 in the United States, and I think what's important first 0:10:50.920 --> 0:10:53.839 to level set is, given how much people are talking 0:10:53.920 --> 0:10:57.400 about tokenization, it's helpful to just look at how big 0:10:57.440 --> 0:11:01.480 the tokenized financial asset market is right now. So crypto 0:11:01.559 --> 0:11:04.800 assets overall are about three trillion US dollars, and of 0:11:04.800 --> 0:11:08.640 course bitcoin is the dominant piece of that. Digital cash, 0:11:08.679 --> 0:11:12.040 which is largely stable coins, is about three hundred billion dollars. 0:11:12.440 --> 0:11:16.960 Tokenized financial assets are actually only thirty billion dollars twenty 0:11:17.000 --> 0:11:20.440 five to thirty billion dollars, so it's like one one 0:11:20.600 --> 0:11:24.600 thousandth of the size about of the ETF market. So 0:11:24.760 --> 0:11:28.040 it's important to kind of level set that were early 0:11:28.120 --> 0:11:33.079 stages in tokenization, but the primary use case right now 0:11:33.120 --> 0:11:37.760 for tokenized equities and ETFs. Interestingly, isn't the investor who's 0:11:37.800 --> 0:11:41.480 currently in ETFs or equities, it's the investor who is 0:11:41.600 --> 0:11:45.600 largely living their financial life on chain. So this growing 0:11:45.720 --> 0:11:49.439 cohort of digital native investors who've largely been in crypto, 0:11:49.559 --> 0:11:52.560 who actually want to diversify out of crypto and into 0:11:52.559 --> 0:11:54.000 traditional financial assets. 0:11:54.760 --> 0:11:56.600 Nick, I see you nodding your head. You are the 0:11:57.120 --> 0:12:00.800 I Shares crypto expert. What can you share, oh about 0:12:00.800 --> 0:12:02.000 what Tomorrow has just said? 0:12:02.280 --> 0:12:03.480 Well, I think you know. 0:12:03.600 --> 0:12:07.320 ETFs have always been about access fundamentally, and it's a 0:12:07.360 --> 0:12:11.720 really interesting new spin on access. Right we've talked a 0:12:11.720 --> 0:12:16.440 lot about giving traditional finance investors access to new exposures 0:12:16.440 --> 0:12:18.240 and new outcomes that they didn't have before. That's the 0:12:18.280 --> 0:12:22.360 ETF right, that's today's token in my view. But when 0:12:22.360 --> 0:12:25.040 we start talking about the primary use cases, it's actually 0:12:25.080 --> 0:12:27.560 the other way around. And so smart used did something 0:12:27.640 --> 0:12:30.480 very interesting earlier today, when it's a very different conversation 0:12:30.600 --> 0:12:33.920 talking to a portfolio builder about allocating, you know, a 0:12:33.960 --> 0:12:37.840 couple of percent of their portfolio to bitcoin, versus talking 0:12:37.840 --> 0:12:41.720 to someone who's one hundred percent cryptonative allocating ten percent 0:12:41.720 --> 0:12:44.880 of the portfolio to global equities, right. But what this 0:12:44.960 --> 0:12:48.199 technology is enabling both ways is access for a different 0:12:48.320 --> 0:12:52.000 vestor bases to access things that they couldn't before. And fundamentally, 0:12:52.040 --> 0:12:54.680 whether it's a token or whether it's an ETF, that's 0:12:54.720 --> 0:12:56.520 what we're talking about here, right, it's a technology that 0:12:56.600 --> 0:12:57.680 enables the access. 0:12:58.559 --> 0:13:00.280 So maybe going back to you tomorrow, So if you 0:13:00.320 --> 0:13:03.000 think of the future of investing, do you see tokenization 0:13:03.240 --> 0:13:06.400 in digital coasts impacting the traditional finance world. 0:13:07.840 --> 0:13:10.560 Absolutely, that would be the aspiration. I mean, at the 0:13:10.600 --> 0:13:13.480 end of the day, our hope is to have bigger 0:13:13.800 --> 0:13:19.360 capital markets, so more investments available to more investors. And 0:13:19.440 --> 0:13:22.600 what tokenization has the potential to do is to make 0:13:22.760 --> 0:13:26.920 investible broader parts of the market and to make it 0:13:26.960 --> 0:13:31.040 accessible to more and more investors. I think getting from 0:13:31.200 --> 0:13:33.480 point A to point B is going to be an 0:13:33.520 --> 0:13:37.880 incredibly interesting period where we likely see integration of traditional 0:13:37.920 --> 0:13:41.400 markets with on chain markets. I like to say that 0:13:41.520 --> 0:13:44.880 we'll know that this has happened successfully where we're not 0:13:44.960 --> 0:13:50.160 talking about tokenization anymore at conferences. It's just how markets work. 0:13:50.559 --> 0:13:53.280 But the promise of tokenization, and I think it's a 0:13:53.320 --> 0:13:55.920 good test to think if we could go back and 0:13:56.480 --> 0:14:01.120 build capital markets anew with distributed ledger tech technology. We 0:14:01.200 --> 0:14:05.720 would utilize it because it would give us features, transparency, 0:14:06.240 --> 0:14:09.880 and the ability for more to participate than our kind 0:14:09.920 --> 0:14:12.120 of current intermediated structure does. 0:14:12.880 --> 0:14:14.400 And if I may add, one of I think the 0:14:14.440 --> 0:14:19.120 most encouraging signs of tokenization, you know, having long term promise, 0:14:19.360 --> 0:14:24.280 is that despite the orders of magnitude difference of size 0:14:24.640 --> 0:14:28.800 between the crypto markets, the tokenization markets, and the traditional 0:14:28.800 --> 0:14:33.760 financial markets, you are already seeing traditional financial markets evolve 0:14:34.200 --> 0:14:38.920 by shortening settlement cycles, by extending trading hours. And this 0:14:38.960 --> 0:14:41.160 is the merging that I believe Tomorrow was referring to, 0:14:41.440 --> 0:14:44.440 is that it may be a while until we see 0:14:44.440 --> 0:14:48.720 these fully digital rails, but those innovations are spurring competition 0:14:48.760 --> 0:14:51.920 effectively in the traditional finance space, so everyone is benefiting 0:14:51.920 --> 0:14:52.320 from that. 0:14:52.320 --> 0:14:53.400 At scale already. 0:14:54.320 --> 0:14:56.880 Nick, I'm not a tokenized expert by any stretch of 0:14:56.880 --> 0:14:59.440 the means. I want to note, like a really simple question, 0:15:00.040 --> 0:15:02.840 what will be the benefit of buying equities in a 0:15:02.880 --> 0:15:06.120 tokenized form versus currently? 0:15:07.160 --> 0:15:09.080 So Nick, and I'm going to answer this first because 0:15:09.080 --> 0:15:11.480 I'm going to give you Nick's answer because I know it. 0:15:13.080 --> 0:15:17.360 Nick's answer is it has to be new or it 0:15:17.400 --> 0:15:20.360 has to be better. Okay, And how I have always 0:15:20.400 --> 0:15:23.080 answered the question is for an investor who's currently in 0:15:23.200 --> 0:15:27.520 equities to want to consider tokens, those tokens need to 0:15:27.760 --> 0:15:30.280 give them something that they don't get in their equities, 0:15:30.800 --> 0:15:34.360 or give them utility that they don't have through the 0:15:34.440 --> 0:15:38.320 way they're currently accessing their equities. So, for example, utility 0:15:38.360 --> 0:15:41.400 could be twenty four to seven trading. To be fair, 0:15:41.520 --> 0:15:45.000 you don't need tokenization to get twenty four to seven trading. Indeed, 0:15:45.080 --> 0:15:49.640 many exchanges are expanding trading hours without it. However, things 0:15:49.800 --> 0:15:55.800 like collateral utility, being able to exchange your portfolio in 0:15:55.920 --> 0:15:59.160 a peer to pure way, those are new forms of utility, 0:15:59.160 --> 0:16:01.680 and I think we're in early days of seeing how 0:16:01.800 --> 0:16:06.600 investors value that. Or, as we were talking about before, 0:16:06.720 --> 0:16:10.720 tokenization will bring investability to parts of the market that 0:16:10.800 --> 0:16:11.840 haven't had it before. 0:16:12.880 --> 0:16:14.960 Okay, I think that's really interesting what you mentioned that 0:16:15.080 --> 0:16:19.600 tokenization is improving, you know, the functionality and the competitiveness 0:16:19.640 --> 0:16:23.120 of current financial markets like equities, but you also mentioned 0:16:23.160 --> 0:16:27.160 something really interesting like twenty four hour trading that's becoming 0:16:27.360 --> 0:16:30.840 a big topic in Asia. The US is planning to 0:16:30.880 --> 0:16:33.880 move to twenty four or twenty three hour trading for 0:16:34.240 --> 0:16:38.080 US stocks going forward. Can you explain why are the 0:16:38.160 --> 0:16:40.040 regulaties pushing. 0:16:39.640 --> 0:16:44.240 This well, I actually think it's been the infrastructure players, 0:16:44.280 --> 0:16:47.400 the exchanges who have pushed it more than the regulators. 0:16:47.560 --> 0:16:50.800 The regulators have supported it, Nick said a couple of 0:16:50.800 --> 0:16:55.320 minutes ago he thought it was competition with the crypto exchanges. 0:16:55.400 --> 0:16:57.120 I think that's a fair way to look at it. 0:16:57.160 --> 0:16:59.760 I like to think of it as just an overall 0:17:00.040 --> 0:17:05.600 leveling up of market structure. But the traditional stock exchanges 0:17:05.720 --> 0:17:10.679 have certainly observed the utility, particularly for example, over the 0:17:10.720 --> 0:17:13.399 past couple of months, as we've seen on the weekends, 0:17:13.440 --> 0:17:18.800 things like perpetual futures contracts trade in significant volume. That 0:17:18.840 --> 0:17:23.760 creates a real extentive for exchanges to expand their trading windows. 0:17:24.119 --> 0:17:26.280 So that's a very big part of it. 0:17:26.520 --> 0:17:28.439 A weekend feels like a long time now in this 0:17:28.640 --> 0:17:32.399 current news cycle, right, I mean, Monday morning and Friday 0:17:32.400 --> 0:17:36.080 afternoon have never seen further apart as an investor, so 0:17:36.520 --> 0:17:38.680 you know, you can certainly see it being demand driven, 0:17:38.720 --> 0:17:41.639 as the need to be able to invest while the 0:17:41.680 --> 0:17:44.800 news is happening, not just on Monday morning when the 0:17:44.800 --> 0:17:45.479 market opens. 0:17:46.160 --> 0:17:49.720 Now, these plans targeting the Asian retail investor, because the 0:17:49.880 --> 0:17:53.960 concern you have with many regional exchanges here is that 0:17:54.440 --> 0:17:57.600 Asian retail will just going forward be trading the MAG 0:17:57.680 --> 0:18:00.439 seven instead of the stocks on their own local bulls. 0:18:00.520 --> 0:18:01.480 What do you say to that? 0:18:02.480 --> 0:18:04.680 I think, you know, when we look at our business, 0:18:04.680 --> 0:18:07.959 for example, the I shares business globally, we have seventeen 0:18:08.040 --> 0:18:11.359 hundred over seventeen hundred products globally, so somewhere globally there 0:18:11.400 --> 0:18:14.480 is likely an exposure that an investor wants. We still 0:18:14.480 --> 0:18:16.800 have a very active and growing local lines business, so 0:18:16.840 --> 0:18:20.200 where we issue ETFs on local exchanges, and the reason 0:18:20.240 --> 0:18:24.840 for that is that there are reasons that investors want 0:18:24.840 --> 0:18:27.960 to invest in their home region. Right. There are exposures 0:18:28.000 --> 0:18:31.960 that only really appeal to the Asian investor really historically, 0:18:32.320 --> 0:18:35.399 and so the MAG seven isn't going to give you 0:18:35.960 --> 0:18:41.760 exposure to Taiwan semiconductor stocks or Korea or any you 0:18:41.760 --> 0:18:44.360 know a lot frankly of the ai supply chain for example. 0:18:44.440 --> 0:18:46.360 And so there's very much. 0:18:46.200 --> 0:18:49.960 Still a case for these local exposures and these local 0:18:50.040 --> 0:18:53.240 boreses and trading hours. Right while the exchanges may be 0:18:53.320 --> 0:18:55.840 in the US, you know, the global economy is global, 0:18:55.960 --> 0:18:56.560 so to speak. 0:18:57.400 --> 0:18:58.320 If I could add. 0:18:58.080 --> 0:19:01.280 Two things to Nick's answer, which I totally agree with. First, 0:19:02.359 --> 0:19:05.800 I think the exchanges are responding to a just general 0:19:05.960 --> 0:19:12.080 diversifying of participation, and that's retail investors more broadly, and frankly, 0:19:12.160 --> 0:19:14.800 a lot of retail investors who are participating in the 0:19:14.840 --> 0:19:17.920 market directly want to do that, like over the weekend 0:19:18.040 --> 0:19:20.359 when they have time to focus, or at the end 0:19:20.400 --> 0:19:23.720 of the day like they actually have day jobs. I 0:19:23.720 --> 0:19:26.960 think the really open question from a market structure perspective 0:19:27.000 --> 0:19:30.600 is what does this actually do to aggregate liquidity If 0:19:30.720 --> 0:19:32.960 we get through the first year of this and look 0:19:33.160 --> 0:19:37.800 and liquidity that existed in a tighter time frame has 0:19:37.880 --> 0:19:42.040 simply been spread out through a longer time frame. I 0:19:42.080 --> 0:19:46.360 don't think that will be necessarily a step forward for markets, 0:19:46.400 --> 0:19:50.040 But the hope is that this will actually bring more 0:19:50.119 --> 0:19:54.120 investors and be accreative to liquidity over the longer term. 0:19:54.119 --> 0:19:56.040 But those are the things that will be really important 0:19:56.040 --> 0:19:58.400 to measure as this starts to go live, I think. 0:19:58.400 --> 0:20:00.639 And nothing that's interesting that you mentioned this morning was 0:20:00.680 --> 0:20:03.919 that the twenty three to five actually came from the 0:20:04.040 --> 0:20:08.040 digital asset aspect where their exchanges didn't close. Could you 0:20:08.080 --> 0:20:09.080 share some more thoughts on that. 0:20:09.160 --> 0:20:13.160 Yeah, we call it crypto fomo. There is the expectation. 0:20:13.480 --> 0:20:15.760 And one of the things that was actually quite interesting 0:20:15.920 --> 0:20:19.840 about bitcoin price performance over the past year is that 0:20:19.920 --> 0:20:25.160 a lot of investors who expected bitcoin to behave as 0:20:25.280 --> 0:20:30.240 what we call a risk off asset, meaning if geopolitical 0:20:30.320 --> 0:20:36.600 risk was rising, bitcoin should appreciate, actually often experienced something different. 0:20:37.200 --> 0:20:41.600 When there was a geopolitical event that happened over the weekend, 0:20:42.119 --> 0:20:46.720 Bitcoin would sell off immediately. Why because it was the 0:20:46.760 --> 0:20:50.320 only thing people could sell on a Saturday night, and 0:20:50.400 --> 0:20:53.800 so clearly from an exchange perspective, seeing that volume and 0:20:53.840 --> 0:20:57.000 activity was happening in this twenty four to seven construct 0:20:56.800 --> 0:20:59.479 was a big incentive. And the interesting thing that we 0:20:59.520 --> 0:21:02.000 often saw with bitcoin in those moments is that it 0:21:02.000 --> 0:21:05.560 would have this immediate risk off behavior, meaning it would 0:21:05.640 --> 0:21:09.080 sell off, and then it would actually quickly rebound as 0:21:09.240 --> 0:21:12.320 investors kind of pivoted into the things they could sell 0:21:12.400 --> 0:21:14.320 longer term when the market's reopened. 0:21:14.640 --> 0:21:18.560 And just to share an anecdote, I think prior to 0:21:19.040 --> 0:21:21.800 the existence of bitcoin, I've been out in the region 0:21:21.840 --> 0:21:23.960 here for about seventeen years and used to work on 0:21:24.000 --> 0:21:27.560 the trading desk, and I can assure you that the 0:21:28.040 --> 0:21:31.560 Monday morning Asia time is a very busy time for 0:21:31.680 --> 0:21:34.320 every trading desk because prior to the ability to trade 0:21:34.359 --> 0:21:37.320 over the weekend, that was the first time the global 0:21:37.320 --> 0:21:42.320 investors could invest. And so Monday morning the Japan open 0:21:43.280 --> 0:21:45.840 used to be crazy if there was news over the weekend. Right, 0:21:45.880 --> 0:21:50.600 So there's very clearly this need to adjust portfolios based 0:21:50.600 --> 0:21:52.639 on news that comes in, and this is just another 0:21:52.680 --> 0:21:53.320 tool to do it. 0:21:53.960 --> 0:21:56.159 I can definitely relate coming from the trading days. You know, 0:21:56.240 --> 0:21:59.200 Monday morning you're all stuck in the dust right at 0:21:59.200 --> 0:22:01.600 the whatever market opens and can never be because of 0:22:01.640 --> 0:22:03.960 all the flow that came through, especially with Asia. You know, 0:22:03.960 --> 0:22:05.680 we always like the US and. 0:22:05.640 --> 0:22:09.480 So we're first up on Monday morning, So busy times, yes. 0:22:09.760 --> 0:22:12.639 Somorrow, Nick, Look, you mentioned a lot of innovations, but 0:22:12.680 --> 0:22:15.320 I got to ask you didn't mention one thing, And 0:22:15.359 --> 0:22:19.000 I'm dying to ask you, what about prediction markets? Is 0:22:19.040 --> 0:22:21.240 this going to be the next big thing for ATFS? 0:22:21.280 --> 0:22:22.320 What's your used there? 0:22:23.680 --> 0:22:27.919 Prediction markets are an incredibly interesting topic right now in 0:22:28.040 --> 0:22:30.719