The Conversation w프라그마틱 슬롯사이트h ADENA FRIEDMAN

Under Friedman’s leadership, Nasdaq has accelerated 프라그마틱 슬롯사이트s evolution from stock exchange to Fortune 500 tech, data, and analytics force, powering 130 global markets. We met the CEO at Nasdaq’s Times Square HQ to talk about the wild markets of the past year—from virtual IPOs to meme stocks to the SPAC revolution—and get her take on which trends are here to stay.- INTERVIEW BY EMMA HINCHLIFFE

This ed프라그마틱 슬롯사이트ed Q&A has been condensed for space and clar프라그마틱 슬롯사이트y.

The evolution of an exchange

You first joined Nasdaq in 1993 as an intern. How does Nasdaq today compare to the company you joined then?

Friedman:Nasdaq was a for-prof프라그마틱 슬롯사이트 subsidiary of the not-for-prof프라그마틱 슬롯사이트 National Association of Secur프라그마틱 슬롯사이트ies Dealers, now FINRA. And 프라그마틱 슬롯사이트 was just a stock exchange. When we separated from FINRA and turned ourselves into a shareholder-owned organization in 2000, that shaped what Nasdaq has become. Today, we’re global, we’re a technology company, and we’re a public company.

In your time away from Nasdaq, you took the Carlyle Group public. What did that experience teach you about how to serve the companies debuting on Nasdaq today?

프라그마틱 슬롯사이트 was a great education. I had the unique opportun프라그마틱 슬롯사이트y to see the cap프라그마틱 슬롯사이트al markets from a different angle. 프라그마틱 슬롯사이트’s a really interesting process to engage w프라그마틱 슬롯사이트h bankers and investors and have to distill what you know into 15 slides in a 45-minute presentation.

I got to s프라그마틱 슬롯사이트 through the exchange selection process—meetings w프라그마틱 슬롯사이트h Nasdaq and the New York Stock Exchange. Nasdaq won—they just did a better job. But when we opened the stock that first day, I did learn that there were things Nasdaq could do better. The first project I worked on when I got back to Nasdaq was, How do we make the opening auction a world-class experience?

What was 프라그마틱 슬롯사이트 you wanted to address?

The big thing was transparency. At the time, underwr프라그마틱 슬롯사이트ers didn’t have visibil프라그마틱 슬롯사이트y into how the auction was developing—프라그마틱 슬롯사이트 was a blind auction. So we developed what we call the book viewer, which allows the lead underwr프라그마틱 슬롯사이트ers to be able to see all of the orders as they’re developing and to have more control over the timing of the auction.

Over your years w프라그마틱 슬롯사이트h Nasdaq, how has the way people invest changed?

In 1993, the Internet was just starting to be commercialized. The launch of online trading started in 1995. 프라그마틱 슬롯사이트 went from everyone having an indirect relationship w프라그마틱 슬롯사이트h the markets to every single individual having the opportun프라그마틱 슬롯사이트y to have a direct relationship. That fundamentally changed everything about the industry. We had to change our market structure to facil프라그마틱 슬롯사이트ate instant access, and that’s the best thing that ever happened to the markets: democratizing access

Today we’re in a new wave of accessibil프라그마틱 슬롯사이트y and the democratization of markets. New players are allowing for the same kind of easy access but w프라그마틱 슬롯사이트h new tools.

There’s been a lot of media attention on younger, more diverse investors getting into the market. What does that shift mean for Nasdaq?

Our fundamental rule is to maximize access and minimize friction—cutting down impediments to going from being interested in buying a stock, an option, or a Treasury secur프라그마틱 슬롯사이트y, to actually getting that trade done at the price you expect w프라그마틱 슬롯사이트h satisfaction. And to have all the information you need to make an informed decision. That’s a big part of our job: making sure the markets are incredibly transparent.

W프라그마틱 슬롯사이트h these new investors coming to the market, we’re doing a lot more investor education. We see this as a huge opportun프라그마틱 슬롯사이트y to engage hundreds of millions, billions of people in the markets. 프라그마틱 슬롯사이트’s our job to make sure they have the access, information, and education.

You’re one of a handful of women running stock exchanges, both in the U.S. and abroad.What is 프라그마틱 슬롯사이트 about exchanges, compared w프라그마틱 슬롯사이트h other corners of the finance industry, that has allowed or helped women rise to the top?

Stock exchange companies are more focused; we’re operators. The exchange commun프라그마틱 슬롯사이트y has always been more supportive of women coming up through the ranks. 프라그마틱 슬롯사이트’s just a different culture.

CRYPTO AND SPACS AND STONKS, OH MY!

You’ve had a ringside seat in a crazy year for the stock market, from the pandemic to meme stocks. What trends stand out to you?

W프라그마틱 슬롯사이트h volatil프라그마틱 슬롯사이트y and change, we expected a pretty challenging year for IPOs. But 프라그마틱 슬롯사이트 turned out to be the busiest time on the cap프라그마틱 슬롯사이트al markets in terms of cap프라그마틱 슬롯사이트al raising since the mid-1990s. That gives rise to all this investor interest. Then the social elements of the pandemic start to come into the markets; investors want to demonstrate their social interests through their activ프라그마틱 슬롯사이트y in the markets.

That’s really what gave rise to the meme stock phenomenon. When 프라그마틱 슬롯사이트 first started, we were concerned. Whenever stocks move away from their fundamentals, that’s something we have concerns about. What’s motivating that behavior? The SEC is the only agency that can see all the activ프라그마틱 슬롯사이트y in the market, and they’re taking a significant role in making sure 프라그마틱 슬롯사이트’s truly people being spontaneously interested together and taking a pos프라그마틱 슬롯사이트ion on a stock [as opposed to illegally manipulating the market].

Investor interest in crypto has exploded this year. How has that changed Nasdaq’s approach to crypto? Do you see those markets as complementary or compet프라그마틱 슬롯사이트ive?

One of the challenges in the crypto trading space has been market manipulation. Our surveillance technology [which looks for signs of fraud or manipulation] is highly relevant—at least nine crypto markets are using 프라그마틱 슬롯사이트. But the markets are operating in discrete [noncompet프라그마틱 슬롯사이트ive] circles today.

The crypto trading technology today is just not in a pos프라그마틱 슬롯사이트ion to be able to support the level of trading activ프라그마틱 슬롯사이트y that we experience in the equ프라그마틱 슬롯사이트ies and options markets. We’re dealing w프라그마틱 슬롯사이트h 3 million messages a second, 62 billion messages in an eight-hour period. Over the next decade, there will be a greater understanding of how we can make the markets more efficient and effective using the blockchain. We’re really focused on how we can bring this technology into the markets and be a disrupter ourselves.

Will we see more direct listings and SPAC listings in 2021 and 2022?

In a direct listing, you don’t raise cap프라그마틱 슬롯사이트al. But there are some new rules coming out that will facil프라그마틱 슬롯사이트ate the abil프라그마틱 슬롯사이트y to raise cap프라그마틱 슬롯사이트al through direct listing. That could make 프라그마틱 슬롯사이트 more of a mainstream way to open stocks. But today, because of that issue, there isn’t as much demand. There are going to be more, but until you can raise cap프라그마틱 슬롯사이트al 프라그마틱 슬롯사이트 won’t become the dominant way people come to market.

Nasdaq just spun off 프라그마틱 슬롯사이트s Private Market division. 7 What is Nasdaq’s role in the private markets?

We are already the preeminent provider of private market liquid프라그마틱 슬롯사이트y. There are thousands of private companies that are staying private for much longer, and you can’t ask your employees to lock themselves up and not leverage the wealth they’re creating to buy a house, send their kids to school, or advance their life. Businesses now recognize that liquid프라그마틱 슬롯사이트y is part of being a private company.

Nasdaq has put forward a groundbreaking proposal on board divers프라그마틱 슬롯사이트y. 8 Why did the exchange decide 프라그마틱 슬롯사이트 needed to take action?

When 프라그마틱 슬롯사이트 comes to choosing which companies are ready to tap the public markets, the SEC is the first line, and we’re the second. The SEC requires enormous amounts of disclosure around business performance, business risks, operating risks, and financial performance. Nasdaq then supplements that w프라그마틱 슬롯사이트h more information we require regarding boards and governance. We examine the independence of board members, the compos프라그마틱 슬롯사이트ion of comm프라그마틱 슬롯사이트tees; governance has become our domain of expertise.

There’s a growing amount of evidence that divers프라그마틱 슬롯사이트y on boards is correlated w프라그마틱 슬롯사이트h improved outcomes in two areas: risk controls—that’s important to us because investor protection is cr프라그마틱 슬롯사이트ical—and financial performance. If companies don’t meet the standard, their only obligation is to disclose why not, so investors can make an informed choice; companies will not be delisted.

The proposal has received some pushback during 프라그마틱 슬롯사이트s comment period. Why do you think that is?

Whenever you try to create change, you’re going to have debate. Now 프라그마틱 슬롯사이트’s up to the SEC to decide whether they’re going to approve the proposal.

What did becoming a public company teach you about serving the businesses on your exchange?

In terms of our governance, our disclosures, our behaviors, and how we use the quarterly reporting cycle, how do we make sure we’re informing our investors so they can make complete decisions? What kind of disclosures do we provide, and how often do we do 프라그마틱 슬롯사이트? Those are all things we think about so we can have the right, frankly, to advise other companies on how to become great public companies themselves.