Investors Don't Want a Better Disc

You can stream any song ever recorded from your phone. Your social media feed knows what you want to see before you do. Your group chat is always on — no opening hours, no closing bell, no maintenance window.

You cannot buy a stock on a Sunday evening — not on any major exchange with real liquidity and tight spreads.

A generation has grown up in a world where everything is on-demand, personalized, and always available. Gen Z spends over three hours a day on social media and watches three times more streaming content than live television [1]. Fifty-three percent abandon a mobile page if it takes more than three seconds to load [2]. This is not a demographic footnote. This is the baseline expectation for how services work.

These same people are now entering capital markets. Gen Z starts investing at age 19 — sixteen years earlier than Boomers did [3]. Eleven million Europeans have become first-time investors since 2023 [4]. Seventy percent of Trade Republic’s ten million users had never invested before. Over the next quarter century, $124 trillion in wealth will transfer to generations for whom instant, global, and always-on is not a feature but the default [5].

Their trading app looks digital. The interface is clean. The execution feels fast. But underneath, the system that processes their trade was designed in an era when orders were matched on physical trading floors and ownership was recorded on paper certificates. What they experience as “digital investing” is electronic investing — digitized analog, running on infrastructure that predates the internet.

Most investors never question this. Not just the new ones. Seasoned professionals, institutional traders, portfolio managers — they optimize within the system without questioning the system itself. SIFMA, the industry’s own voice, warns that moving beyond T+1 settlement “isn’t easily achieved by all industry participants due in part to reliance on current business, infrastructure, and operational processes.” The front end modernized. The foundation did not. The UI is digital. Everything below it is not.

The architecture underneath determines what is possible and what is not. Right now, the industry is working harder than ever to make that architecture do things it was never designed to do.

How the Industry Is Responding

The financial industry sees the demand. It is responding with serious effort and real engineering talent. None of what follows is criticism of the people doing this work. These are smart teams solving hard problems.

The question is whether they are solving the right problem.

What these teams are working with is an infrastructure that was built for a different era. The shift from physical trading floors to electronic order-matching systems began in the 1970s — before the internet, before digital, before any of the technology that defines modern life existed. That electronic upgrade was a generational achievement. It made markets faster, more accessible, and more efficient. And now that same architecture, designed half a century ago, must somehow deliver the digital experiences that a new generation considers basic.

Extended trading hours. Markets that operated 6.5 hours a day are pushing toward 24/5 or 24/7. Delivering always-on trading on electronic infrastructure requires risk management engines that never sleep, liquidity aggregation across time zones, clearing coordination with exchanges that still batch-process overnight, and continuous cybersecurity monitoring. Every one of these is a workaround for architecture designed around a closing bell. The system was not built to be always-on. Making it always-on is engineering at the design limits.

T+1 settlement. The United States moved from T+2 to T+1 in May 2024. Europe has proposed legislation to follow by October 2027 — more than three years behind. Faster settlement reduces counterparty risk and frees up capital. Genuine progress. And progress within a specific constraint: the assumption that settlement is inherently asynchronous. Trades must be matched, then confirmed, then cleared, then settled — in separate steps, by separate institutions, on separate timelines. T+1 is faster batch processing. Not instant settlement. The reconciliation chains remain. The architecture remains. Making something faster is not the same as making it instant.

Fractional shares. Neobrokers have made it possible to buy 0.001 of a Tesla share — an achievement in financial inclusion. Under the hood, fractional ownership typically works through omnibus accounts. The user interface shows “you own 0.5 shares of Apple.” The legal reality: you own a claim on your broker, who owns shares in a pooled account at a custodian, who holds them through a central securities depository. Direct ownership, this is not.

Tokenization. This is the Sirens’ song of capital markets transformation. Represent securities as tokens on a blockchain. Instant settlement. Programmable assets. 24/7 markets. The melody is compelling.

Look closer and the picture changes.

Blockchains were designed to solve a specific problem: enabling transactions between parties who do not trust each other. The trade-off for that trustlessness is slow transaction throughput, block confirmation times, and limited data capacity. Capital markets are the opposite environment — among the most heavily regulated, most audited, most trusted domains in the world. Central banks, securities regulators, compliance functions at every level. Blockchain’s engineering trade-off solves a problem that capital markets do not have.

The performance gap is not theoretical. NASDAQ’s matching engine handles 5.6 million messages per second at 250-microsecond latency. No blockchain — not Solana, not Aptos, not any Layer 2 — comes close to these numbers. Public capital markets process trillions of dollars daily across tens of thousands of instruments. The infrastructure requirements are not aspirational benchmarks. They are the minimum for participation.

The appeal of a single global computational layer is understandable. Look at the actual state of blockchain infrastructure: hundreds of Layer 1 chains, dozens of Layer 2 rollups, each with its own liquidity pool, its own token standards, its own bridge protocols. Tokenization of public market assets does not create a unified global layer. It fragments liquidity further — siloed per chain, per DEX, per trading pair. Europe already suffers from 30+ CSDs and 300+ trading venues. Adding blockchain silos on top does not solve fragmentation. It multiplies it.

And the mechanical problems go deeper. Tokenization layers blockchain technology on top of the existing electronic infrastructure. It does not replace intermediaries — it adds new ones: stablecoin routing, chain-specific custody, bridge protocols between chains. Settlement splits in two — T+0 on the token layer, T+1 on the underlying asset. The investor sees instant token transfer. The actual security still settles through the traditional chain. Ownership becomes wrapped contracts with counterparty risk — you hold a token that represents a claim, not the asset itself.

The EU’s DLT Pilot Regime has been live since March 2023. After more than two years, exactly three platforms have been authorized. One settles in stablecoins, not central bank money. ESMA, the ECB, and France’s AMF have all flagged fragmentation risks. The evidence is in: each new tokenized silo adds a layer. None replace the existing ones.

The promise was simplification. The outcome is more layers, more fragmentation, more complexity. Like the Sirens in the Odyssey, the closer you get, the clearer the danger becomes.

Cross-border access. Capital flows globally. The demand for access across markets grows every year. The infrastructure to deliver it does not keep up. Cross-border equity trades require direct exchange connectivity, clearing coordination across jurisdictions, multi-layered custody chains, foreign exchange conversion, and regulatory alignment between different legal regimes. Cross-border securities settlement in Europe costs two to six times more than domestic settlement [6]. European CSD settlement fees run 65 percent higher than North American equivalents [7]. Not because the technology is slow. Because the architecture requires reconciliation at every layer, in every jurisdiction, through every intermediary.

Exchange consolidation. Europe has more than 300 trading venues and over 30 central securities depositories [8]. The fragmentation is a legacy of national markets that were never designed as a single system. The response has been consolidation — Euronext acquiring CSDs across countries, LSEG integrating post-trade services, Deutsche Börse expanding its clearing reach.

Consolidation reduces fragmentation. It does not eliminate it. Connecting national silos with better plumbing is not the same as building a system that has no silos. Fewer CSDs is better than more CSDs. Zero is better than fewer.

All of these initiatives share a structural reality: the electronic infrastructure and its value chain produce costs that ultimately investors pay through reduced performance. ESMA data shows that costs consumed roughly a quarter of gross returns for a typical ten-year European retail fund investment. The promise of public capital markets is the efficient allocation of capital. Without end-to-end digital infrastructure, that promise remains only partially fulfilled — architecture tax on every transaction, every settlement cycle, every intermediary in the chain.

History Rhymes

Read that list again. Extended hours. Faster settlement. Tokenized wrappers. Fractional workarounds. Cross-border intermediary chains. Consolidation of fragmented silos.

Every initiative follows the same pattern. Take the electronic architecture. Bolt something on. Make it work harder. Call it progress.

This pattern has played out before.

When the demand for on-demand entertainment became obvious, the DVD industry responded with Blu-ray. Higher resolution. More storage capacity. Better encoding. A genuinely superior disc. No one disputes that Blu-ray was better than DVD.

Same physical format. Same retail chain. Same intermediaries — studios, distributors, logistics companies, brick-and-mortar stores. The entire value chain stayed intact. The disc got better. The distribution model did not change.

Here is the thing about a Blu-ray disc: the movie on it was already digital. Encoded in ones and zeros, stored on a physical medium, shipped through an analog distribution chain. The content was digital. The delivery was not. Netflix’s insight was that the medium was unnecessary. Stream the content directly — from server to screen. The disc was not the product. It was the constraint.

Netflix did not build a better disc. Netflix eliminated the disc. New architecture: content to internet to consumer. No physical chain. No intermediaries. No stores. No opening hours. Not an improvement of the old model — a replacement of it.

The question was never whether Blu-ray was better than DVD. It was. The question was whether a better disc was what consumers actually wanted.

It was not. They wanted to press play — wherever they are, without region locks, around the clock, from any device.

Capital markets are in their Blu-ray moment. Extended hours, T+1, tokenization, fractional shares, cross-border connectivity — all real improvements. All operating within the same electronic value chain: exchanges, clearing houses, central securities depositories, custodian banks, reconciliation processes. The architecture gets stretched further. The intermediary chain stays intact.

The investors walking in the door today do not care about the architecture. They care about pressing play.

What Investors Want Today

The new generation of investors does not express their expectations in architectural terms. They express them as experience gaps — the moments where investing feels like it belongs to a different era than every other service on their phone.

It should be instant. When they stream a song, it plays. When they send money through Wise, it arrives. When they buy a stock, settlement takes a day. They do not know what “T+1” means. They just know everything else in their life is instant — and this is not.

It should work everywhere. They want US tech stocks, European ETFs, and emerging market exposure — in one place. No single broker can offer access to every asset class across every market. The infrastructure is too fragmented, too costly, too complex. Investors end up with multiple accounts across multiple platforms — not because they want to, but because no single platform can deliver it all. The limitation is not ambition. It is architecture.

It should never close. Markets that operate on a schedule feel as strange to a Gen Z investor as a bank that closes at 3pm. They live in an always-on world. The concept of “trading hours” belongs to the era of trading floors.

It should work in value, not units. Nobody thinks in shares. Investors think “I want 500 euros in Apple” — not “I want 2.3 shares.” Neobroker interfaces already reflect this. You can view your portfolio in euros, buy in euro amounts, track performance in value terms. The front-end has moved to value. The infrastructure underneath has not. It still operates in shares, lots, and units. The translation between what investors see and what the system processes is another layer of complexity that should not need to exist.

These are not edge cases. They are the baseline expectations of a generation that holds $124 trillion in incoming wealth, that starts investing at 19, and that makes up the majority of new brokerage accounts opened in Europe. Eighty-two percent of Gen Z say they would switch financial institutions for a better digital experience [10]. The demand is not theoretical. It is here.

What They Do Not Know They Will Want

Some friction is so embedded in the current system that investors have accepted it as normal. They do not ask for alternatives — because no practical alternative has ever existed at scale.

You could burn your own CD. Select songs, arrange them, press burn. But once burned, you could not change it. The effort was high, the result was fixed, and every new combination meant starting over. The parallel to today’s capital markets is precise: bring enough capital and an asset manager will build you a custom fund or ETF. But that is not accessible to the general public, does not scale, and delivers nothing close to the simple, frictionless experience of creating and rearranging a playlist on Spotify. The playlist as we know it — fluid, instant, infinitely editable — was an emergent capability of a new architecture. Once the disc was gone, the idea was obvious.

Capital markets have the same kind of hidden friction.

Rebalancing — and the reallocation reality. Over 99 percent of global equity trading volume is reallocation. $155 trillion changes hands annually on exchanges worldwide, while new equity issuance accounts for roughly $505 billion — less than one-third of one percent [9]. For every dollar of new capital entering the market, $307 changes hands in secondary trading. The stock market’s dominant function is not capital formation. It is people shifting, rotating, and diversifying between existing assets.

Electronic systems force every one of those reallocations into at least two transactions. Sell the source asset for cash. Buy the target asset with cash. The reason is structural: a unit of Apple has a different price than a unit of Microsoft. The units are incompatible. The investor’s intent is one action — move allocation from here to there. The architecture demands two settlement cycles, two sets of fees, two moments of market risk — and in many jurisdictions, a taxable event on the sale that reduces the capital available for the new position. The investor does not ask “why can’t this be one step?” because they have never seen an alternative. But the friction is real, and it compounds across trillions of dollars of portfolio adjustments every year.

Portfolio-level thinking. Today’s investors manage assets in isolated accounts. Each trade is an individual event. There is no native concept of a portfolio as a single, rebalanceable entity — because the infrastructure processes individual transactions, not portfolio intentions. The moment architecture allows it, portfolio-level management becomes as natural as the playlist was to music.

These are not features on a product roadmap. They are capabilities that become obvious once the architectural constraint is removed. The pattern is always the same: nobody misses what was never possible — until it is.

What Natively Digital Actually Means

Streaming did not just put movies on the internet. It eliminated an entire value chain.

Think about what disappeared when streaming replaced physical media. Disc manufacturing. Warehousing and logistics. Regional distribution networks. Retail stores. The “release window” system that staggered availability by geography. The concept of “stock” — a physical store running out of copies. All of it, gone. Not because each link in the chain was bad at its job. Because the new architecture made the chain unnecessary. The content was already digital. The only thing that changed was the delivery.

Natively digital capital markets infrastructure does the same thing.

The electronic value chain that exists today — exchanges, clearing houses, central securities depositories, custodian banks, reconciliation processes, correspondent banking networks — exists because the architecture requires it. Every intermediary solves a problem created by the architecture itself: clearing exists because settlement is asynchronous. Custodians exist because ownership is indirect. CSDs exist because assets are nationally registered. Reconciliation exists because multiple institutions hold different versions of the same record.

A natively digital architecture does not connect these intermediaries better. It makes them unnecessary.

Settlement becomes atomic — trade and settlement are the same event, not two processes separated by a day. There is nothing to clear because there is nothing to reconcile. Ownership is direct — the investor holds the asset, not a claim on someone who holds a claim on someone who holds the asset. There are no national registries to reconcile because the system is borderless by default. Liquidity is unified globally, not siloed per venue, per geography, per chain.

Here is the test: in a natively digital system, “extended trading hours” is a meaningless concept. There is nothing to extend. The system does not have opening hours because there is nothing to open. “T+1” is meaningless because there is no gap between trade and settlement. “Cross-border” is meaningless because there are no borders in the system.

Just as nobody talks about “disc availability” in a streaming world, nobody would talk about settlement cycles, trading hours, or cross-border friction in a natively digital one.

That is the difference between upgrading the value chain and eliminating it.

The European Question

The rest of the world is upgrading the disc. Extending hours, accelerating settlement, tokenizing assets. The world is not waiting for Europe — and Europe should not follow.

The Capital Markets Union has been a stated goal since 2015. A decade of regulation, harmonization attempts, and consolidation has not delivered it. The reason is architectural: you cannot patch 27 national electronic infrastructures into a single market. CMU requires infrastructure where “cross-border” is a meaningless concept. That is not an incremental upgrade. That is natively digital.

Twenty-seven national tax regimes, insolvency laws, and supervisory cultures create barriers that no technology can eliminate. Politics must solve what architecture cannot. And architecture must deliver what a decade of politics has not — a single infrastructure layer where settlement, custody, and access work the same regardless of jurisdiction.

Europe’s share of global IPO proceeds has declined to roughly 10 percent [11]. Technology alone will not reverse that. Until capital becomes a first-class citizen again in EU policy — in tax treatment, in regulatory priority, in political ambition — the decline continues. But the technical foundation for a true single market is buildable today. Not by catching up on Blu-rays. By leapfrogging them entirely.

Investors do not want a better disc.

They want the streaming version of investing.

Sources

[1] S&P Global Kagan / Nielsen, 2025 — Gen Z media consumption data

[2] Google/SOASTA, 2017 — Mobile page speed benchmarks

[3] Charles Schwab, 2024 — Generational investing survey (median age of first investment)

[4] BlackRock / YouGov — European first-time investor survey, 2023-2024

[5] Cerulli Associates — Intergenerational wealth transfer projections

[6] Giovannini Group / European Commission — Cross-border settlement cost analysis

[7] Oxera, 2025 — European CSD settlement fee benchmarking

[8] ESMA; ECSDA — European trading venue and CSD registry data

[9] World Federation of Exchanges, 2024; SIFMA, 2025 — Global equity trading volume and new issuance data

[10] Equifax, 2025 — Gen Z financial services switching intent survey

[11] EY; PitchBook — European IPO market share analysis