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Over the last year to date, up 14%. Over
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the last year, NASDAQ shares up 40%.
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Over the 5-year period, more than
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doubled, up over 100%. You've been on a
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real tear.
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She is often on the list of not just the
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most influential women in finance, but
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just the most influential. Adena
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transformed NASDAQ into a global tech
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powerhouse. Adena is a dealmaker at her
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core. NASDAQ is in the business of
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deals.
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We are here to advance economic progress
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for all.
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Ladies and gentlemen, please welcome
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NASDAQ CEO Adena Freriedman.
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[Music]
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Welcome.
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Hey Jason, how are you?
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Thanks for coming. How are you?
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Hi. It's great to see you. Hey,
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great. It's great to be here.
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Welcome. Thanks for coming out.
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What a day you've been having.
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Yeah. So, you caught some of the action
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earlier today, right?
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I did. I did. I've been watching from
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behind the scenes. It's been amazing to
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watch. You've been hanging backstage.
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Did you have a favorite moment or
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speaker?
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Oh, I I I never like to pick favorites
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at NASDAQ. We don't pick favorites. Um
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uh we have great companies, but
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obviously Rene is a wonderful NASDAQ
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listed company that and I've gotten to
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know it very well with ARM. So, I would
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say always have great conversations.
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But you know, sorry, but NASDAQ's more
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than a market. I think I wanted to start
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with this real important question
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because when when we were talking, I
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didn't realize that NASDAQ was more than
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just the NASDAQ market that we all know.
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Maybe just for the for the audience you
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could just share a little bit more about
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the broader business.
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Sure. Thank you. Well, so first of all,
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we are really proud of our foundation as
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a market. But as we started to grow and
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expand the business, first of all, you
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know, when I became CEO, we had about
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two and a half million billion dollars
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in revenue. Today or as of the end of
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last year, we had a little over $2.5
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billion dollars of IBIDA. So, we've
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grown and expanded the business quite
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dramatically. And how we've done that is
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taking our core as a market and saying,
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what more can we do for our clients? So
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we are an architect of modern markets.
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We provide our technology to our 17
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markets and we sell it to 135 other
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markets around the world. So market
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infrastructure is our business and we do
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that globally. Then the second is really
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being powering that innovation economy
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like companies like Renee you know ARM
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and other great companies. So uh we've
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expanded that. So, our index business
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now has about $700 billion of assets
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under management that are tied to those
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great innovators in addition to creating
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better abilities for companies to
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navigate the public markets and
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investors to find cu find investments.
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And you had a big announcement today.
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And then the third is is also building
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trust in across the financial system.
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And that is anti-inancial crime
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technology, market surveillance
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technology, other technologies that the
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banking industry and the and the broker
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dealer industry really need to manage
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their lives in the markets. And you're
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right, we had a big invest we had a big
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um a big announcement today
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which almost Vlad foreshadowed before
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you actually.
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Yeah. And and actually it goes right
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back to that first pillar being, you
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know, being the architect of modern
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life.
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Tell people what
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You think we should? Yeah. Yeah. Okay.
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So uh so this morning we announced that
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um we're going to be bringing
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tokenization into our markets. So making
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sure that equities are tokenized and
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traded on market in the markets not in a
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side a side sleeve but actually in the
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the core markets.
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So the eventual goal or is it today 24x7
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365 equities just let it rip constantly.
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I mean I think we are all moving in that
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direction. We announced several months
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ago that we're moving to 245. So we're
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moving that way. So Saturday and Sunday
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not
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not not for equities yet. I think that
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you know we have to we're walking before
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we run u but I think that getting to 245
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is a major advancement for the US
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equities markets. And then on top of
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that now with tokenization if we can
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introduce that also into the markets it
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allows us to really think about
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streamlining the post trade processing
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bringing and modernizing elements of the
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markets that have a lot of friction. You
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know we we are hyper resilient and we're
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hyperscaled. You know, we manage like
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today we had 95 billion messages come
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into our systems today and we had a
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median, you know, return time of 20
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micros on from order to trade. We handle
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like 3 million messages a second. It's
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hugely scaled. But then at the same
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time, you know, once that trade occurs,
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there's a different process. And the
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post trade process as we know is an area
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where tokenization really shines and
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really cutting down the friction
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managing capital flows across the global
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ecosystem and really bringing that
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capability into the market is going to
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be the next.
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Get your reaction to this. You know
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there's this very famous curve which is
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like you get this early font of insanity
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and then there's the trough of
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disillusionment and then you grow
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through and it's is it does it seem like
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crypto is actually a blockchain? It's
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just it's finally real. It's like
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there's real companies doing real
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things, stable coins, what Sachs did
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with the Genius Act. It's
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Well, I I actually want to point to that
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because, you know, honestly, having
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regulators who want to to work on
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bringing it into the mainstream and want
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to create the rules of the road is such
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a refreshing thing because I think that
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it allows us all to understand how we
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can operate within a world where there
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are tenants of investor protection. the
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technology is going to have things we
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can and can't do, but also being forward
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thinking and forward-leaning in how the
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technology is going to be applied is
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going to be critical. So, we're very
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excited about the fact that we finally
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have this convergence of regulatory of
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regulation between the traditional
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markets, the digital markets. How do we
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bring it all together to frankly advance
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all markets and we're very very excited
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about that.
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And and I don't mean this to be glib or
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anything, but wasn't there like a
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concept around the markets having an end
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of the day at 4:00, allowing people to
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have a life and to sleep and to not have
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this anxiety? Are we all going to live
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in a world where we have to check our
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stocks at 2 in the morning or some crazy
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event happens in the world, god forbid,
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a terrorist attack or a hack or
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something, and now we've all got to wake
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up at 3:00 in the morning and decide, do
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we trade or not? Was that the resistance
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to this? And then how do you justify it?
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Like, hey, it's going to be worth the
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fact that none of us are ever going to
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sleep again.
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Yeah. So, so I think first of all, I've
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been at I started at NASDAQ in 1993, and
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back in the '9s, we had a vision to go
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to 247 markets, and we just couldn't
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achieve it both technologically, it
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wasn't the technology wasn't there to do
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it, but also regulatory. And and part of
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a big part of that was that resistance
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from the industry saying, I like to be
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able to finish my day and go home. And
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actually we need those points in the
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day. I mean the market open and the
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market close will continue to exist in a
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world of 245 markets. But you'll have
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like a US trading day and you'll have
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non- US trading day. And so and we
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already our systems turn on at 4 and
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they turn off at 8:00 at night. 4 in the
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morning 8:00. Trading occurs during that
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entire period of time. But the official
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trading days of the United States are
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9:34. I don't anticipate that changing
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because we have to have those moments
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for like the navs to be set for mutual
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funds and things like that but have
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allowing the entire world to trade these
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securities. I mean we have the NASDAQ
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itself we have the top seven companies
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in the world listed on NASDAQ. Those
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companies are global investors have
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global interests. The NASDAQ 100's one
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of the most traded products in the
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world. The futures trade 245. So why
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shouldn't the underlying? So that's how
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we look at those non- US trading hours
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and then the trading hours and trying to
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find that confluence and wait a little
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bit.
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There's a lot of um hand ringing about
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the number of companies that have gone
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public. The weight of being a public
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company, the stay private longer moment.
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Took Uber 11 long years. Stripe is
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private now close to 15 years. SpaceX.
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So and and we have some folks who maybe
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think things should run differently. We
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had Spotify go uh public in a direct
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listing. You have Chimath experimenting
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with spaxs. What should the IPO market
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look like? And how can we make it now
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that we have a government that's maybe a
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little more engaged, let's say, and less
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napping as administration? How should
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the IPO market change and that process
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change to encourage people to maybe not
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stay private so long? Because all the
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gains are being captured by the elites,
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by the qualified purchasers, the
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accredited investors can barely get in
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and let alone the public. By the time
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the public gets in, it does feel like,
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oh, I'm getting into Instacart and it's
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going to go sideways for a year or two
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or three.
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Yeah. So I mean first of all I think
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it's really good to remind all of our
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you know all of us why the public
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markets are so important for the
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economy. Um when a company goes public
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they get access to billions of investors
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and every citizen in this country gets a
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chance to become an owner in the
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economy. And when we look at just the
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performance of the NASDAQ 100 over 40
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years of its existence the average
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return on the NASDAQ 100 over those 40
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years is a 14.25% annual return. So
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that's double the broader market.
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It's an incredible return
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if if if com you know if individuals
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have access to these great companies as
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you know I saw your your pod a few weeks
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ago showing the performance of the
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public markets. It's it's such an
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important part of our economy to engage
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the population in the economy and the
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growth of the economy and the success of
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the economy. So I've always believed in
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the balance between public and private
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markets. I think there are reasons for
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them both to thrive and be great great
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for everyone. But the public market
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experience has become this massive you
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know burden and I think that we call it
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like you have to cross the Rubicon to
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become public and it's become very
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daunting for com for CEOs and companies
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to to take that decision. So we have
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talked very closely with the SEC and
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others about what can we do to lighten
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the load to make it so that it's not
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such a huge change. We've t we've
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advocated for changes in disclosure
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reforms, proxy reform, litigation
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reform, all of those things. There's
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such a different existence. It shouldn't
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be so different.
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Does the burden actually improve the
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quality of the companies that are
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public? Does it improve the fraud rates?
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Does it
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It's a good question. And I actually do
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think that you will find that there is
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really good valid reasons for certain
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disclosures. I think disclosure is a
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cleansing, you know, as a as a cleansing
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event. Um but and so having the respon
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but there's so they have to disclose so
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much more than that's actually necessary
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for an investor to make a smart
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investment decision.
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Let's strip that away and get back to
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the core disclosures and then offering
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different ways to actually enter the
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public markets. We think the direct
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listing and we've actually worked
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closely with Bill and others on a direct
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listing with a capital raise like why
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not have that? We have that ability
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today. Um and so and then spaxs are
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another another avenue to public
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markets. ICOs over time. We'd like to
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kind of bring that as a that to me is
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frankly a direct listing, a tokenized
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direct listing. So, how do we bring all
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those capabilities into the markets and
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make them available and make these
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companies feel like it's exciting?
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That requires the SC hold just sort of
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one followup if I may. That requires the
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SEC to take a a little bit more risk and
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they seem like an organization that is
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incredibly riskoff and you know very
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conservative in their approach. Did they
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need to change their approach to be a
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little bit more forwardinking in your
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mind?
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Well, I first of all, I would say that
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um Chair Atkins is my first meeting with
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him was just amazing. He's great. Um you
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know, he is forward-leaning. He wants to
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create change. He wants to make IPOs
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great again.
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He wants to to really support the public
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markets while also, frankly, looking at
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elements of the market structure in the
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established markets and saying, does
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this all need to exist? Because there's
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a lot of there's a lot of that, too. And
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then also really embracing the crypto
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ecosystem to say what elements of this
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could be brought in that regulatory
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convergence is real.
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You know, how can we create a a
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regulatory road for crypto markets? How
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can we actually create a regulatory road
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for tokenized securities markets? How do
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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
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would say he's off to a great start.
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outside of the equity markets, the
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biggest liquid pools that are trading
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right now, whether it's the actual
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tokens or pers or what have you or the
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crypto markets themselves, it would seem
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relatively logical that um you guys or
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others would want to play in that game.
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And um why don't you?
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Yeah, I mean yeah, I think what's held
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us back is the lack of regulatory
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clarity. I I say that NASDAQ is really
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good at operating regulated markets and
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so you ask us to go into a completely
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unregulated space that's a pretty
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different existence. The risk tolerance
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is much higher. Um we want to make I
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mean we are always investor protection
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first always. So how do we make sure
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that we create the right structure with
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fairness and equality for for investors
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while also being really big innovators?
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You know we've moved our markets to
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cloud. We've kind of really brought
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forth a lot of modern technology into
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markets, but we also operate best when
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we have the rules of the road. What's
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happening now in Washington is the
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potential for rules of the road. And
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that gives us an opportunity to
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participate in a market that has not
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been available to us.
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And is that something that if the
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federal government just creates that
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clarity, you know, you could compete
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with Coinbase, you can compete with
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Binance, you can compete with OKX, you
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can compete with the decentralized. I I
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would say that what we would want to do
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is really work with our institutional
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clients because they also have not been
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able or willing to play in the markets.
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Their risk tolerance is we have a
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similar profile.
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So if we can actually bring the
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institutional ecosystem into crypto
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assets, we bring tokenization into
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securities assets. That's a really
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interesting way for us to play a role in
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in really helping evolve these markets
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and and bring them to the mainstream.
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And whether you know I many flowers will
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bloom in that in that ecosystem. you you
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today all of your markets are equities.
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These are securities that have secured
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interest in in an underlying business
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asset. There's a business that's buying
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and selling stuff and has employees and
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does stuff.
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But much of what we see the volume today
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in prediction markets, in crypto
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markets, there aren't underlyings. These
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are there's there's a there's a point of
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view on some value of, for example, in
00:14:02
the prediction markets an event. And
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historically, you'd have to figure out a
00:14:06
way to play that event with some equity
00:14:08
trade. Does that do the prediction
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markets actually kind of create a new
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way to express investment pieces that
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are kind of going to perhaps be a
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superset of the way we trade equities or
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are these just fundamentally different
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that owning an interest in a business is
00:14:24
different than having a point of view on
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a thesis?
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I mean, I have to say the options
00:14:28
markets are as much a prediction market
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as uh as the other prediction markets.
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So we own and operate the largest
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options marketplace in the United
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States. Um and so we are really you know
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we're very engaged in looking at how do
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you think about you you are making a
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decision as to the direction of travel
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in an in an underlying equity but you're
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not actually trading in the underlying
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equity. So options are I think a great
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reflection of a prediction market. The
00:14:55
difference though is that in a
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prediction market it's a binary yes no
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versus an option market you're laying
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you're layering in your bets across
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multiple price points and different
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durations. There's by the way a million
00:15:07
and a half strikes in the in the options
00:15:09
markets today. But so it's I think that
00:15:12
in in some ways the prediction markets
00:15:14
make these types of um these types of
00:15:18
bets you know more accessible to more
00:15:20
people because the options markets are
00:15:22
quite complex. prediction markets are a
00:15:24
little bit more simple. So there is an
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opportunity and I I think it's also good
00:15:28
that the SEC and the CFTC by are joining
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forces to think about these markets much
00:15:33
more comprehensively because if we can
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bring that regatory paradigm across the
00:15:36
markets and make more more of these kind
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of asset classes more accessible. I
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think that's good for everyone.
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Maybe you could talk about private uh
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markets and the secondary sales that are
00:15:48
occurring. There's an SPV boom. We heard
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um uh Vlad talk earlier today about
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tokenizing open AI and SpaceX and I know
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when Masayoshi wanted to buy a bunch of
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um Uber when it was a private company,
00:16:03
they did that through NASDAQ uh and I
00:16:06
guess second market.
00:16:07
NAS Yeah, NASDAQ private market.
00:16:09
NASDAQ private markets which came
00:16:10
through the acquisition for Second
00:16:11
Market. That's right. If I remember my
00:16:13
history correct,
00:16:14
that's pretty good. Um, so how do you
00:16:17
think about those opportunities and
00:16:20
aggressively going after them? Right now
00:16:21
I I I take it you are invited into those
00:16:25
and people hire you to do that. But what
00:16:28
about making markets for an open AI
00:16:30
share or SpaceX shares or stripe shares.
00:16:32
So I think the first thing we focus on
00:16:35
in NASA private market is being issuer
00:16:38
first in how we work with work with
00:16:39
these private companies. So you know
00:16:42
they are private companies and they're
00:16:43
private for a reason. They want to have
00:16:45
control over their shareholder base. Uh
00:16:47
and yet they want to create liquidity
00:16:48
for their employees, their early
00:16:50
investors, etc. And there is a second
00:16:52
market that is created on the back of
00:16:54
these private shares. So how do we work
00:16:55
with them to allow that to happen in a
00:16:58
fair way to make it so that we can
00:17:00
introduce them to other other investors
00:17:02
that they want to have in their cap
00:17:03
table? SPVS are a way to do that. You
00:17:06
can roll up a lot of wealth interests in
00:17:08
a company and create an SPV through a
00:17:10
known institution. And so the
00:17:11
institution becomes the owner. Remember
00:17:14
the the you know the wealth clients are
00:17:16
not actual owners of the shares. They're
00:17:17
owners of the SPV that are owners of the
00:17:19
shares. But letting the issuer have the
00:17:22
the ultimate decision on whether or not
00:17:24
they invite those issu those investors
00:17:26
in I think is actually really important
00:17:27
in the private context, you know, and
00:17:29
that's that's kind of part of I I
00:17:31
believe is what makes NASA private
00:17:34
market different than other providers in
00:17:36
the private space is we always partner
00:17:38
with the issuer
00:17:38
because they're going rogue basically.
00:17:40
They're going around the backs of the
00:17:42
CFO and CEO of those companies at times
00:17:44
and it does piss them off.
00:17:46
Yeah. I I think it's important always to
00:17:48
realize that um you know the the issuers
00:17:51
the companies especially private
00:17:53
companies are being very mindful of who
00:17:55
they have as owners. Let's let them
00:17:57
continue to do that as private
00:17:58
companies. Once you enter the public
00:17:59
market then you've got public investors
00:18:01
and that's a different it is a different
00:18:02
responsibility
00:18:03
and there is different risk that that's
00:18:05
involved in opening the aperture to
00:18:07
billions of people but I think um and
00:18:09
there should be disclosures also
00:18:11
provided as a result of that. So in this
00:18:14
in that private marketplace, let's make
00:18:16
sure that we we keep some controls in
00:18:17
place around that.
00:18:18
The um the stock market has mostly
00:18:21
flipped from individual stock pickers to
00:18:24
just an absolute abundance of index
00:18:27
funds.
00:18:28
Um
00:18:29
it kind of compresses returns in some
00:18:32
way. It's hard to find like a lot of
00:18:33
alpha in the market. Um you have an
00:18:36
enormous concentration with the top
00:18:38
seven, eight or nine companies as a
00:18:40
percentage of the overall market. um
00:18:42
when you see these kinds of structural
00:18:44
things, what does it tell you about the
00:18:46
moment of the cycle because you you've
00:18:48
seen it now for 30 years.
00:18:49
Yeah. Yeah, I have. Um well, first of
00:18:51
all, I I think that the rise of index
00:18:53
investing is making investing more
00:18:55
accessible in general. It's a very very
00:18:58
inexpensive, very accessible and very
00:19:01
liquid way to have a view into a sector
00:19:05
or a return profile or a theme and not
00:19:08
have to pick stocks. And you know, as as
00:19:10
as retail investors, it's hard to sit
00:19:12
there and be a stock picker. It takes a
00:19:13
lot of time. I tried to I worked with my
00:19:15
son when he was a teenager. He really
00:19:16
wanted to do it. So I had to teach him
00:19:18
how to read an S1 or a 10K. It's you
00:19:21
spend some time on it. But but indexes
00:19:23
give makes I think investing much more
00:19:25
accessible. However, I also agree with
00:19:27
you that you also have to balance it
00:19:28
with active management. You have to have
00:19:30
active investors. I mean, at the end of
00:19:32
the day, I always say that there's a
00:19:33
balance between the passive and and
00:19:35
active world within the markets. And
00:19:38
whenever it skews towards the passive,
00:19:40
what happens is that that creates um
00:19:42
arbitrage opportunities for the active.
00:19:44
If the herd really kind of starts to
00:19:45
move the socks in a certain direction,
00:19:47
the active manager should step in and
00:19:49
take advantage of that arbitrage. But
00:19:50
the the real foundation of it though,
00:19:52
Chimath, is this that the you know the
00:19:54
NASDAQ 100 or these innovative companies
00:19:57
h are they are performing the way
00:19:59
they're performing for a reason and it
00:20:00
becomes very difficult to beat
00:20:03
the index because these companies are
00:20:05
very hard. It's hard to find companies
00:20:07
that deliver a better return than they
00:20:08
do. Um, and I think that's where active
00:20:10
management has has uh struggled just
00:20:13
because they are trying to beat a
00:20:14
benchmark, but that benchmark is so such
00:20:16
an attractive benchmark.
00:20:18
Let me ask a question unrelated to
00:20:20
NASDAQ. Um, your role on the board of
00:20:23
the New York Fed
00:20:25
from where you sit and and and your role
00:20:28
in capital markets, do you think that
00:20:30
there is a trend of ddollarization
00:20:32
underway? Um there's a report that just
00:20:34
came out on central bank holdings that
00:20:37
have shown dollar denominated I think it
00:20:40
was treasuries declining from 60 to 40%
00:20:44
gold going from 10 to 20% over just the
00:20:46
last decade with some acceleration
00:20:49
perhaps underway obviously China selling
00:20:51
down treasuries what's your view on
00:20:53
where we are um with respect to spending
00:20:56
with respect to central bank interest in
00:20:58
in in dollar denominated assets and what
00:21:00
that implies for our markets
00:21:02
yeah I mean I think First of all, I am a
00:21:05
huge believer in dollar as a reserve
00:21:07
currency and the fact we will be
00:21:08
persistent as a reserve currency over a
00:21:10
long period of time. I think our economy
00:21:13
is just is such a powerhouse. Um I think
00:21:15
that the rule of law and the stability
00:21:18
that we have and that we deliver to the
00:21:20
world is going to continue to provide
00:21:22
that anchor for for the dollar to be the
00:21:24
reserve currency. But you know uh
00:21:26
investors will express themselves if
00:21:28
they see certain risks starting to
00:21:29
manifest. I do think as we've you guys
00:21:31
talk about a lot you know the amount of
00:21:33
debt that we have in the country is
00:21:34
something that is we're starting to see
00:21:36
manifest itself in the markets and we'll
00:21:38
make it so that they look for
00:21:40
alternatives if they feel like the
00:21:41
return characteristics of a of a
00:21:43
treasury are different than what they
00:21:44
could get in another the risk weighted
00:21:46
returns versus other currencies or other
00:21:49
treasuries that they're going to express
00:21:51
themselves. I I believe in the US I feel
00:21:54
like I believe in the power of the US
00:21:55
economy to work its way through this. I
00:21:57
believe that you guys talking about it a
00:21:59
lot is actually going to help us make
00:22:01
ourselves work our way through it.
00:22:02
Does the Fed
00:22:03
uh and the Fed I think the Fed is a
00:22:05
staunch believer in the reserve
00:22:06
currency? I don't think that they have
00:22:08
any, you know, at least my experience
00:22:09
with them is that they don't have any
00:22:11
significant concerns that have arisen
00:22:13
from what you talked about.
00:22:14
Do you think that there's a data issue
00:22:15
at the Fed? You know, I've talked about
00:22:16
this before. I just I worry that, you
00:22:19
know, sort of bad inputs, bad decisions,
00:22:21
and they don't necessarily benefit from
00:22:23
the best of what's available. And quite
00:22:25
frankly, the best of what's available
00:22:26
is, you know, held close by certain
00:22:29
companies and not really shared broadly
00:22:31
because that they think is their edge.
00:22:33
So I'm just curious how
00:22:36
enabled the Fed is to actually see the
00:22:38
tea leaves and actually see what's
00:22:40
actually happening on the field.
00:22:41
I I can only say I mean I I can just
00:22:43
speak from my own experience. The the
00:22:45
Fed is very data driven. They get
00:22:47
sources of data, private sources of
00:22:49
data, public sources of data. They'll
00:22:51
get private databases of information
00:22:54
that they're not going to disclose or
00:22:56
they're not going to share with others
00:22:57
as an input. But there are many many
00:22:59
inputs that they take into
00:23:00
consideration. And they share every 10
00:23:03
days we go through and understand a
00:23:04
market update and economic update to
00:23:06
help us understand and frame what's
00:23:08
happening in the economy. And they use
00:23:10
that data. They're they're quite wedded
00:23:12
to understanding the data. But they'll
00:23:14
take in new sources. if new sources
00:23:16
become available or they find something
00:23:17
that could be useful, they will
00:23:18
absolutely take that into consideration,
00:23:21
but it won't supplant everything else
00:23:23
that they're looking at.
00:23:24
Do you have concerns about the Fed
00:23:26
remaining independent? We've seen a bit
00:23:27
of pressure uh from this administration.
00:23:29
We've seen it from other administrations
00:23:31
in the past, but what are your thoughts
00:23:32
broadly on the Fed and independence and
00:23:35
the importance of that and their
00:23:36
mandate?
00:23:37
Yeah, I mean, I know there's a a debate,
00:23:39
you know, even in healthy debate, a
00:23:40
health debate, I would say on that
00:23:42
point. I do have a point of view. I do
00:23:44
think that the Fed we've benefited for
00:23:46
almost 250 years on having Fed
00:23:48
independence. Uh I think that it's
00:23:50
important to to have allow the Fed to
00:23:53
think long term and that's why the term
00:23:54
of the Fed chair is six years like to
00:23:56
think longer term than through
00:23:58
individual political cycles and to be
00:24:01
data dependent. And I agree Tomoth like
00:24:03
there should be new sources of data that
00:24:05
are made available to allow the Fed to
00:24:07
continue to make those smart decisions.
00:24:09
But and I think in terms of the
00:24:11
decision-m within the Fed um that
00:24:13
independence allows them to to look
00:24:16
through a lot of different noise in the
00:24:18
economy and to think longer term. Are
00:24:20
they going to make perfect decisions
00:24:21
every time? No.
00:24:23
Are they 2020 hindsight we could all
00:24:25
look back and say oh we would have done
00:24:26
it differently.
00:24:27
Are they a political politically driven
00:24:30
organization in your experience?
00:24:31
Yeah. My pers my perspective and my
00:24:33
experience is that it is a very
00:24:35
datadriven very apolitical. I mean the
00:24:37
New York Fed has been very very focused
00:24:40
on just looking at the economy looking
00:24:42
at the market.
00:24:42
They take pride in that. I take it
00:24:44
a huge amount of pride in that and they
00:24:47
have you know there's definitely I mean
00:24:48
we've they've gone through some very
00:24:50
different political cycles. I I've been
00:24:52
there for almost six years. Uh and and
00:24:54
yet it's been a very steady process of
00:24:58
evaluating the monetary policy. Very
00:25:00
steady. while they also do a lot to
00:25:02
operate the economy. It's pretty cool.
00:25:04
Yeah. Do you think that um we need to
00:25:07
think more about the underlying leverage
00:25:10
that the Fed enables in market
00:25:13
participants and specifically you know
00:25:15
I've said this I I worry that we
00:25:18
financialize so much of the the economy
00:25:21
that you know hedge funds they can take
00:25:25
on so much leverage that even if you
00:25:26
have you know 60 70 billion you're
00:25:28
running a trillion long and you know a
00:25:31
trillion is not what it used to be but
00:25:32
it's still a lot of money where you can
00:25:34
really screw up the infrastructure of
00:25:35
America if you blow up or if you know
00:25:37
things go wrong. And there just doesn't
00:25:40
seem to be this robust check and balance
00:25:42
anymore yet again. I mean, we had it for
00:25:44
a few years coming out of the GFC
00:25:46
because we everybody was so burned by
00:25:48
it.
00:25:50
But I think that all these risk
00:25:51
measures, if you look at them, many of
00:25:53
them say, you know, a lot of these folks
00:25:55
um are running very levered. Um, so I
00:25:59
don't know if you see that from your
00:26:00
vantage point if you have
00:26:01
I mean certainly NASDAQ as the CEO of
00:26:03
NASDAQ we do see it in not so much in
00:26:06
our specific ecosystem although there
00:26:08
are you know highly levered let's say
00:26:09
ETFs and other things like that. Um
00:26:11
certainly outside the regulated markets
00:26:13
in the crypto space there's a lot of
00:26:15
leverage there too in the derivatives
00:26:18
markets there is but so but at the same
00:26:20
time I think there are a lot of checks
00:26:21
and balances within the securities
00:26:23
ecosystem that um that forces us to go
00:26:26
back towards a mean and there is an
00:26:28
oversight that the SEC has on what
00:26:30
levered products are at least brought
00:26:31
into the public markets. Uh in terms of
00:26:33
the Fed and looking at leverage I think
00:26:34
that the way that they focus it is what
00:26:36
really truly creates systemic risk. Um
00:26:39
and the GFC too big to fail kind of.
00:26:42
Yeah. The GFC really introduced the fact
00:26:44
that the there are certain banks that
00:26:45
introduce systemic risk by capitalizing
00:26:48
the banks the way they have. They feel
00:26:49
like have addressed a lot of that. And
00:26:51
yes, some of that activity moves off
00:26:52
outside the banking system that they
00:26:55
don't necessarily have complete control
00:26:56
over. But their view is that it's
00:26:58
distributed enough that it doesn't
00:27:00
necessarily create um systemic risk or
00:27:02
having a too big to fail hedge fund for
00:27:04
instance, right? Um but that's that's
00:27:06
that's how they kind of manage that that
00:27:08
risk. I you know leverage is a part of
00:27:10
the system but we also I think there's a
00:27:12
responsibility we all have to think
00:27:13
about how much
00:27:14
where do you see the biggest risk in the
00:27:16
market today? All markets. So there's
00:27:19
there's a lot of talk about climbing
00:27:20
defaults in commercial real estate and
00:27:23
the catalyzing effect that may result
00:27:25
from delinquency rates starting to
00:27:26
climb. We're private
00:27:28
credit I've heard about those now for
00:27:31
several years. Um, and I also would say
00:27:34
that the banks, you know, to the extent
00:27:36
they have a lot of real estate in their
00:27:37
portfolio, they've been working through
00:27:39
that. I do think that as we start to be
00:27:42
in an environment where we can start to
00:27:43
see rates come down, I think that
00:27:45
there'll be a lot of pressure that's
00:27:46
eased off of some of those those
00:27:48
concerns. Uh, and you know, people are
00:27:50
also coming back to work. Like, you
00:27:52
know, commercial real estate's going
00:27:53
through a cycle, but it's not it's it's
00:27:55
going to go through a different cycle.
00:27:56
So, but I do think that a lot of banks
00:27:58
have been working through those issues
00:28:00
and have been managing actually quite
00:28:02
well. We have over 5,000 banks in this
00:28:04
country. So, it's also again it's pretty
00:28:05
distributive risk.
00:28:07
So, I'm going to go buy stocks tomorrow.
00:28:08
I think that's a great idea. I remember
00:28:11
joining me in thanking Tina Freriedman
00:28:13
for being here today. Thank you. Thanks.
00:28:16
That was great. Thank you.
00:28:19
[Music]
