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From proof of concept to production scale
Feb 2025
Magnus Haglind, senior vice president and head of Capital Markets Technology at Nasdaq, sits down with Karl Loomes to discuss where traditional and emerging market models intersect, why liquidity and collateral remain the hard problems, and how extended trading hours are reshaping market structure
Image: Nasdaq
For much of the past decade, efforts to apply distributed ledger technology (DLT) to capital markets have focused on efficiency gains at the asset level.
According to Magnus Haglind, senior vice president and head of Capital Markets Technology at Nasdaq, that approach has often produced unintended consequences.
“We have seen a lot of attempts to find efficiencies using blockchain and DLT and basic tokenisation of assets as a way of achieving efficiencies and solving perceived inefficiencies in the transaction chain, from origination through to settlement, over the last 10 years,” he says.
In practice, many of these initiatives struggled to progress beyond pilots. “What has typically happened is that these have been proof of concepts or minimum-viable-product-style initiatives, which basically affected liquidity,” Haglind explains.
“It was the liquidity event first — for example around a bond or something that was tokenised — but then, based on limitations in eligibility, impacting access and liquidity provisioning around that particular asset, the bond effectively sat on that infrastructure until redemption.”
This resulted in fragmented ecosystems. “We have seen a siloed structure around these assets and, essentially, a lack of liquidity, which has hindered adoption,” he adds.
Liquidity, interoperability, and institutional scale
Haglind argues that the current phase of development looks materially different. Advances in underlying technology, combined with broader institutional participation, are beginning to address earlier structural limitations.
“What we are seeing now, with developments around layer-one platforms overall and the technology around them, is a much broader focus on interoperability,” he says. “There are also more places where you can typically tokenise and issue assets, plus the fact that some of the bigger custodians and institutions are now enabling liquidity to come to these assets.”
Institutional involvement, in particular, has changed the conversation. “When larger institutions get involved, they start addressing the problem of how to achieve and solve liquidity around them,” Haglind notes.
Alongside this, tokenisation is increasingly being explored as a means of supporting extended trading hours. “The second is tokenisation of assets to achieve 24/5 or 24/7 markets, particularly around securities,” he says.
Different structural models are emerging in parallel. Haglind outlines approaches ranging from traditional issuers becoming digital asset issuers themselves, to proxy-based models and private-market tokenisation initiatives.
The common theme, he suggests, is that trusted institutions are now engaging in these models in earnest.
Collateral cannot remain fragmented
Beyond issuance and trading models, Haglind identifies collateral and liquidity management as the next major frontier.
“If you are crypto-native today, you can use stablecoins when trading different crypto assets to facilitate delivery-versus-payment and move exposures quickly across the globe, supported by DeFi capabilities,” he says.
However, that model does not translate cleanly into institutional environments where firms manage both conventional and digital instruments. “When we move to the institutional side, where you have both conventional assets and digital assets, over time you will need to manage them in a consolidated way,” Haglind explains. “Otherwise, you lose efficiencies by treating digital and conventional assets as separate collateral and liquidity pools.”
As markets move towards extended trading hours, that fragmentation becomes more costly. “Especially as markets move towards 24/5 and 24/7, collateral mobility becomes critical to capturing those benefits,” he adds.
Operating parallel infrastructures, Haglind notes, is not sustainable in the long term. “Every separate infrastructure costs money; every separate operating process costs money,” he says. “As an intermediary or market participant, you want an operating model that can handle all asset classes, regardless of whether they are represented as tokens or conventional assets.”
Post-trade remains the anchor
While much of the industry discussion around DLT has focused on settlement mechanics, Haglind stresses that post-trade infrastructure remains key.
“Post-trade infrastructure is fundamental, because that is where risk is managed across the entire lifecycle,” he says.
Atomic settlement may reduce delivery risk, but it does not eliminate longer-dated exposures. “Many assets do not settle tomorrow,” Haglind notes. “If you and I trade a euro swap that settles in three years, it does not matter whether the asset is tokenised — I still have counterparty and credit risk with you.”
As a result, supporting processes from origination through to settlement must be capable of handling both asset types seamlessly. “That is where a lot of innovation will occur,” he says.
The operational reality of always- on markets
Extended trading hours also introduce operational challenges that are only beginning to be fully appreciated.
“Traditionally, markets run from Sunday evening to early Saturday morning, with overnight breaks for fixes, reconciliation, upgrades, and issue resolution,” Haglind explains. “In always-on markets, that window disappears.”
This has implications for everything from system maintenance to cyber resilience. “Nasdaq’s trading technology is already used by a wide range of crypto markets to run 24-hour markets, seven days a week. It requires a fundamental rethink around when upgrades should happen, when cybersecurity patches are applied, and how systems are maintained,” he says.
Operating continuously through weekends, in particular, represents a structural shift. “Extending opening hours to bridge payment system cut-off times is one thing, but operating through weekends is much more challenging, particularly from a technology perspective,” Haglind adds. “That fundamentally changes the industry’s operating model.”
From experimentation to operationalisation
Institutional engagement with digital asset venues has accelerated in recent years, driven by a combination of regulatory change, retail demand, and capital efficiency considerations.
“A recent survey we supported showed that only about 25 per cent of the collateral banks deploy daily is remunerated,” Haglind notes. “The rest is not, largely because firms over-provision and deploy collateral early to meet obligations.”
As markets extend trading hours, precision in capital deployment becomes more important. “With 24/5 markets, being precise about how and where capital is deployed becomes even more important,” he says. “Tokenisation and digital rails can help manage treasury and collateral more efficiently.”
That shift has reframed expectations. “Previously, this was a case of technology looking for a problem,” Haglind says. “Now, the benefits are visible at scale.”
The remaining challenge, he concludes, lies in execution rather than experimentation. “We have made huge strides technologically,” Haglind says. “The challenge now is operationalisation — integrating this into back office systems, ensuring legal certainty, and setting appropriate risk mandates. The privacy dimension is also critical for institutional adoption, bridging the transparency of public blockchains with the requirement to preserve confidentiality. We are past early experimentation and are now focused on making this work at industry scale.”
According to Magnus Haglind, senior vice president and head of Capital Markets Technology at Nasdaq, that approach has often produced unintended consequences.
“We have seen a lot of attempts to find efficiencies using blockchain and DLT and basic tokenisation of assets as a way of achieving efficiencies and solving perceived inefficiencies in the transaction chain, from origination through to settlement, over the last 10 years,” he says.
In practice, many of these initiatives struggled to progress beyond pilots. “What has typically happened is that these have been proof of concepts or minimum-viable-product-style initiatives, which basically affected liquidity,” Haglind explains.
“It was the liquidity event first — for example around a bond or something that was tokenised — but then, based on limitations in eligibility, impacting access and liquidity provisioning around that particular asset, the bond effectively sat on that infrastructure until redemption.”
This resulted in fragmented ecosystems. “We have seen a siloed structure around these assets and, essentially, a lack of liquidity, which has hindered adoption,” he adds.
Liquidity, interoperability, and institutional scale
Haglind argues that the current phase of development looks materially different. Advances in underlying technology, combined with broader institutional participation, are beginning to address earlier structural limitations.
“What we are seeing now, with developments around layer-one platforms overall and the technology around them, is a much broader focus on interoperability,” he says. “There are also more places where you can typically tokenise and issue assets, plus the fact that some of the bigger custodians and institutions are now enabling liquidity to come to these assets.”
Institutional involvement, in particular, has changed the conversation. “When larger institutions get involved, they start addressing the problem of how to achieve and solve liquidity around them,” Haglind notes.
Alongside this, tokenisation is increasingly being explored as a means of supporting extended trading hours. “The second is tokenisation of assets to achieve 24/5 or 24/7 markets, particularly around securities,” he says.
Different structural models are emerging in parallel. Haglind outlines approaches ranging from traditional issuers becoming digital asset issuers themselves, to proxy-based models and private-market tokenisation initiatives.
The common theme, he suggests, is that trusted institutions are now engaging in these models in earnest.
Collateral cannot remain fragmented
Beyond issuance and trading models, Haglind identifies collateral and liquidity management as the next major frontier.
“If you are crypto-native today, you can use stablecoins when trading different crypto assets to facilitate delivery-versus-payment and move exposures quickly across the globe, supported by DeFi capabilities,” he says.
However, that model does not translate cleanly into institutional environments where firms manage both conventional and digital instruments. “When we move to the institutional side, where you have both conventional assets and digital assets, over time you will need to manage them in a consolidated way,” Haglind explains. “Otherwise, you lose efficiencies by treating digital and conventional assets as separate collateral and liquidity pools.”
As markets move towards extended trading hours, that fragmentation becomes more costly. “Especially as markets move towards 24/5 and 24/7, collateral mobility becomes critical to capturing those benefits,” he adds.
Operating parallel infrastructures, Haglind notes, is not sustainable in the long term. “Every separate infrastructure costs money; every separate operating process costs money,” he says. “As an intermediary or market participant, you want an operating model that can handle all asset classes, regardless of whether they are represented as tokens or conventional assets.”
Post-trade remains the anchor
While much of the industry discussion around DLT has focused on settlement mechanics, Haglind stresses that post-trade infrastructure remains key.
“Post-trade infrastructure is fundamental, because that is where risk is managed across the entire lifecycle,” he says.
Atomic settlement may reduce delivery risk, but it does not eliminate longer-dated exposures. “Many assets do not settle tomorrow,” Haglind notes. “If you and I trade a euro swap that settles in three years, it does not matter whether the asset is tokenised — I still have counterparty and credit risk with you.”
As a result, supporting processes from origination through to settlement must be capable of handling both asset types seamlessly. “That is where a lot of innovation will occur,” he says.
The operational reality of always- on markets
Extended trading hours also introduce operational challenges that are only beginning to be fully appreciated.
“Traditionally, markets run from Sunday evening to early Saturday morning, with overnight breaks for fixes, reconciliation, upgrades, and issue resolution,” Haglind explains. “In always-on markets, that window disappears.”
This has implications for everything from system maintenance to cyber resilience. “Nasdaq’s trading technology is already used by a wide range of crypto markets to run 24-hour markets, seven days a week. It requires a fundamental rethink around when upgrades should happen, when cybersecurity patches are applied, and how systems are maintained,” he says.
Operating continuously through weekends, in particular, represents a structural shift. “Extending opening hours to bridge payment system cut-off times is one thing, but operating through weekends is much more challenging, particularly from a technology perspective,” Haglind adds. “That fundamentally changes the industry’s operating model.”
From experimentation to operationalisation
Institutional engagement with digital asset venues has accelerated in recent years, driven by a combination of regulatory change, retail demand, and capital efficiency considerations.
“A recent survey we supported showed that only about 25 per cent of the collateral banks deploy daily is remunerated,” Haglind notes. “The rest is not, largely because firms over-provision and deploy collateral early to meet obligations.”
As markets extend trading hours, precision in capital deployment becomes more important. “With 24/5 markets, being precise about how and where capital is deployed becomes even more important,” he says. “Tokenisation and digital rails can help manage treasury and collateral more efficiently.”
That shift has reframed expectations. “Previously, this was a case of technology looking for a problem,” Haglind says. “Now, the benefits are visible at scale.”
The remaining challenge, he concludes, lies in execution rather than experimentation. “We have made huge strides technologically,” Haglind says. “The challenge now is operationalisation — integrating this into back office systems, ensuring legal certainty, and setting appropriate risk mandates. The privacy dimension is also critical for institutional adoption, bridging the transparency of public blockchains with the requirement to preserve confidentiality. We are past early experimentation and are now focused on making this work at industry scale.”
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