Emma RadmoreNikhil Rathi has spoken on the volatility of capital markets and on how one small “blip” can have a significant ripple effect. He noted how things that used only to happen rarely now happen more frequently and that, overall both volatility and risk are on the rise.
He looked at some of the single glitches that have had catastrophic effect – whether the Crowdstrike cyber software patch or the risks that arise from a very small number of companies representing 50% of the FTSE 100 value, and investment management becoming heavily centralised in the largest firms, or the Big Tech firms that dominate the cloud and AI.
Capital markets can help manage volatility he said, first by nurturing liquidity, and second by moving to proactive regulation and a system guided by good outcomes. A new mindset towards risk is needed, together with investment in infrastructure. And finally, deep market engagement.