The New Era of the Stock Market with Nasdaq CEO Adena Friedman | All-In Summit 2025

We are here to advance economic progress for all.

Hey Jason, how are you? Hi. It's great to see you. Hey. Great. It's great to be here.

Yeah. So, you caught some of the action earlier today, right?

Oh, I never like to pick favorites at NASDAQ. We don't pick favorites. We have great companies, but obviously Rene is a wonderful NASDAQ listed company and I've gotten to know him very well with ARM. So, I would say always have great conversations.

Sure, thank you. Well, so first of all, we are really proud of our foundation as a market. But as we started to grow and expand the business, first of all, you know, when I became CEO, we had about two and a half million billion dollars in revenue. Today or as of the end of last year, we had a little over two and a half billion dollars of EBITDA. So, we've grown and expanded the business quite dramatically. And how we've done that is taking our core as a market and saying, what more can we do for our clients? So we are an architect of modern markets. We provide our technology to our 17 markets and we sell it to 135 other markets around the world. So market infrastructure is our business and we do that globally. Then the second is really being powering that innovation economy like companies like Renee, you know ARM and other great companies. So we've expanded that. So our index business now has about $700 billion of assets under management that are tied to those great innovators in addition to creating better abilities for companies to navigate the public markets and investors to find investments.

And then the third is also building trust in across the financial system. And that is anti-financial crime technology, market surveillance technology, other technologies that the banking industry and the broker dealer industry really need to manage their lives in the markets. And you're right, we had a big investment, we had a big announcement today.

Yeah. And actually it goes right back to that first pillar being, you know, being the architect of modern market.

Yeah. Yeah. Okay. So this morning we announced that we're going to be bringing tokenization into our markets. So making sure that equities are tokenized and traded on market in the markets not in a side sleeve but actually in the core markets.

I mean I think we are all moving in that direction. We announced several months ago that we're moving to 24/5. So we're moving that way. So Saturday and Sunday not not for equities yet. I think that you know we have to we're walking before we run but I think that getting to 24/5 is a major advancement for the US equities markets. And then on top of that now with tokenization if we can introduce that also into the markets it allows us to really think about streamlining the post-trade processing bringing and modernizing elements of the markets that have a lot of friction. You know we are hyper resilient and we're hyperscaled. You know, we manage like today we had 95 billion messages come into our systems today and we had a median, you know, return time of 20 microseconds on from order to trade. We handle like 3 million messages a second. It's hugely scaled. But then at the same time, you know, once that trade occurs, there's a different process. And in the post-trade process, as we know, is an area where tokenization really shines and really cutting down the friction, managing capital flows across the global ecosystem and really bringing that capability into the markets is going to be the next to get your reaction to this. You know, there's this very famous curve which is like you get this early font of insanity and then there's the trough of disillusionment and then you grow through and it is it does it seem like crypto is actually in blockchain? It's just it's finally real. It's like there's real companies doing real things, stable coins, what Sachs did with the Genius Act. Well, I actually want to point to that because, you know, honestly, having regulators who want to work on bringing it into the mainstream and want to create the rules of the road is such a refreshing thing because I think that it allows us all to understand how we can operate within a world where there are tenants of investor protection. The technology is going to have things we can and can't do, but also being forward thinking and forward leaning in how the technology is going to be applied is going to be critical. So, we're very excited about the fact that we finally have this convergence of regulatory of regulation between the traditional markets, the digital markets. How do we bring it all together to frankly advance all markets? And we're very very excited about that.

Yeah. So, so I think first of all I've been I started at NASDAQ in 1993 and back in the 90s we had a vision to go to 24/7 markets and we just couldn't achieve it both technologically it wasn't the technology wasn't there to do it but also regulatory and and part of 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 actually we need those points in the day I mean the market open and the market close will continue to exist in a world of 24/5 markets But you'll have like a US trading day and you'll have non- US trading day. And so, and we 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 entire period of time, but the official trading days of the United States are 9:34. I don't anticipate that changing because we have to have those moments for like the NAVs to be set for mutual funds and things like that. But have allowing the entire world to trade these securities. I mean, we have the NASDAQ itself. We have the top seven companies in the world listed on NASDAQ. Those companies are global. Investors have global interest. The NASDAQ 100's one of the most traded products in the world. The futures trade 24/5. So why shouldn't the underlying? So that's how we look at those non- US trading hours and the trading hours and trying to find that confluence and the way it work.

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 markets are so important for the economy. When a company goes public they get access to billions of investors and every citizen in this country gets the chance to become an owner in the economy. And when we look at just the performance of the NASDAQ 100 over 40 years of its existence the average return on the NASDAQ 100 over those 40 years is a 14.25% annual return. So that's double the broader market. It's an incredible return if if if com you know if individuals have access to these great companies as you know I saw your your pot a few weeks ago showing the performance of the public markets. It's it's such an important part of our economy to engage the population in the economy and the growth of the economy and the success of the economy. So I've always believed in the balance between public and private markets. I think there are reasons for them both to thrive and be great great for everyone. But the public market experience has become this massive you know burden and I think that we call it like you have to cross the Rubicon to become public and it's become very daunting for com for CEOs and companies to to take that decision. So we have talked very closely with the SEC and others about what can we do to lighten the load to make it so that it's not such a huge change. We've t we've advocated for changes in disclosure reforms, proxy reform, litigation reform, all of those things. There's such a different existence. It shouldn't be so different.

It's a good question and I actually do think that you will find that there is really good valid reasons for certain disclosures. I think disclosure is a cleansing, you know, as a as a cleansing event. But and so having the respon but there's so they have to disclose so much more than that's actually necessary for an investor to make a smart investment decision. Let's strip that away and get back to the core disclosures and then offering different ways to actually enter the public markets. We think the direct listing and we've actually worked closely with Bill and others on a direct listing with the capital raise. Like why not have that? We have that ability today. And so and then SPACs are another another avenue to public markets. ICOs over time. We'd like to kind of bring that as a that to me is frankly a direct listing, a tokenized direct listing. So, how do we bring all those capabilities into the markets and make them available and make these companies feel like it's exciting

Well, I first of all, I would say that Chair Atkins is my first meeting with him was just amazing. Great. You know, he is forward-leaning. He wants to create change. He wants to make IPOs great again. He wants to to really support the public markets while also frankly looking at elements of the market structure in the established markets and saying, does this all need to exist? Because there's a lot of there's a lot of that too. And then also really embracing the crypto ecosystem to say what elements of this could be brought in that regulatory convergence is real. You know, how can we create a regulatory road for crypto markets? How can we actually create a regulatory road for tokenized securities markets? How do those things kind of converge? He's a great I mean I would say he's off to a great start. Outside of the equity markets, the biggest liquid pools that are trading right now, whether it's the actual tokens or pers or what have you or the crypto markets themselves, it would seem relatively logical that you guys or others would want to play in that game. And why don't you?

I would say that what we would want to do is really work with our institutional clients because they also have not been able or willing to play in the markets. their risk tolerances have we have a similar profile. So if we can actually bring the institutional ecosystem into crypto assets we bring tokenization into securities assets that's a really interesting way for us to play a role in in really helping evolve these markets and and bring them to the mainstream and whether you know I many flowers will bloom in that in that ecosystem.

I mean I have to say the options markets are as much a prediction market as the other prediction markets. So we own and operate the largest options marketplace in the United States. And so we are really you know we're very engaged in looking at how do you think about you you are making a decision as to the direction of travel in an underlying equity but you're not actually trading in the underlying equity. So options are I think a great reflection of a prediction market. The difference though is that in a prediction market it's a binary yes no versus an option market you're laying you're layering in your bets across multiple price points and different durations. There's, by the way, a million and a half strikes in the options markets today. But so it's I think that in in some ways the prediction markets make these types of bets, you know, more accessible to more people because the options markets are quite complex. Prediction markets are a little bit more simple. So there is an opportunity and I think it's also good that the SEC and the CFTC by the are joining forces to think about these markets much more comprehensively because if we can bring that regulatory paradigm across the markets and make more more of these type of asset classes more accessible. I think that's good for everyone.

So I think the first thing we focus on in NASDAQ private market is being issuer first in how we work with these private companies. So you know they are private companies and they're private for a reason. They want to have control over their shareholder base. And yet they want to create liquidity for their employees, their early investors, etc. And there is a second market that is created on the back of these private shares. So how do we work with them to allow that to happen in a fair way to make it so that we can introduce them to other other investors 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 a company and create an SPV through a known institution. And so the institution becomes the owner. Remember the you know the wealth clients are not actual owners of the shares. They're owners of the SPV that are owners of the shares. But letting the issuer have the ultimate decision on whether or not they invite those investors in I think is actually really important in the private context, you know, and that's that's kind of part of I believe is what makes NASDAQ private market different than other providers in the private space is we always partner with the issuer because they're going rogue basically. They're going around the backs of the CFO and CEO of those companies at times and it does piss them off. Yeah. I think it's important always to realize that you know the issuers the companies especially private companies are being very mindful of who they have as owners. Let's let them continue to do that as private companies. Once you enter the public market then you've got public investors and that's a different it is a different responsibility and there is different risk that that's involved in opening the aperture to billions of people. But I think and there should be disclosures also provided as a result of that. So in this in that private marketplace, let's make sure that we keep some controls in place around that.

Yeah. Yeah, I have. Well, first of all, I think that the rise of index investing is making investing more accessible in general. It's a very very inexpensive, very accessible and very 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 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 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 spend some time on it. But indexes give makes I think investing much more accessible. However, I also agree with you that you also have to balance it with active management. You have to have active investors. I mean, at the end of the day, I always say that there's a balance between the passive and and active world within the markets. And whenever it skews towards the passive, what happens is that that creates arbitrage opportunities for the active. If the herd really kind of starts to move the socks in a certain direction, the active manager should step in and take advantage of that arbitrage. But the real foundation of it though, Chimoth, is this that the you know the NASDAQ 100 or these innovative companies are they are performing the way they're performing for a reason and it becomes very difficult to beat the index because these companies are very hard. It's hard to find companies that deliver a better return than they do. And I think that's where active management has struggled just because they are trying to beat a benchmark, but that benchmark is such an attractive benchmark.

Yeah, I mean I think first of all, I am a huge believer in dollar as a reserve currency and the fact we will be persistent as a reserve currency over a long period of time. I think our economy is just such a powerhouse. I think that the rule of law and the stability that we have and that we deliver to the world is going to continue to provide that anchor for the dollar to be the reserve currency. But you know investors will express themselves if they see certain risks start to manifest. I do think as we've you guys talk about a lot, you know, the amount of debt that we have in the country is something that we're starting to see manifest itself in the markets and we'll make it so that they look for alternatives if they feel like the return characteristics of a treasury are different than what they could get in another. The risk weight of returns versus other currencies or other treasuries that they're going to express themselves. I believe in the US I feel like I believe in the power of the US economy to work its way through this. I believe that you guys talking about it a lot is actually going to help us make ourselves work our way through it. And the Fed I think the Fed is a staunch believer in the reserve currency. I don't think that they have any, you know, at least my experience with them is that they don't have any significant concerns that have arisen from what you talked about.

I can only say I mean I can just speak from my own experience. The Fed is very data driven. They get sources of data, private sources of data, public sources of data. They'll get private databases of information that they're not going to disclose or they're not going to share with others as an input. But there are many many inputs that they take into consideration. And they share every 10 days we go through and understand a market update and economic update to help us understand and frame what's happening in the economy. And they use that data. They're they're quite wedded to understanding the data. But they'll take in new sources. If new sources become available or they find something that could be useful, they will absolutely take that into consideration, but it won't supplant everything else that they're looking at.

Yeah, I mean, I know there's a debate, you know, even in healthy debate, a health debate, I would say on that point. I do have a point of view. I do think that the Fed, we've benefited for almost 250 years on having Fed independence. I think that it's important to allow the Fed to think long term and that's why the term of the Fed chair six years like to think longer term than through individual political cycles and to be data dependent and I agree like there should be new sources of data that are made available to allow the Fed to continue to make those smart decisions. But and I think in terms of the decision-making within the Fed, that independence allows them to look through a lot of different noise in the economy and to think longer term. Are they going to make perfect decisions every time? No. With 2020 hindsight, we could all look back and say, 'Oh, we would have done it differently.' Are they a politically driven organization in your experience? My perspective and my experience is that it is a very data-driven, very apolitical. I mean the New York Fed has been very very focused on just looking at the economy, looking at the market. They take pride in that. 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 different political cycles. I've been there for almost six years. And yet it's been a very steady process of evaluating the monetary policy. Very steady. While they also do a lot to operate the economy. It's pretty cool.

I mean certainly NASDAQ as the CEO of NASDAQ we do see it in not so much in our specific ecosystem although there are you know highly levered let's say ETFs and other things like that certainly outside the regulated markets in the crypto space there's a lot of leverage there too in the derivatives markets there is but so but at the same time I think there are a lot of checks and balances within the securities ecosystem that forces us to go back towards a mean and there is oversight that the SEC has on what levered products are at least brought into the public markets. In terms of the Fed and looking at leverage, I think that the way that they focus it is what really truly creates systemic risk. And the GFC. Yeah. The GFC really introduced the fact that there are certain banks that introduce systemic risk by capitalizing the banks the way they have. They feel like have addressed a lot of that. And yes, some of that activity moves off outside the banking system that they don't necessarily have complete control over, but their view is that it's distributed enough that it doesn't necessarily create systemic risk or having a too big to fail hedge fund for instance. But that's that's how they kind of manage that 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 about how much

Private credit I've heard about those now for several years. And I also would say that the banks, you know, to the extent they have a lot of real estate in their portfolio, they've been working through that. I do think that as we start to be in an environment where we can start to see rates come down, I think that there'll be a lot of pressure that's eased off of some of those concerns. And you know people are also coming back to work like you know commercial real estate's going 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 have been working through those issues and have been managing actually quite well. We have over 5,000 banks in this country. So it's also again it's pretty distributive risk.