John Lothian News sat down at the 2014 FIA Boca Conference with six exchange CEOs to talk about their views on four main topics: competition, regulation, growth and technology. Here’s what Greifeld, CEO of Nasdaq OMX, had to say about each.
Greifeld, like other exchange CEOs, believes that regulation is the key driver of competition and change in the financial industry globally.
“If you think about the evolving nature of the markets, you have to start first and foremost with the regulation,” he told Jim Kharouf, editor-in-chief of John Lothian News. “We are a creature of the regulatory environment.”
Nasdaq OMX, which has gained some traction in Euribor futures with its young Nasdaq NLX market in London, is facing global regulation with exchanges in the US, Europe and with its technology platform, which is used by other markets throughout the world. Nasdaq has traditionally adopted a two-pronged strategy for growth, through acquisition and via organically created markets.
“You have to recognize that the exchange businesses… are fundamentally transaction businesses and they have transaction processing cost economics, where the marginal cost of the marginal trade is quite low,” he said. “And that’s the fundamental driver for acquisition and merger activity in this space.”
In terms of expanding his business, Greifeld believes that growth will come across a few different business lines at Nasdaq.
“In the given landscape today, there are plenty of opportunities for us to innovate, [and] come out with products that better meet our customer needs, so that’s where I say we spend the great majority of our time,” he said.
Nasdaq has been known for its technology and he sees potential improvements there as well. The exchange and technology firm has been a leader in terms of speed for years, but now is looking at other areas that can be improved.
“We have to then make sure the entire ecosystem is resilient,” Greifeld said. “We’re spending a lot of time and effort, and I think you’ll see us innovate in several areas in that space.”
He added that Nasdaq OMX is also focused on “sophistication and granularity” on the software it now offers and “narrow-cast in terms of the product sets that our different customers need.”
Going forward, Greifeld said his company is looking to grow organically and with partnerships, such as the one it signed last year with Borsa Istanbul, to provide the trading systems and a 5 percent investment into that emerging marketplace.
“What gives me particular pleasure is, we take all the knowledge and know-how that we’ve developed over the years from all of our customers, and allow an emerging or developing market to fast forward their progress,” Greifeld said.