Fixed Income’s $140 Trillion Plumbing Problem

(A Guest Post by Marius Jurgilas, CEO of Axiology)

Fixed income is the quiet giant of capital markets. With more than $140 trillion outstanding globally, it dwarfs listed equities and funds, governments, banks, and corporates. And yet the machinery that moves it has not meaningfully changed in a generation. The whole bond lifecycle (issuance, custody, trading, settlement) still runs on siloed systems stitched together by intermediaries, message queues, and overnight batch processes. The market is vast; the infrastructure underneath it is not.

These markets were built for a world that no longer exists. Paper, batch processing, trust-by- intermediary: those design choices made sense in 1975. In 2026, the result is an asymmetry that should bother every European policymaker: an SME (Small and Medium Enterprise) selling goods and services across a dozen markets still raises capital from a single, local one. Trade has integrated; capital, especially for smaller issuers, has not.

The Structural Inefficiencies.

Trace what happens between the moment a bond is issued and the moment it settles in a final investor’s account, and you will walk through around at least six disconnected systems: an issuance platform, a paying agent, a central securities depository, a custodian, a trading venue, and a clearing house. Each has its own ledger, each reconciles with the next, and each requires people and code to bridge the gaps. This fragmentation is the residue of four decades of incremental digitisation, books of record turned into databases, and databases connected by SWIFT, SWIFT wrapped in APIs. Every layer solved a specific, local problem, but no one stopped to ask whether the whole stack still made sense. The result is a system in which retail access is blocked not by regulation, but by the economics of running six intermediaries.

The Shift to Digital Rails.

Distributed ledger technology has suffered from premature marketing. It has been pitched as a revolution, a threat, and a speculation vehicle. What it actually is, in the context of capital markets, is a boring and useful innovation: a shared ledger that removes the need for multiple parties to maintain parallel copies of the same truth. When issuance, custody, trading, and settlement sit on the same permissioned ledger, every counterparty reads the same record. The reconciliation work that today consumes middle-office budgets simply isn't needed anymore. Settlement becomes atomic because delivery and payment happen in the same transaction, instantly. And coupons, calls, and redemptions become programmable rather than being processed across six vendors.

This is not hypothetical. Under the EU’s DLT Pilot Regime, licensed operators are settling live bond transactions on these rails today, and the ECB’s Pontes trials are testing how central bank money integrates with DLT-based securities settlement. These are production systems handling regulated securities for real investors.

The second-order effects are what matter. Shared infrastructure is the first credible path to taking real cost out of a post-trade base that has barely moved in twenty years. Atomic settlement against a wider eligible pool changes the liquidity profile of instruments long considered illiquid by default. And once the marginal cost of an additional investor approaches zero, retail fixed income becomes a serious distribution channel, not a novelty.

What We’re Seeing Across Fixed-Income Markets.

The inefficiencies are worst where the market is least glamorous, such as SME bonds, municipal debt, and private placements. These are not the instruments that central bank working groups study, but they represent enormous amounts of capital, and the operational cost of servicing them is often higher than the coupon itself. Institutional hesitation is almost never about the technology; it is about operational readiness, legal clarity, and the willingness to be second rather than first. Conversations that used to stall on “does DLT work?” now stall on “who else in my peer group

has moved?”

The firms moving fastest are not the biggest. They are mid-sized brokers, specialist banks, and crowdfunding platforms with specific, painful bottlenecks to solve. They are not rebuilding their entire operation; they are re-routing a single flow onto new rails and measuring the result. That is the right playbook. A tokenised bond on legacy rails is still just a bond with a more expensive label; the value is in the rails. The participants who understand this are evaluating end-to-end workflows rather than isolated tools, and preparing now for a world in which settlement is a matter of seconds, not days.

The Infrastructure is the Market.

A bond is a legal claim. It is indifferent to whether it lives in a paper certificate, a central depository, or a permissioned ledger. What is not indifferent is everyone who has to interact with it. The future of fixed-income markets will not be defined by new instruments. It will be

defined by the rails they run on.

About the Author

Marius Jurgilas is CEO of Axiology, an EU-regulated capital market infrastructure operator servicing the full lifecycle of securities. He previously served as a Member of the Board at the Bank of Lithuania, where he led work on capital markets and financial innovation.