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Nasdaq President on 2025 IPO Outlook, Trump Policy, Crypto & AI

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Bloomberg Dec 3 08:00 · 6645 Views

Nasdaq President, Tal Cohen says the exchange sees a "constructive backdrop" for the IPO market in 2025. "We are seeing a larger [IPO] backlog today than at the same time last year," he said. Cohen spoke on "The Pulse with Francine Lacqua" on Bloomberg TV.

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Transcript

  • 00:00 You see the the ever changing landscape, you see
  • 00:02 animal spirits maybe being lifted around the world.
  • 00:04 How do you see risks growing and how can you take advantage of some of this,
  • 00:09 you know,
  • 00:10 different,
  • 00:11 different environment out there?
  • 00:13 Yeah, so you you started out with the IPO backdrop.
  • 00:16 Let's start there.
  • 00:17 So in 2024, we welcomed about 150 IPOs, strong win rate of 75%, largest IPO the year in Lineage and
  • 00:25 some notable switches as well such as Palantir
  • 00:28 and Campbell's, which is our 500.
  • 00:29 As we look to 2025, we see a couple of things.
  • 00:33 1 is a constructive backdrop.
  • 00:36 The economy is strong,
  • 00:38 earnings were strong
  • 00:39 and then from from the perspective of a backlog, we're seeing
  • 00:43 a a larger backlog today than at the same time last year.
  • 00:47 So that's all constructive.
  • 00:48 And we also have this proprietary IPO pulse index that we've created.
  • 00:51 So we look at valuation, volatility and interest rates and that all suggests again a more constructive 2025.
  • 00:58 Now from the exchange perspective,
  • 01:00 we're very interested in making sure that the markets are well functioning,
  • 01:04 resilient, and then we uphold investor confidence and nothing we've seen how far is diminished our our expectations that we'll be able to manage that, manage that cleanly.
  • 01:13 But I mean, it's very clear that for example, if you look at London's IPO market, I mean it's losing out to New York.
  • 01:18 So I don't know if you have advice or why do you think you're winning these even from some homegrown
  • 01:22 UK companies that would rather list on the other side of the pond?
  • 01:26 Yes, and we operate businesses in in Europe, in the Nordics and the Baltics, as you know.
  • 01:31 And so we want to, as I said last time we were together, we want to be part of the solution in Europe.
  • 01:35 And we identified a few areas in which we can, we can aid and provide blueprints.
  • 01:40 And so when we look at the complexity of Europe,
  • 01:43 potentially the the excess fragmentation that we see in Europe, there's two things that come to mind.
  • 01:48 1 is how can we make the deeper more liquid, the markets deeper more liquids?
  • 01:52 We look at Sweden, we've talked about the legal framework, a more constructive regulatory and tax framework, but we also talked about cultural and educational pieces of it
  • 02:01 where
  • 02:02 pension funds and retail investors really support small and medium growth companies in Sweden.
  • 02:07 So that's one.
  • 02:08 The second is in the Baltics, we consolidated our CSDS, one platform, one rule book,
  • 02:13 allows for operational
  • 02:15 efficiencies and frees up capital.
  • 02:16 That's what we'd like to talk to Europe about.
  • 02:19 But now, is there a concern that in the immediate, you know, short term, it's the US that wins also because of a Trump victory
  • 02:25 that that could deregulate, put policy and actually attract more capital deployment over there?
  • 02:31 So we don't know what the
  • 02:32 new administration is going to bring just yet,
  • 02:34 but we hope it is pro growth.
  • 02:36 We hope it is pro innovation and we hope it is pro smart regulation.
  • 02:40 And if all things those
  • 02:42 hold, then we'll continue to see a very constructive backdrop in the US.
  • 02:45 But it's also because the economy is healthy in the US.
  • 02:48 So nothing makes up for a strong economy.
  • 02:51 And so earnings this past earning season were pretty strong.
  • 02:54 Companies again
  • 02:55 have shown really to be constructive labor markets, tightening
  • 02:59 interest rates,
  • 03:00 pretty manageable, pretty, pretty manageable, but we'll see.
  • 03:03 We'll see what happens in 2025 when he comes into office.
  • 03:07 Tal, it's been about a year since NASDAQ closed the deal to buy Adenza.
  • 03:10 How's that going?
  • 03:11 Thank you for asking.
  • 03:12 It's been just about a year since we closed our deal.
  • 03:15 Now we serve 3500 institutions globally
  • 03:18 through our financial technology division.
  • 03:21 Our capital market solutions provide full trade life
  • 03:23 cycle solutions.
  • 03:25 Our regulatory technology and financial crime technology
  • 03:28 divisions provide solutions that protect brands and reputations of the firms that we serve.
  • 03:33 We're doing a really good job in integrating that serving our clients, we're helping them with their largest problems, which is complexity,
  • 03:40 managing risk, the explosion of regulatory
  • 03:43 reforms and costs, and then of course, helping them transform
  • 03:47 and modernize.
  • 03:48 And that's where they need trusted partners.
  • 03:49 And that's the the role that we hope to fill.
  • 03:51 How have financial crimes actually changed?
  • 03:53 Are they more difficult to spot or difficult to,
  • 03:56 you know, has it been a big game changer?
  • 03:58 Is it still through fishing and things like that?
  • 04:00 That's a great question.
  • 04:01 Let's frame the problem.
  • 04:02 Financial crime, 3.1 trillion in money laundering,
  • 04:06 500 billion in fraud.
  • 04:08 It's a real drain on the economy.
  • 04:10 It's incredible.
  • 04:11 And these are real world problems.
  • 04:12 It's financing terrorism,
  • 04:14 elderly abuse, human trafficking.
  • 04:16 And So what one institution or a single institution is not going to be able to solve it on their own.
  • 04:20 We need a private public partnership and that's what we've been talking to our clients about and that's why we want to bring Verafin,
  • 04:26 our financial crime solution into Europe
  • 04:29 and Verafin born in the cloud.
  • 04:30 It takes advantage of large data sets and applies statistical analytics to detect patterns and financial crime and fraud.
  • 04:37 So we can lower false positives,
  • 04:39 increase the weight of finding real, real fraud and that is going to be of real value.
  • 04:45 Talk to me a little bit about the crypto market.
  • 04:47 Would you be interested in getting into the crypto market under the the new US administration?
  • 04:51 Does it change everything?
  • 04:52 A great question.
  • 04:53 We're already in the crypto market and the way that we are is through providing institutional grade technology
  • 04:58 trading surveillance.
  • 05:00 Trade custody technology
  • 05:02 and and by the way, we have 3500 institutions so that that spans the life cycle of if you will,
  • 05:07 crypto and non crypto.
  • 05:09 Our stance though hasn't changed.
  • 05:10 We'll do a couple of things, provide that technology,
  • 05:13 advocate for public policy change that we think balances,
  • 05:17 if you will, innovation and investor protection.
  • 05:20 We power new markets through crypto technology.
  • 05:24 So for carbon markets, we provide tokenization technology for issuance and settlement.
  • 05:28 And then finally we launched the first options contract on BTC just a few weeks ago, I bet and that's been incredible.
  • 05:35 So we're helping
  • 05:36 in a number of ways.
  • 05:37 But
  • 05:37 I mean, would you consider pursuing the crypto custody again, this is a business that you entered and then kind of retrench from?
  • 05:43 I don't think our analysis
  • 05:45 calculus has changed on that.
  • 05:46 It to be an institutional custodian.
  • 05:48 It's it's really capital intensive.
  • 05:50 While I think there's going to be more certainty in legislation that comes out, we're really happy with the approach and strategy we have.
  • 05:56 I know, I know you've fully integrated parts of AI, of course in your business.
  • 05:59 What's left to do?
  • 06:01 Well, there's a lot left to do.
  • 06:03 2024 has been the year of activation for US.
  • 06:05 25 will be the year of impact for us.
  • 06:07 At NASDAQ we embrace all forms of AI, algorithmic and Gen.
  • 06:11 AI.
  • 06:11 We have about 20
  • 06:13 AI enabled products and at any point in time we have about 50 POC's that were conducting across NASDAQ and we just frame it in two ways.
  • 06:20 1 is in the product where we're looking at alpha and helping manage risk for our clients and then on the business where we're thinking about productivity
  • 06:29 and customer experience.
  • 06:30 So that's how we frame it.
  • 06:32 That's and our North Star has always been for our markets, it's been resilience and integrity
  • 06:36 and for our financial technology business, it's just fueling our client success.
  • 06:40 Does that mean you need to buy, you
  • 06:42 know, other technology to, to put in those places?
  • 06:45 I think we're very happy with the the technology assets we have.
  • 06:48 And with respect to AI,
  • 06:50 again, we are partnering with the likes of AWS.
  • 06:52 So whether we have
  • 06:54 optionality in, in looking at the different foundational models, looking across the landscape to see what fits the use cases we have
  • 07:01 for AI.
  • 07:02 And I think one very important point that gets
  • 07:04 over
  • 07:05 maybe not overstated is governance.
  • 07:07 So we put in governance in place.
  • 07:09 It acts as both a guardrail and a lubricant for us as we think about new ideas.
  • 07:14 And the thing we really, really, because on these days, it's upscaling our employees,
  • 07:17 training and educating our employees, putting the tools in the hands of our employees.
  • 07:21 So they're on that journey with us that that's the investment we're making.
  • 07:24 And tell is that across the board, so European exchanges and the US or does the US have, you know, are they further ahead
  • 07:32 adoption,
  • 07:33 adoption of AI?
  • 07:34 So
  • 07:35 NASDAQ actually the first exchange to have a regulator approve an AI order type, we did that last year.
  • 07:41 And I would say that the US is pretty far along if I compared it to other parts of the world where we do see a lot of AI adoption into the Southeast Asia,
  • 07:50 India, Latin America really stand out to me in terms of accelerating their adoption of AII.
  • 07:55 Think in Europe, we're seeing regulations, smart regulation come in place.
  • 07:58 It's a matter of how people implement that regulation.
  • 08:01 Tal, let me ask you a little bit about the, you know, the London market.
  • 08:04 We're seeing a huge interest in trading on secondary markets
  • 08:07 in London.
  • 08:07 What do you think is driving that?
  • 08:10 There's probably a host of macroeconomic factors that are driving that
  • 08:14 from from the desire to to make sure that they position themselves.
  • 08:17 There's talk of tariffs in the US, There's talk of
  • 08:21 trade wars.
  • 08:21 They're talking
  • 08:22 about a number of different, different things that make the future
  • 08:26 uncertain.
  • 08:26 So I think we're seeing a lot of hedging,
  • 08:28 a lot of risk management taking place in those markets
  • 08:31 and that's healthy for the markets.
  • 08:32 It's good that we have those markets.
  • 08:34 It's good that those markets operate
  • 08:36 well
  • 08:37 so they can help
  • 08:38 investors mitigate risks.
  • 08:40 But does it also mean, I mean does it almost automatically mean that actually there are less IP OS because of that?
  • 08:46 It doesn't, not necessarily.
  • 08:47 Yeah,
  • 08:48 it does.
  • 08:49 I'm not sure that it translates that way
  • 08:51 for us.
  • 08:51 We'll I think again, what's going to drive the IPO
  • 08:55 market for us as we look at it, is our valuations healthy, Is volatility manageable?
  • 09:00 Is there an understanding
  • 09:01 of the the economic backdrop in terms of interest rates?
  • 09:04 And again, I think that's pretty well behaved at this point.
  • 09:07 So we we are pretty constructive in the beginning of 2025 and throughout 2025,
  • 09:12 but we do have these geopolitical risks that we need to think about.
  • 09:15 And and so that's probably there's a couple of unknowns that might impact the market.
  • 09:19 Is that your biggest challenge?
  • 09:22 Oh, so we, we focus on the things we can control,
  • 09:25 the things we can't control.
  • 09:26 We'll make sure that our markets are resilient and that we're paying attention to security.
  • 09:30 But the things that we can't control and things that I worry about keep me up on my at night
  • 09:33 are really talent management, upscaling our employees.
  • 09:36 For all of the disruption that you and I just spoke about, I want to make sure that we bring our employee base with us
  • 09:42 as we take this journey into AI and this more disruptive landscape in the years ahead.