Nasdaq CEO Adena Friedman on the Future of 23-5 Trading | At Barron's

Key Concepts

• 23/5 Trading: A market model operating 23 hours a day, 5 days a week.
• Consolidated Tape: A centralized feed broadcasting all trade and quote activity from various venues.
• Fintech Transformation: The strategic shift of NASDAQ from a traditional stock exchange to a technology-driven financial services company.
• Market Integrity/Guardrails: Mechanisms like "limit up/limit down" to manage volatility during extended trading hours.
• Capital Formation: The process of bringing private companies to public markets to allow broader investor access.

---

1. The Shift to 23/5 Trading

NASDAQ is transitioning to a 23/5 trading schedule, moving beyond traditional "banker’s hours" (9:30 a.m. to 4:00 p.m.).

• Current State: NASDAQ already operates from 4:00 a.m. to 8:00 p.m. The new model will expand this to near-continuous operation, closing only for one hour daily.
• Rationale: CEO Adena Friedman notes that global retail investors and advanced brokerage technology have already created an "always-on" expectation. This move legitimizes existing off-hours activity and increases accessibility for global investors wanting to participate in the US economy.
• Technological Infrastructure: To support this, NASDAQ is implementing:
  • Consolidated Tape: Centralized transparency across "lit" venues and "dark pools."
  • Guardrails: Implementation of "limit up/limit down" protocols to manage volatility during international sessions.
  • Real-time Clearing: Collaboration with the DTCC (Depository Trust & Clearing Corporation) to ensure holistic, real-time settlement.

2. NASDAQ’s Strategic Evolution

Under Adena Friedman’s leadership, NASDAQ has pivoted from a pure exchange to a diversified fintech company.

• Revenue Composition: Over 75% of NASDAQ’s revenue now stems from "solutions" (technology products, software, and index services), while traditional trading revenue accounts for 22–25%.
• Three Pillars of Strategy:
  1. Market Infrastructure: Powering capital markets globally (NASDAQ owns Nordic markets and provides tech to ~130 other markets/regulators).
  2. Innovation Economy: Listing innovative companies and providing index products to make them accessible to billions of investors.
  3. Trust and Security: Providing anti-financial crime, compliance, and regulatory reporting technology.

3. IPO Market and Regulatory Reform

Friedman addressed the trend of companies staying private longer and the need for public market reform.

• Market Momentum: Despite a period of private-market dominance, NASDAQ is seeing renewed momentum in IPOs across biotech, tech, and defense sectors.
• Proposed Reforms: To make public markets more attractive, Friedman advocates for:
  • Disclosure Reform: Reducing the burden of antiquated or redundant reporting requirements.
  • Proxy Reform: Modernizing the voting and proxy process.
  • Litigation Reform: Encouraging mandatory arbitration to protect public companies from excessive class-action litigation.
• Symbiotic Relationship: Friedman emphasizes that private markets remain essential for early-stage capital formation, but argues that bringing companies public earlier benefits the broader investor base.

4. Leadership and Vision

Adena Friedman, the first woman to lead a global stock exchange, attributes her career trajectory to her upbringing and a focus on technological scalability.

• Professional Background: Her career spans from an intern at NASDAQ to CFO, a leadership role at The Carlyle Group, and her current tenure as CEO.
• Notable Quote: Regarding the company's vision, Friedman stated: "Our vision is to be the trusted fabric of the world's financial system."
• Personal Influence: She credits her parents for fostering her ambition, noting that her mother’s transition from a stay-at-home parent to a lawyer served as a critical role model for work ethic and confidence.

5. Synthesis and Conclusion

The transition to 23/5 trading represents a broader shift in the financial landscape where technology, rather than physical presence, dictates market access. NASDAQ’s strategy is to position itself as the "trusted fabric" of this global system by providing the underlying infrastructure for both trading and regulatory compliance. By advocating for IPO reforms and expanding its fintech footprint, NASDAQ aims to bridge the gap between the private innovation economy (e.g., AI, space tech) and the public capital markets, ensuring that the exchange remains the primary venue for the world's most transformative companies.