Nasdaq's President of North American markets, Tal Cohen and President of European Markets, Bjørn Sibbern discuss their view on the current state of markets in North America and Europe and some of the actions that Nasdaq is taking to ensure that markets keep operating and to support its members and listed companies throughout these unprecedented times.
What is happening in the markets today, and why?
Tal Cohen: The markets are experiencing a level of heightened volatility due to the escalating economic uncertainty and evolving health crisis. The selloff and volatility we’re seeing have signaled a new reality, which we and the larger issuer and investor community are still adjusting to. From a Nasdaq perspective, we have enacted our business continuity plans and remain confident that we can continue to ensure our markets are resilient and well functioning.
Bjørn Sibbern: As all our European markets are operated through the support of a mix of local staff in the eight countries where we run markets in and some central functions located in Vilnius, Lithuania and our European HQ in Stockholm, working remotely is not new to us. Nevertheless, this is of course a new level and while challenging we have managed to successfully run our markets and all supporting functions without a second of downtime.
There have been discussions on shutting markets in order to mitigate the heavy volatility. Do you think that would be a good idea?
Bjørn Sibbern: Not at all. The exchange, similar to other financial institutions, plays an important role in the economy. In times of high volatility, it is particularly important to offer investors a chance to get both in and out of positions.
We have no plans on closing our markets at this point, and we will continue to operate them as normal.
Tal Cohen: Also, keeping markets open should be thought of as part of the solution, as it provides investors with access to capital during times of need and allows issuers to raise capital for important aspects of our economy. For instance, what if a Biotech company wants to raise capital for R&D work related to the virus? To date, markets have been processing the information and sentiment from investors and operating as they are designed. It’s important for investors to know that our markets will continue to do so.
Are your market systems holding up under this strain?
Tal Cohen: Yes. Our market systems are incredibly resilient, and we’ve processed record-breaking amounts of trades and messages over the last several weeks as the markets react to news around the coronavirus.
We expect this to continue over the short term and are well prepared to ensure a high level of resiliency and availability to support investor confidence in the functioning of the markets.
What do you see in the near future for your respective markets?
Bjørn Sibbern: Nasdaq will continue to do what we can to provide our employees, investors, listed companies and local European communities with support and resources to push through these difficult times and prepare for a recovery. Exchanges, as integrated parts of the wider financial and societal ecosystem, play a key role when the efforts to not only managing thru but also help recover from the effects of COVID-19.
Tal Cohen: Our markets were designed, built and tested to weather these types of market conditions. We plan to continue to monitor the situation and have been working closely with regulators, along with the broader industry, to ensure we continue to support issuers and investors. We’re also telling our clients and regulators that the markets should remain open to process this volatility and that closing the markets may spike volatility, creating more uncertainty. In closing, we are confident in our ability to manage these unprecedented market conditions and provide a high level of certainty to issuers and investors.
For more information from industry experts and thought leaders about best practices to manage business continuity, investor relations, and governance during uncertain times, visit Nasdaq.com