Nasdaq’s new CEO faces uncertainty in Trump era
ADENA Friedman, the next CEO of Nasdaq, is a black belt in taekwondo. She’ll need all those fighting skills and more.
Friedman, 47, has been groomed for years by outgoing CEO Bob Greifeld to inherit the stock exchange in an industry where the rules looked fairly stable. But Donald Trump’s surprise victory means the old playbook on financial regulation could soon be torn apart, just as she ascends to the exchange’s top job on January 1.
Consider what she faces: president-elect Trump’s go-to man on financial regulation, former Securities and Exchange Commission commissioner Paul Atkins, has been calling for an overhaul of the rules on equity trading. He’s been a vocal critic of the decade-old landmark regulation that ushered in all-electronic stock trading.
Meanwhile, SEC chairwoman Mary Jo White will step down when President Barack Obama leaves office in January. And if that doesn’t augur a profoundly altered trading environment, Trump promised on the campaign trail to dismantle the Dodd-Frank act, the 2010 law with broad effects on trading.
“We’ve been living through a lot of regulatory change in the last seven years,” Friedman said with equanimity. “It could be that it continues.”
She will become the first female CEO of a major US exchange group, cementing her position as one of the most powerful women on Wall Street. While Facebook’s Sheryl Sandberg, who wrote the women’s empowerment manifesto Lean In, congratulated her on the social network, Friedman demurs on whether she considers herself a feminist.
“I don’t ever use that vernacular, no,” she said. “I just think of myself as a hard-working person who loves my job.”
Friedman has been the consummate Nasdaq insider. After earning a business degree at Vanderbilt University’s Owen Graduate School of Management in Nashville in 1993, she stumbled on Nasdaq while job-hunting in Washington, where the company was based at the time. She took an entry-level job, basically as an intern.
Ten years later, Friedman was overseeing the company’s data product when Greifeld arrived as CEO. Nasdaq was running on clunky, outdated technology and watching its market share get vacuumed up by nimble electronic trading platforms.
Two years into Greifeld’s Nasdaq career, US regulators rocked the exchange business by passing the Regulation National Market System, paving the way for fastmoving electronic stock trading, where price and speed reigned.
Greifeld responded with acquisitions and improved technology, eventually turning Nasdaq from the operator of a single stock exchange into an $11-billion (about R155-billion) behemoth.
Friedman climbed the ranks to FIGHT ON HER HANDS: Incoming Nasdaq CEO Adena Friedman may have to navigate a new regulatory order manage strategy and become chief financial officer, before leaving in 2011 for a three-year stint as chief financial officer at Carlyle Group. She returned to Nasdaq in 2014, touching off rumours that she would be next in line to take over from Greifeld, her mentor.
“Adena has a drive to success, and a willingness to do whatever’s necessary to succeed,” said Greifeld, 59, who is becoming Nasdaq’s chairman.
A detail fiend, Friedman will need to show she can steer the complex company through a changing trading environment.
“As someone who grew up inside the organisation, she’s different from Bob,” said John Jacobs, a former Nasdaq executive vicepresident. “Bob had to save the ship and turn it around. She has to redirect it.”
Some of the potential regulatory changes under the Trump administration could be to Nasdaq’s favour. For example, Atkins, who voted against Regulation NMS when he was at the SEC, has complained that it is overly complex and can create market distortions in its emphasis on price and speed in trading.
Any overhaul of that regulation could end up directing more trades to exchanges like Nasdaq’s rather than to the multitude of dark pools and other venues.
Similarly, Trump’s call to dismantle Dodd-Frank could make it easier for banks to step back into the proprietary trading and market-making they had to curtail. Friedman said that could be a good thing for her business.
“We think there are elements of that regulation that could be moderated, most notably those that limit banks putting liquidity into the markets,” she said.
Nasdaq looks radically different to the company Friedman joined two decades ago. It has expanded to include venues in Europe and Canada, platforms for trading options and US Treasuries, and businesses in exchange technology, investor relations and proprietary data.
The industry is also consolidating, with Deutsche Börse and London Stock Exchange Group working on merging. CBOE Holdings is buying Bats Global Markets, an exchange group run by Friedman’s former Nasdaq colleague, Chris Concannon.
Friedman, seen by some as a more cautious leader than Greifeld, will have to decide how to address those foes.
She will also face an industry battle over the amount exchanges charge for their vital price feeds, an issue annoying banks and highspeed traders that need the information to run their businesses.
Friedman played an instrumental role in building Nasdaq’s proprietary data business. With equity trading revenue squeezed, revenue from data products has swelled, bringing in about $400million for Nasdaq in 2015.
On the cusp of new changes that could alter the job she has so painstakingly prepared for, Friedman said she felt up to the task. Some of her most formative moments came in a trial-by-fire setting, in a deal or project Greifeld would throw her way.
“He just said: ‘Here you go, let’s go, let’s go get this done,’ ” she recalled. “Now we need someone who can help the company accelerate its potential. That’s who I am.” — Bloomberg
Bob Greifeld had to save the ship and turn it around. She has to redirect it