Nasdaq Chair and CEO Adena Friedman discusses the market for initial public offerings, the future of artificial intelligence, and the need for updated regulations in the US. She spoke to Bloomberg's Sonali Basak.
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Now, investors across the globe are waiting for an IPO comeback. Nazak has one of the most intimate views of what that market could look like and joining us now on the heels of Nasdaq's four year results that beat analyst estimates. Adina Friedman, NASDAK Chair and CEO. Everyone's waiting, Everyone's waiting. We haven't seen a full rush back to market yet for initial public offerings.
What are you seeing under the surface? How soon can we get there? Well, I think.
As we exit, As we exited twenty twenty four, we saw that investors are feeling more confident in having more I would say, some level of predictability on in terms of interest rates and inflation.
The growth, it's been resilient.
We've started to see some normalization in illness of the economy that allow investors to feel more confident in putting capital to work.
So coming into twenty.
Twenty five, we have been expecting the fact that that the IPO environment will likely heat up as we go into Q two and into later in the year, because you have to get through a big change in the administration and other changes that are happening at the beginning of the year. But we are talking with a great number of companies that are excited to come and tap the public markets. They're putting at least tentative dates on the calendar and getting very prepared for.
Is it a flood or is it a trickle?
You know, it's hard to know, honestly, it really depends on a lot of factors. I can only say that we have a high, healthy pipeline of really interesting companies that are ready to come out this year. We've seen also both the VC investors and private equity investors really gearing up to bring companies out, and so it's just a matter of are they going to see the reception that they're looking for. But investors are also ready to put risk capital to work, and you know, I think that that you know, as you know, our company is broader than that.
Today, but as we looked.
At the business and in the markets, you know, we continue to see good trading volumes and an opportunity to have a better listing environment, great index performance, and then of course we have our technology division as well.
Speaking of index performance, forty years of the NASDAQ one hundred, I know you were celebrating that. If we reflect on what we're seeing right now, of course there's been a lot of change to that Nasdaq one hundred.
Where do you see the Nasdaq one hundred.
Going in the next couple of years given this rapid change in the technology environment that we're seeing, Well, I think we.
Should take a minute to step back and look at the NASOG one hundred over that forty year period. The first thing to note is that over a forty year period, the NAZAQ one hundred is delivered a fourteen plus percent cager.
Growth compounded annual growth over that forty years. So what does that really represent?
That really represents the fact that the NASOGA one hundred reflects the future of the economy, that it is kind of the index that is driving that reflects where the economy is going, how technology is going to have an impact on the economy and has delivered incredible, incredible growth in returns for shareholders in the index. Going forward, we're going to continue to see technology as the driver of the economy. If anything, that's going to accelerate even faster. There are going to be new companies coming in the large tech companies are continuing to make massive investments in the future infrastructure to support the future of the economy and AI technology is we're just at the dawn of that, and I also believe that you'll see more and more companies benefiting from that in terms of efficiency and productivity across the entire economy, and that'll benefit all stocks, but also the fact that the technology ecosystem will continue.
To be the driver of the future.
You know, as we said here today and talk about technology, there was a lot of questions really burning in the market this week with the deep seek moment, this question about cat back spending, what it means for many companies. How do you see that dilemma from your perch. A lot of people were throwing around the term Spetnik moment, but that was also also seen as a hyperbole elsewhere.
How do you feel about it?
Yeah, First of all, we are at the beginning of the dawn of a new technology and I would even say potentially a technology revolution. And we have to reflect on the fact that there's going to be a lot of innovation that comes down in the space. Every new innovation is going to have the opportunity to benefit every industry and that's the great thing about this technology is. It's not industry specific, it's not even operations specific. It has the ability to infuse itself across companies to create drive efficiency and productivity. So you have these new innovations that come out. I think competition is good. I would never underestimate the power of American innovation. I think that it means that we can have more options, more choices as we look at using this technology ourselves. NASAC is very deep in bringing this GENAI technology into our product suite. We have our financial technology suite. By the way, overall, NAZAC grew nine percent in twenty twenty four and our Technology division grew ten.
Percent in twenty twenty four.
We bring that technology in to drive and automate workflows for our clients, make them more efficient, make it so that we can root out criminal behavior more efficiently and effectively, make sure we can do regulatory reporting more efficiently effectively. There's so many ways that we're using that technology. In our fintech division, and then in our cap division, which are have access platforms, we're developing new index products leveraging AI. We're also bringing those that GENAI capabilities into workflows for corporates and investors to make their lives more efficient.
And we're just started like this is like.
Year one of what this technology is really capable of.
Well, it's interesting because as somebody who leverages this technology throughout many businesses, as you were talking about, wouldn't.
You want it to be cheaper? Well, in general, what.
We should expect is that there's going to be a massive amount of innovation. Innovation generally makes things more efficient. Efficiency drives price down. There's already been a very large efficiency that's come into these models. Anyway, they're much cheaper today than they were a year ago, So I just think that that will continue to be the case.
But also the use of.
It is going to ex broaden and expand dramatically. The more efficient and the more affordable, the use is going to go up a lot. So every model creator, they're going to have an opportunity to find a growing market here.
You know, I'm glad you brought up American innovation because another aspect of this is the concern that maybe investors aren't realizing the type of competition that Chinese AI models are presenting. How do you feel about that dynamic and view it from your seat?
I again, I'll never underestimate the power American innovation. And I think that you know, as we've always talked about the economy's global, technology is global, and we have to operate and compete in a global economy. So it's very important that we all just support this innovation in a way that is going to drive the right results for companies, the right results for society. I actually I'm very optimistic in the fact that we have so much focused, so much innovation, and so much investment going into the technology.
Another thing you've been talking about a lot this year is regulation and the power for changes regulation to really bring more companies to market, among other things, save costs. How do you feel about the prospect for change this year? If the Trump administration, the new SEC, maybe even the newest CFTC, if they could do some one thing, one thing that would really move the needle, what would that be.
I don't have one thing on my agenda. I have several.
So it's important for us to focus both on unlocking the potential of the financial industry in terms of making regulations smarter. Regulation is very important in the financial industry, but there are a lot of probably outdated regulations that could be reevaluated. There's a lot of regulation where maybe they had their original intent was to drive safety and security for investors, but the way they measure it is solely on inputs as opposed to outcomes. So how do we get more outcome oriented regulation that allows technology to be brought in to help solve these problems as opposed to having to do it only with you know, just you know, adding time and adding people to the processes. So there's a lot of opportunity to make the financial industry efficient. If they could take ten to twenty percent out of just risk and compliance programs, that's unlocking twenty five to fifty billion dollars of capital that could be deployed into the economy.
So that's one.
And then of course making the public company existence, I would say making that more efficient and effective as well.
You know another area too. I have to ask you because a lot of.
People are looking at you and saying, okay, what does NAZAC do in the world of digital assets? And this is something where I know you've spent a lot of time with the rules changing around digital assets.
Does it change your thinking.
On how much you may want to embrace them?
Well, we are a technology provider to the cryptocurrency industry by providing trading clearing, surveillance technology now risk management technology.
To banks who hold digital wallets.
We also have a financial crime capabilities to support both digital.
And fiat wallets.
So as a technology provider, we're very engaged. As a market we have the most successful crypto ETFs on NAZAC and we're very proud to support that ecosystem.
As a market operator, we're going to have to.
Look at how the regulatory environment shapes up, because it's really going to be their f I think the SEC and the CFTC will be introducing rules of the road, you with gearing towards investor protection. And if that's the case, then we have very clear rules of the road and we see an opportunity for us to be successful and to engage our clients in new ways. We will certainly consider that, but we already have a heavy engagement in the industry today.
You know, we thank you so very much for joining us here on set today. That is Adina Freeman of NASDAK. Of course, on the heels of results