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Over the last year to date, up 14%. Over the last year, NASDAQ shares up 40%. Over the 5-year period, more than
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doubled, up over 100%. You've been on a real tear. She is often on the list of not just the
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most influential women in finance, but just the most influential. Adena transformed NASDAQ into a global tech
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powerhouse. Adena is a dealmaker at her core. NASDAQ is in the business of deals.
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We are here to advance economic progress for all. Ladies and gentlemen, please welcome
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NASDAQ CEO Adena Freriedman. [Music] Welcome. Hey Jason, how are you? Thanks for coming. How are you?
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Hi. It's great to see you. Hey, great. It's great to be here. Welcome. Thanks for coming out.
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What a day you've been having. Yeah. So, you caught some of the action earlier today, right?
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I did. I did. I've been watching from behind the scenes. It's been amazing to watch. You've been hanging backstage.
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Did you have a favorite moment or speaker? Oh, I I I never like to pick favorites
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at NASDAQ. We don't pick favorites. Um uh we have great companies, but obviously Rene is a wonderful NASDAQ
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listed company that and I've gotten to know it very well with ARM. So, I would say always have great conversations.
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But you know, sorry, but NASDAQ's more than a market. I think I wanted to start with this real important question
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because when when we were talking, I didn't realize that NASDAQ was more than just the NASDAQ market that we all know.
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Maybe just for the for the audience you could just share a little bit more about
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the broader business. Sure. Thank you. Well, so first of all, we are really proud of our foundation as
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a market. But as we started to grow and expand the business, first of all, you know, when I became CEO, we had about
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two and a half million billion dollars in revenue. Today or as of the end of last year, we had a little over $2.5
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billion dollars of IBIDA. So, we've grown and expanded the business quite dramatically. And how we've done that is
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taking our core as a market and saying, what more can we do for our clients? So we are an architect of modern markets.
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We provide our technology to our 17 markets and we sell it to 135 other markets around the world. So market
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infrastructure is our business and we do that globally. Then the second is really
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being powering that innovation economy like companies like Renee you know ARM and other great companies. So uh we've
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expanded that. So, our index business now has about $700 billion of assets under management that are tied to those
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great innovators in addition to creating better abilities for companies to navigate the public markets and
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investors to find cu find investments. And you had a big announcement today. And then the third is is also building
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trust in across the financial system. And that is anti-inancial crime technology, market surveillance
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technology, other technologies that the banking industry and the and the broker dealer industry really need to manage
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their lives in the markets. And you're right, we had a big invest we had a big um a big announcement today
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which almost Vlad foreshadowed before you actually. Yeah. And and actually it goes right
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back to that first pillar being, you know, being the architect of modern life. Tell people what
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You think we should? Yeah. Yeah. Okay. So uh so this morning we announced that um we're going to be bringing
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tokenization into our markets. So making sure that equities are tokenized and traded on market in the markets not in a
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side a side sleeve but actually in the the core markets. So the eventual goal or is it today 24x7
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365 equities just let it rip constantly. I mean I think we are all moving in that
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direction. We announced several months ago that we're moving to 245. So we're moving that way. So Saturday and Sunday
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not not not for equities yet. I think that you know we have to we're walking before
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we run u but I think that getting to 245 is a major advancement for the US equities markets. And then on top of
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that now with tokenization if we can introduce that also into the markets it allows us to really think about
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streamlining the post trade processing bringing and modernizing elements of the markets that have a lot of friction. You
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know we we are hyper resilient and we're hyperscaled. You know, we manage like today we had 95 billion messages come
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into our systems today and we had a median, you know, return time of 20 micros on from order to trade. We handle
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like 3 million messages a second. It's hugely scaled. But then at the same time, you know, once that trade occurs,
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there's a different process. And the post trade process as we know is an area where tokenization really shines and
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really cutting down the friction managing capital flows across the global ecosystem and really bringing that
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capability into the market is going to be the next. Get your reaction to this. You know
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there's this very famous curve which is like you get this early font of insanity
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and then there's the trough of disillusionment and then you grow through and it's is it does it seem like
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crypto is actually a blockchain? It's just it's finally real. It's like there's real companies doing real
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things, stable coins, what Sachs did with the Genius Act. It's Well, I I actually want to point to that
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because, you know, honestly, having regulators who want to to work on bringing it into the mainstream and want
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to create the rules of the road is such a refreshing thing because I think that it allows us all to understand how we
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can operate within a world where there are tenants of investor protection. the technology is going to have things we
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can and can't do, but also being forward thinking and forward-leaning in how the
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technology is going to be applied is going to be critical. So, we're very excited about the fact that we finally
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have this convergence of regulatory of regulation between the traditional markets, the digital markets. How do we
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bring it all together to frankly advance all markets and we're very very excited
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about that. And and I don't mean this to be glib or anything, but wasn't there like a
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concept around the markets having an end of the day at 4:00, allowing people to have a life and to sleep and to not have
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this anxiety? Are we all going to live in a world where we have to check our stocks at 2 in the morning or some crazy
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event happens in the world, god forbid, a terrorist attack or a hack or something, and now we've all got to wake
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up at 3:00 in the morning and decide, do we trade or not? Was that the resistance
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to this? And then how do you justify it? Like, hey, it's going to be worth the fact that none of us are ever going to
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sleep again. Yeah. So, so I think first of all, I've been at I started at NASDAQ in 1993, and
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back in the '9s, we had a vision to go to 247 markets, and we just couldn't achieve it both technologically, it
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wasn't the technology wasn't there to do it, but also regulatory. And and part of
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a big part of that was that resistance from the industry saying, I like to be able to finish my day and go home. And
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actually we need those points in the day. I mean the market open and the market close will continue to exist in a
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world of 245 markets. But you'll have like a US trading day and you'll have non- US trading day. And so and we
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already our systems turn on at 4 and they turn off at 8:00 at night. 4 in the morning 8:00. Trading occurs during that
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entire period of time. But the official trading days of the United States are 9:34. I don't anticipate that changing
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because we have to have those moments for like the navs to be set for mutual funds and things like that but have
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allowing the entire world to trade these securities. I mean we have the NASDAQ itself we have the top seven companies
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in the world listed on NASDAQ. Those companies are global investors have global interests. The NASDAQ 100's one
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of the most traded products in the world. The futures trade 245. So why shouldn't the underlying? So that's how
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we look at those non- US trading hours and then the trading hours and trying to find that confluence and wait a little
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bit. There's a lot of um hand ringing about the number of companies that have gone
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public. The weight of being a public company, the stay private longer moment. Took Uber 11 long years. Stripe is
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private now close to 15 years. SpaceX. So and and we have some folks who maybe think things should run differently. We
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had Spotify go uh public in a direct listing. You have Chimath experimenting with spaxs. What should the IPO market
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look like? And how can we make it now that we have a government that's maybe a little more engaged, let's say, and less
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napping as administration? How should the IPO market change and that process change to encourage people to maybe not
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stay private so long? Because all the gains are being captured by the elites, by the qualified purchasers, the
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accredited investors can barely get in and let alone the public. By the time the public gets in, it does feel like,
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oh, I'm getting into Instacart and it's going to go sideways for a year or two or three.
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Yeah. So I mean first of all I think it's really good to remind all of our you know all of us why the public
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markets are so important for the economy. Um when a company goes public they get access to billions of investors
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and every citizen in this country gets a chance to become an owner in the economy. And when we look at just the
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performance of the NASDAQ 100 over 40 years of its existence the average return on the NASDAQ 100 over those 40
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years is a 14.25% annual return. So that's double the broader market. It's an incredible return
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if if if com you know if individuals have access to these great companies as you know I saw your your pod a few weeks
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ago showing the performance of the public markets. It's it's such an important part of our economy to engage
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the population in the economy and the growth of the economy and the success of the economy. So I've always believed in
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the balance between public and private markets. I think there are reasons for them both to thrive and be great great
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for everyone. But the public market experience has become this massive you know burden and I think that we call it
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like you have to cross the Rubicon to become public and it's become very daunting for com for CEOs and companies
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to to take that decision. So we have talked very closely with the SEC and others about what can we do to lighten
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the load to make it so that it's not such a huge change. We've t we've advocated for changes in disclosure
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reforms, proxy reform, litigation reform, all of those things. There's such a different existence. It shouldn't
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be so different. Does the burden actually improve the quality of the companies that are
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public? Does it improve the fraud rates? Does it It's a good question. And I actually do
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think that you will find that there is really good valid reasons for certain disclosures. I think disclosure is a
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cleansing, you know, as a as a cleansing event. Um but and so having the respon but there's so they have to disclose so
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much more than that's actually necessary for an investor to make a smart investment decision.
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Let's strip that away and get back to the core disclosures and then offering different ways to actually enter the
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public markets. We think the direct listing and we've actually worked closely with Bill and others on a direct
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listing with a capital raise like why not have that? We have that ability today. Um and so and then spaxs are
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another another avenue to public markets. ICOs over time. We'd like to kind of bring that as a that to me is
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frankly a direct listing, a tokenized direct listing. So, how do we bring all those capabilities into the markets and
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make them available and make these companies feel like it's exciting? That requires the SC hold just sort of
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one followup if I may. That requires the SEC to take a a little bit more risk and
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they seem like an organization that is incredibly riskoff and you know very conservative in their approach. Did they
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need to change their approach to be a little bit more forwardinking in your mind?
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Well, I first of all, I would say that um Chair Atkins is my first meeting with him was just amazing. He's great. Um you
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know, he is forward-leaning. He wants to create change. He wants to make IPOs great again.
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He wants to to really support the public markets while also, frankly, looking at
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elements of the market structure in the established markets and saying, does this all need to exist? Because there's
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a lot of there's a lot of that, too. And then also really embracing the crypto ecosystem to say what elements of this
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could be brought in that regulatory convergence is real. You know, how can we create a a
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regulatory road for crypto markets? How can we actually create a regulatory road
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for tokenized securities markets? How do those things kind of converge? Can I can
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I ask you he's a he's a great I mean I would say he's off to a great start. outside of the equity markets, the
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biggest liquid pools that are trading right now, whether it's the actual tokens or pers or what have you or the
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crypto markets themselves, it would seem relatively logical that um you guys or others would want to play in that game.
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And um why don't you? Yeah, I mean yeah, I think what's held us back is the lack of regulatory
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clarity. I I say that NASDAQ is really good at operating regulated markets and so you ask us to go into a completely
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unregulated space that's a pretty different existence. The risk tolerance is much higher. Um we want to make I
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mean we are always investor protection first always. So how do we make sure that we create the right structure with
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fairness and equality for for investors while also being really big innovators? You know we've moved our markets to
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cloud. We've kind of really brought forth a lot of modern technology into markets, but we also operate best when
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we have the rules of the road. What's happening now in Washington is the potential for rules of the road. And
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that gives us an opportunity to participate in a market that has not been available to us.
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And is that something that if the federal government just creates that clarity, you know, you could compete
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with Coinbase, you can compete with Binance, you can compete with OKX, you can compete with the decentralized. I I
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would say that what we would want to do is really work with our institutional clients because they also have not been
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able or willing to play in the markets. Their risk tolerance is we have a similar profile.
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So if we can actually bring the institutional ecosystem into crypto assets, we bring tokenization into
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securities assets. That's a really interesting way for us to play a role in in really helping evolve these markets
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and and bring them to the mainstream. And whether you know I many flowers will bloom in that in that ecosystem. you you
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today all of your markets are equities. These are securities that have secured interest in in an underlying business
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asset. There's a business that's buying and selling stuff and has employees and does stuff.
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But much of what we see the volume today in prediction markets, in crypto markets, there aren't underlyings. These
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are there's there's a there's a point of view on some value of, for example, in the prediction markets an event. And
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historically, you'd have to figure out a way to play that event with some equity
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trade. Does that do the prediction markets actually kind of create a new way to express investment pieces that
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are kind of going to perhaps be a superset of the way we trade equities or are these just fundamentally different
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that owning an interest in a business is different than having a point of view on
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a thesis? I mean, I have to say the options markets are as much a prediction market
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as uh as the other prediction markets. So we own and operate the largest options marketplace in the United
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States. Um and so we are really you know we're very engaged in looking at how do
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you think about you you are making a decision as to the direction of travel in an in an underlying equity but you're
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not actually trading in the underlying equity. So options are I think a great reflection of a prediction market. The
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difference though is that in a prediction market it's a binary yes no versus an option market you're laying
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you're layering in your bets across multiple price points and different durations. There's by the way a million
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and a half strikes in the in the options markets today. But so it's I think that
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in in some ways the prediction markets make these types of um these types of bets you know more accessible to more
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people because the options markets are quite complex. prediction markets are a little bit more simple. So there is an
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opportunity and I I think it's also good that the SEC and the CFTC by are joining
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forces to think about these markets much more comprehensively because if we can bring that regatory paradigm across the
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markets and make more more of these kind of asset classes more accessible. I think that's good for everyone.
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Maybe you could talk about private uh markets and the secondary sales that are occurring. There's an SPV boom. We heard
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um uh Vlad talk earlier today about tokenizing open AI and SpaceX and I know when Masayoshi wanted to buy a bunch of
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um Uber when it was a private company, they did that through NASDAQ uh and I guess second market.
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NAS Yeah, NASDAQ private market. NASDAQ private markets which came through the acquisition for Second
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Market. That's right. If I remember my history correct, that's pretty good. Um, so how do you
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think about those opportunities and aggressively going after them? Right now I I I take it you are invited into those
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and people hire you to do that. But what about making markets for an open AI share or SpaceX shares or stripe shares.
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So I think the first thing we focus on in NASA private market is being issuer first in how we work with work with
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these private companies. So you know they are private companies and they're private for a reason. They want to have
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control over their shareholder base. Uh and yet they want to create liquidity for their employees, their early
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investors, etc. And there is a second market that is created on the back of these private shares. So how do we work
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with them to allow that to happen in a fair way to make it so that we can introduce them to other other investors
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that they want to have in their cap table? SPVS are a way to do that. You can roll up a lot of wealth interests in
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a company and create an SPV through a known institution. And so the institution becomes the owner. Remember
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the the you know the wealth clients are not actual owners of the shares. They're
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owners of the SPV that are owners of the shares. But letting the issuer have the
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the ultimate decision on whether or not they invite those issu those investors in I think is actually really important
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in the private context, you know, and that's that's kind of part of I I believe is what makes NASA private
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market different than other providers in the private space is we always partner with the issuer
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because they're going rogue basically. They're going around the backs of the CFO and CEO of those companies at times
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and it does piss them off. Yeah. I I think it's important always to realize that um you know the the issuers
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the companies especially private companies are being very mindful of who they have as owners. Let's let them
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continue to do that as private companies. Once you enter the public market then you've got public investors
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and that's a different it is a different responsibility and there is different risk that that's
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involved in opening the aperture to billions of people but I think um and there should be disclosures also
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provided as a result of that. So in this in that private marketplace, let's make
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sure that we we keep some controls in place around that. The um the stock market has mostly
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flipped from individual stock pickers to just an absolute abundance of index funds.
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Um it kind of compresses returns in some way. It's hard to find like a lot of alpha in the market. Um you have an
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enormous concentration with the top seven, eight or nine companies as a percentage of the overall market. um
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when you see these kinds of structural things, what does it tell you about the moment of the cycle because you you've
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seen it now for 30 years. Yeah. Yeah, I have. Um well, first of all, I I think that the rise of index
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investing is making investing more accessible in general. It's a very very inexpensive, very accessible and very
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liquid way to have a view into a sector or a return profile or a theme and not have to pick stocks. And you know, as as
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as retail investors, it's hard to sit there and be a stock picker. It takes a lot of time. I tried to I worked with my
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son when he was a teenager. He really wanted to do it. So I had to teach him how to read an S1 or a 10K. It's you
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spend some time on it. But but indexes give makes I think investing much more accessible. However, I also agree with
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you that you also have to balance it with active management. You have to have active investors. I mean, at the end of
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the day, I always say that there's a balance between the passive and and active world within the markets. And
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whenever it skews towards the passive, what happens is that that creates um arbitrage opportunities for the active.
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If the herd really kind of starts to move the socks in a certain direction, the active manager should step in and
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take advantage of that arbitrage. But the the real foundation of it though, Chimath, is this that the you know the
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NASDAQ 100 or these innovative companies h are they are performing the way they're performing for a reason and it
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becomes very difficult to beat the index because these companies are very hard. It's hard to find companies
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that deliver a better return than they do. Um, and I think that's where active management has has uh struggled just
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because they are trying to beat a benchmark, but that benchmark is so such an attractive benchmark.
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Let me ask a question unrelated to NASDAQ. Um, your role on the board of the New York Fed
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from where you sit and and and your role in capital markets, do you think that there is a trend of ddollarization
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underway? Um there's a report that just came out on central bank holdings that have shown dollar denominated I think it
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was treasuries declining from 60 to 40% gold going from 10 to 20% over just the last decade with some acceleration
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perhaps underway obviously China selling down treasuries what's your view on where we are um with respect to spending
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with respect to central bank interest in in in dollar denominated assets and what
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that implies for our markets yeah I mean I think First of all, I am a huge believer in dollar as a reserve
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currency and the fact we will be persistent as a reserve currency over a long period of time. I think our economy
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is just is such a powerhouse. Um I think that the rule of law and the stability that we have and that we deliver to the
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world is going to continue to provide that anchor for for the dollar to be the reserve currency. But you know uh
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investors will express themselves if they see certain risks starting to manifest. I do think as we've you guys
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talk about a lot you know the amount of debt that we have in the country is something that is we're starting to see
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manifest itself in the markets and we'll make it so that they look for alternatives if they feel like the
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return characteristics of a of a treasury are different than what they could get in another the risk weighted
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returns versus other currencies or other treasuries that they're going to express
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themselves. I I believe in the US I feel like I believe in the power of the US economy to work its way through this. I
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believe that you guys talking about it a lot is actually going to help us make ourselves work our way through it.
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Does the Fed uh and the Fed I think the Fed is a staunch believer in the reserve
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currency? I don't think that they have any, you know, at least my experience with them is that they don't have any
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significant concerns that have arisen from what you talked about. Do you think that there's a data issue
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at the Fed? You know, I've talked about this before. I just I worry that, you know, sort of bad inputs, bad decisions,
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and they don't necessarily benefit from the best of what's available. And quite frankly, the best of what's available
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is, you know, held close by certain companies and not really shared broadly because that they think is their edge.
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So I'm just curious how enabled the Fed is to actually see the tea leaves and actually see what's
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actually happening on the field. I I can only say I mean I I can just speak from my own experience. The the
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Fed is very data driven. They get sources of data, private sources of data, public sources of data. They'll
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get private databases of information that they're not going to disclose or they're not going to share with others
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as an input. But there are many many inputs that they take into consideration. And they share every 10
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days we go through and understand a market update and economic update to help us understand and frame what's
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happening in the economy. And they use that data. They're they're quite wedded to understanding the data. But they'll
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take in new sources. if new sources become available or they find something that could be useful, they will
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absolutely take that into consideration, but it won't supplant everything else that they're looking at.
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Do you have concerns about the Fed remaining independent? We've seen a bit of pressure uh from this administration.
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We've seen it from other administrations in the past, but what are your thoughts
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broadly on the Fed and independence and the importance of that and their mandate?
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Yeah, I mean, I know there's a a debate, you know, even in healthy debate, a health debate, I would say on that
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point. I do have a point of view. I do think that the Fed we've benefited for almost 250 years on having Fed
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independence. Uh I think that it's important to to have allow the Fed to think long term and that's why the term
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of the Fed chair is six years like to think longer term than through individual political cycles and to be
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data dependent. And I agree Tomoth like there should be new sources of data that
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are made available to allow the Fed to continue to make those smart decisions. But and I think in terms of the
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decision-m within the Fed um that independence allows them to to look through a lot of different noise in the
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economy and to think longer term. Are they going to make perfect decisions every time? No.
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Are they 2020 hindsight we could all look back and say oh we would have done it differently.
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Are they a political politically driven organization in your experience? Yeah. My pers my perspective and my
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experience is that it is a very datadriven very apolitical. I mean the New York Fed has been very very focused
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on just looking at the economy looking at the market. They take pride in that. I take it
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a huge amount of pride in that and they have you know there's definitely I mean we've they've gone through some very
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different political cycles. I I've been there for almost six years. Uh and and yet it's been a very steady process of
00:24:58
evaluating the monetary policy. Very steady. while they also do a lot to operate the economy. It's pretty cool.
00:25:04
Yeah. Do you think that um we need to think more about the underlying leverage that the Fed enables in market
00:25:13
participants and specifically you know I've said this I I worry that we financialize so much of the the economy
00:25:21
that you know hedge funds they can take on so much leverage that even if you have you know 60 70 billion you're
00:25:28
running a trillion long and you know a trillion is not what it used to be but it's still a lot of money where you can
00:25:34
really screw up the infrastructure of America if you blow up or if you know things go wrong. And there just doesn't
00:25:40
seem to be this robust check and balance anymore yet again. I mean, we had it for
00:25:44
a few years coming out of the GFC because we everybody was so burned by it. But I think that all these risk
00:25:51
measures, if you look at them, many of them say, you know, a lot of these folks um are running very levered. Um, so I
00:25:59
don't know if you see that from your vantage point if you have I mean certainly NASDAQ as the CEO of
00:26:03
NASDAQ we do see it in not so much in our specific ecosystem although there are you know highly levered let's say
00:26:09
ETFs and other things like that. Um certainly outside the regulated markets in the crypto space there's a lot of
00:26:15
leverage there too in the derivatives markets there is but so but at the same time I think there are a lot of checks
00:26:21
and balances within the securities ecosystem that um that forces us to go back towards a mean and there is an
00:26:28
oversight that the SEC has on what levered products are at least brought into the public markets. Uh in terms of
00:26:33
the Fed and looking at leverage I think that the way that they focus it is what really truly creates systemic risk. Um
00:26:39
and the GFC too big to fail kind of. Yeah. The GFC really introduced the fact that the there are certain banks that
00:26:45
introduce systemic risk by capitalizing the banks the way they have. They feel like have addressed a lot of that. And
00:26:51
yes, some of that activity moves off outside the banking system that they don't necessarily have complete control
00:26:56
over. But their view is that it's distributed enough that it doesn't necessarily create um systemic risk or
00:27:02
having a too big to fail hedge fund for instance, right? Um but that's that's that's how they kind of manage that that
00:27:08
risk. I you know leverage is a part of the system but we also I think there's a responsibility we all have to think
00:27:13
about how much where do you see the biggest risk in the market today? All markets. So there's
00:27:19
there's a lot of talk about climbing defaults in commercial real estate and the catalyzing effect that may result
00:27:25
from delinquency rates starting to climb. We're private credit I've heard about those now for
00:27:31
several years. Um, and I also would say that the banks, you know, to the extent they have a lot of real estate in their
00:27:37
portfolio, they've been working through that. I do think that as we start to be in an environment where we can start to
00:27:43
see rates come down, I think that there'll be a lot of pressure that's eased off of some of those those
00:27:48
concerns. Uh, and you know, people are also coming back to work. Like, you know, commercial real estate's going
00:27:53
through a cycle, but it's not it's it's going to go through a different cycle. So, but I do think that a lot of banks
00:27:58
have been working through those issues and have been managing actually quite well. We have over 5,000 banks in this
00:28:04
country. So, it's also again it's pretty distributive risk. So, I'm going to go buy stocks tomorrow.
00:28:08
I think that's a great idea. I remember joining me in thanking Tina Freriedman for being here today. Thank you. Thanks.
00:28:16
That was great. Thank you. [Music]