Adena T. Friedman, Chair and CEO of Nasdaq, Inc.

It's great to be here.

Okay. Well, what NASDAQ is and what we stand for are two very different things. So, but the NASDAQ was started in 1971 and we were a subsidiary of the National Association of Securities Dealers, NASD. And we were formed to be the first electronic market to drive automated quotes. So, NASDAQ is the National Association of Security Dealers automated quotation system.

Yeah. So I'm in my 10th year.

Mhm.

Apple, Meta.

Google, Alphabet.

Yep.

And now Walmart. So, what do you have the top? We have the top eight companies in the world listed on NASDAQ and we're really proud of that, too.

Yeah. I mean, it is there are some differences. And I think the first thing is that we do, there's some soft stuff and some hard stuff. So, I'm going to start a little bit with the soft stuff. So, the first thing is everyone at NASDAQ works for listings. No matter what you do in your job, whether you're in the software business, the data business, the exchange business, we all work for our list of companies. And that really means that we come to work every single day saying, how do we make the markets better? How do we make them perform better? We invest in our technology. We invest in our relationships. We invest in products like indexes and all the needs that public companies have to be great public companies. And then we invest in the foundations of the entire financial system with core technology that manages risk and roots criminals out of the system. But we do care about it because at the end of the day we really focus on the liquidity, transparency and the integrity we bring to those companies. And for a listed company, if I'm going to go in and pitch a listed company, maybe I'll talk about the fact that we did actually have Walmart switch from New York to NASDAQ last year.

No, luckily no. So we first is that we have the NASDAQ 100 index and that for the top 100 companies is actually a sizable investment that we make in the company through the NASDAQ 100 index products. So we are essentially kind of a 3 to 4% owner of the companies that sit in the NASDAQ 100. So for them that was a very large investment that was going to come into their stock and that only, and the NASDAQ 100 is the only index in the United States that's tied to where you list. We have companies that are in the Dow 30. We have many companies in the S&P 500. But the NASDAQ is the only one that is tied to the listing. And then we also have better markets and they really did do a deep dive on the quality of trading at NASDAQ. We've invested a lot in our technology, modernizing it, making it cloud ready and driving performance. And we can show that if you list on NASDAQ, you have a better trading outcome, which means that your investors have a better outcome. And that lowers your cost of capital. And then we also provide a whole suite of IR services, governance solutions that really help you navigate the public markets really successfully. And New York doesn't own any of those.

Yeah. So, first I would say that most investors, you know, it's a pretty ubiquitous experience for investors when they come and choose to list in or trade in any company because we all trade each other's stocks. So, we trade all stocks in the United States and the New York Stock Exchange trades all stocks in the United States. There are in fact 40 venues that trade all stocks in the United States. So, as an investor, you have a very good experience all the time. We can actually demonstrate they have a slightly better experience in that listed companies. And it's measurable. But the fact is that it's really you have to choose your investment thesis and you go and you can have instantaneous execution of any order you put in any system at or better than the best bidding offer. And that's a great experience for investors and that's created through a whole series of players in the markets, not just us, but we do play a big role in making sure that everyone has equal access to information about what is the best bid and offer in the stock, what was the last trade in the stock, how do you want to think about managing your positions. We give a whole suite of intelligent solutions to support investors. How do you want to allocate your assets especially as an institutional investor? How do you make sure that you're getting that information instantaneously with no delay, like 20 microseconds of latency? That's what we do and that's the experience we create.

No, they don't. They don't do that. Not retail investors don't and even institutional investors will they might. So what we like to say is we always want to be the first venue of choice. So if you're coming into the stock market and you're trying to buy a stock and you go through any sort of retail broker, we want to work with that broker to be the first venue they choose to send it to. And that means that we have to be faster than anyone else and we have to be more deterministic than anyone else. And that's what we strive to be every day. But today, most people probably heard of the New York Stock Exchange and they've heard of NASDAQ, but aren't there like 38 other people you can buy things through? Who are all these other people you can buy things through?

What is Citadel Security? So, what is Citadel Security?

So if somebody says I want to be listed on NASDAQ do you service them and you charge a fee for that or we do you do?

Yes. So we never comment on any company as they're going through the process but I can say that it is quite exciting to think that there are a lot of amazing companies looking to tap the public markets. It's wonderful to have them understand the power of the public markets as a way to help them drive their growth.

We fight for every listing. We really do. It is all the time. It's a constant.

Yeah. Well, they have an obligation to give you the best price. And do they everybody? Yeah, they have something called best execution. So it's a rule that says that broker is responsible for getting you the best execution they can at any given moment all day long and then they're measured on that. The firms have to do regulatory reporting on that and we provide the regulatory reporting tools that allow them to report on that.

Yes.

Exactly. We're all electronic today. So, think about it. I mean, I would just say in the month of March, so far this month, across all of the venues that trade stocks, we are executing 22 billion shares a day, which is a record. So, that's a new record. Before COVID, it was averaging 10. So, if you think about it, the markets have doubled over the last six years in terms of volumes. But if you're trading 22 billion shares a day, you can't do that manually.

Well, we have a great way. We have a bell ringing ceremony at the NASDAQ market site. And what's nice about ours is that everyone can be on the same level. So, like at New York, you stand on a podium and you look down on everyone and now it's like you're all with everyone. So we can have a hundred people up at the podium with you as you are celebrating your moment and we love it. It's really fun. We have a great time with that.

Yeah, it's a great question. So we actually do, we are the largest provider of what we call market surveillance technology, trade surveillance technology in the world. So we use our own solution. And it's a very sophisticated system that takes in every order, every trade that's done in our markets or if I'm a trading firm, every order and every trade that you do in your trading desk. And we compare it against the consolidated feed. We compare it against other known behaviors. We do a lot of work to make sure that we know what we call the topology of bad behavior looks like. So if you're doing wash sales or if you're doing insider trading, then we see an alert, we generate an alert and we send it to the SEC. The SEC and FINRA then gather up all that information across all the markets and they're the ones who really go in and do the investigations. But it's a very sophisticated process and it requires a lot of coordination across the exchanges and with the regulator.

Well, it's actually kind of amazing at how well they do at rooting out insider trading. I'm very impressed and same across other countries too. Like in Europe, we've seen that.

There we go. You're going to think, 'Oh my gosh, you think you can get away with it?'

I was born in Springfield, Massachusetts, but I grew up in Baltimore.

Yeah. My dad worked at T. Rowe Price for his whole career.

I went to Williams College.

Well, my father had gone to Williams, so that made a difference. And I loved it there. I thought it was just an amazing place.

I majored in political science with a concentration in Soviet studies. So, of course, the Soviet Union

It disappeared the year I graduated. So, the wall fell in 1990 and I graduated 1991. I'm like, I guess I have to find another.

So, you went to Vanderbilt.

Well, my husband was at the law school. He was my boyfriend at the time, but we had met at Williams and he had ended up at the law school there and so I applied to one school. And I was very lucky to get in.

So, I came to NASDAQ. So we moved to Washington because at the time being a subsidiary of the NASD, NASDAQ was actually based here in Washington DC. So we moved to Washington. My husband took a job at a shop, Pitman, and I took a job at NASDAQ. I was an intern and then I turned it into a full-time job.

Well, we were all in DC then and then we moved the headquarters to New York in 2000. And so by then I was already running the data division within NASDAQ. We had three business units and they just created the data business unit and they asked me to head that up. And so I said to my boss, I said great that we're moving to New York but I won't be moving. Because I had two kids, they were in a great school. My husband had a wonderful job and so we said, you know, I can commute when I need to. The data business is still largely run out of Washington. 25 years later.

Yes, I did.

So, I got a call from a headhunter who asked me, 'What would you think about working for the best private equity firm in the country to help them go public?' And at the time, I was the CFO of NASDAQ, very happy in the job. And it was a cold call and I said, 'Well, did you know that I live in Washington DC?' And Clark, I don't know if I remember Clark Murphy, he was kind of taken aback. He's like, 'No, I didn't know that.' So anyway, I interviewed for the job and I ended up at Carlyle as CFO. We went public and did a great job. So we had a great time. It was a really cool time.

Yeah. So I mean the first and the biggest thing was I'd run a business and I'd been doing all the deals for NASDAQ and then I became the CFO, which is much more of a risk manager job, right? And then I came to Carlyle and that was so amazing, to be able to take this incredible firm and take it public. But I did realize I really liked risk-taking more than risk management. And Bob, the CEO was ready. He was getting ready to think about retiring. So they asked me to come back as president with the opportunity to become the CEO.

Do you remember the bake-off meetings? I do remember we had that, but I don't know how fair it was. But okay. Oh, no. It was very fair. But I have to tell you, NASDAQ honestly I sat in both meetings and then they had to come back and do it again for Bill because he wasn't there that day. And NASDAQ just did a better job. I have to say I did not make the decision. I let you guys make the decision. But however you judged that decision was up to you.