April was a month marked by significant volatility, driven by U.S. tariffs on trading partners, forcing broker-dealers and exchanges to adapt to increased transaction volume and revise their risk management strategies. Last month also saw a few key mergers and acquisitions, along with crypto regulatory advancements.
Tariffs and volatility
On April 2, the U.S. administration announced tariffs on numerous countries, causing declines in stock prices, increases in bond yields, and a weakened U.S. dollar compared to other major currencies such as the Euro, British Pound, and Japanese Yen. This heightened volatility forced broker-dealers and exchanges to be dynamic in their operations.
Not only did broker-dealers experience higher-than-normal transaction loads as investors adjusted their portfolios based on the news of tariffs, but they also revised their risk management techniques to mitigate the risks associated with the rapid market movements. Some broker-dealers even proactively communicated with their client base to provide further detail on the rapidly changing market conditions along with potential strategies to navigate this volatility, such as further portfolio diversification and recalibration of asset allocation based on the risk profile of the investor.
The selloffs continued through April 4, when major indices such as the S&P 500 experienced their worst single-day performance since the COVID-19 pandemic. The market volatility persists with significant fluctuations as investors continue to be wary about the current economic environment and tariffs.
Notable mergers and acquisitions
Despite the ongoing stock market volatility and uncertainty, there were a few key mergers and acquisitions in the capital markets space. On April 14, a leading futures exchange and global market index provider sold their stakes in an organization that provides post-trade solutions to the global over-the-counter market across various asset classes. This acquisition aims to improve the post-trade organization’s existing technology and foster innovative solutions in order to meet the evolving needs of the global markets.
Additionally, Ripple Labs, a blockchain digital payment company, acquired a crypto-friendly prime broker. This acquisition positions Ripple as the world’s largest non-bank prime broker. Ripple looks to expand into new asset classes and new customer bases.
Regulatory updates
The U.S. Securities and Exchange Commission in April hosted two roundtables on regulatory clarity for digital assets, one focused on trading infrastructure and a second devoted to custody.
During the first meeting, focused on trading infrastructure, there was support for practical regulatory adjustments, such as allowing crypto-specific custody methods and a flexible Alternative Trading System (ATS) framework. However, there was disagreement over whether trading platforms should be allowed to handle custody, trading, execution, settlement, and clearing all in house.
Two weeks later, members of a roundtable on the topic of digital asset custody discussed their desire to broaden the definition of a qualified custodian to include state-chartered trust banks and other technology providers. Expanding the definition of what constitutes a qualified custodian to include qualifying state-chartered banks and technology providers would provide funds and venture capitalists more access to qualified custodians and thus make compliance with the SEC rules easier.
In addition, there was broad agreement that any entity meeting the expanded custody threshold should adhere to minimum wallet security IT governance and insurance requirements.
Also in April, the Federal Reserve rescinded four joint guidance statements previously issued with the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., removing requirements that banks seek prior approval before engaging in crypto-related activities. However, the Federal Reserve retained its January 27, 2023, policy statement, which generally prohibits state member banks from holding crypto assets or issuing stablecoins unless they demonstrate that doing so meets safety and compliance standards. This selective rollback likely reflects external pressure for the Federal Reserve to align with the OCC and FDIC’s softened positions yet underscores the Fed’s continued skepticism toward banks’ involvement with digital assets.
Looking ahead
As April 2025 ended, the financial markets remained moderately volatile, forcing broker-dealers and exchanges to navigate the fluctuating conditions. We will continue to watch key markets, broker-dealers, and exchanges adapt as tariffs shift and other news shapes the sector.
Chris Forst, a manager on RSM’s blockchain and digital assets team, contributed to this article.
