Nasdaq OMX, the world’s first electronic stock market, is almost synonymous with technology. The exchange not only lists a large number of technology stocks but provides its own technology to other markets.
At FIA Boca, John Lothian News spoke with Lars Ottersgard, head of market technology at Nasdaq OMX, who said a very important piece of Nasdaq’s tech philosophy is that “we actually sell what we use internally.”
He said the type of technology Nasdaq provides can be divided into three segments:
1. Technology provided to marketplaces for trading, clearing, settlement and risk management; 2. Tech designed for brokers for pre-trade risk management and market compliance; and 3. Software for enterprise governance risk and compliance for corporates.
He sees several areas of growth in the tech sector. For one, traditional trading and matching platforms continue to grow, though at a slower pace. The focus has moved into post-trade, clearing and settlement. Another growth area is control and risk mitigation – surveillance and pre- and post-trade risk management.
On that end, Nasdaq has developed Tradeguard Solutions, a suite of risk management tools that is essentially an upgrade of the enterprise risk management platform known as FTEN before its acquisition by Nasdaq. These tools “can be provided either as access for the brokers, or we put it in the exchange, and the exchange takes a broader role in tracking trades coming into the exchange,” Ottersgard said.
The pre- and post- trade management space is clearly a strong growth area, he said.
“In the Asian region I see it being handled by the exchanges themselves, whereas in the U.S. it is more on the broker side.” He said he thinks brokers will be given a bigger responsibility for that space in Europe and Asia in the future.
The demand a couple of years ago was for high frequency and speed, but now it’s about resiliency and even more about flexibility, Ottersgard added.
“We need to have cheaper, still fast but more flexible technology,” he said.