Embracing technology to shape the capital markets of the future

By: Brad Peterson, Executive Vice President and Chief Technology and Chief Information Officer, Nasdaq Aug 2019

We live in an era of disruption where the progress of digital technology is transforming our economies, the way we live, work and operate our businesses at a rapid pace. From a capital markets perspective, we see unprecedented technological progress that gives us the opportunity to boost flexibility, scale efficiencies and reduce complexity in how our markets operate. To unlock growth opportunities, the leaders in our industry need to embrace technologies that have the power to transform the capital markets ecosystem for the future.

At the very foundation of embracing new technologies is convergence. Looking toward other industries for fresh ideas on how to leverage technology is crucial, and convergence is all about applying technology in creative ways to develop the markets. For Nasdaq, we are always looking beyond the horizon and towards other industries to innovate, such as telecommunications and gaming.

As we see it, one of the most disruptive technologies for our industry is cloud computing. Innovation in cloud product offerings has been prolific as cloud providers compete to gain market share. Two significant advances in cloud computing in the past year are the integration of time series databases and the introduction of parallel streaming in milliseconds, giving companies a comprehensive view of activity like never before. Cloud providers are embracing and supporting open source alternatives in addition to the enterprise software and proprietary solutions that are currently available, while cloud customers are benefitting in terms of better availability and cost effectiveness of the product.

Secondly, companies need to become data-driven to succeed in the rapidly changing capital markets. The ability to make structured, unstructured and alternative datasets actionable can be a significant differentiator between the successful and the obsolete. By leveraging both traditional market data and alternative data, we can provide intelligence and bring additional value to the industry, resulting in increased transparency and accessibility. Through our Analytics Hub, we analyse and structure alternative data that typically is not considered in this business, such as satellite images, which can provide markets with different types of insights.

Furthermore, the growth in cloud computing and data technology is enabling a breakthrough in machine intelligence capabilities. The advancements of machine intelligence allow us to extend our capabilities to new areas of application, such as risk management and surveillance. With machine intelligence algorithms, Nasdaq is creating sophisticated solutions to analyse abnormal market events to detect market abuse. Simultaneously, we can apply machine intelligence on data to put data in context and make it usable, which ultimately provides actionable intelligence for decision-makers in our sector. The three - cloud, data, and AI - are a powerful combination and will likely have a significant impact for exchanges and market infrastructure operators to leverage.

A major part in pushing us forward to adopt emerging technology and test new concepts are evolving demographics, which are rapidly changing the world of capital markets. Global changes in demographics and population growth, and the evolving investor profile will drive capital markets to identify innovative growth opportunities to satisfy new needs, segments and investor attitudes. By recognising this evolution, including novel approaches to creating and accessing capital, we can apply many of these emerging technologies to progress our industry to meet new needs, demands and market structures.

This development will not be identical for every market infrastructure operator as it will depend on strategic priorities, who you collaborate with to find synergies and geographical location. Certainly, the industry can at times be slow to adopt. However, that can also be beneficial as we reap the benefits of, for example, cloud, big data technology, and AI when we adopt, as the solutions are more mature and time-tested.

When Nasdaq looks towards the future, as a technology company that also runs markets, we see exciting times ahead for our industry. Challenging and evaluating incumbent structures and our strategies and standpoints only helps us innovate and strengthen our offering to the market. By collectively identifying and implementing emerging technologies that drive our businesses forward, we are making an important contribution to advancing and shaping the capital markets of the future.