Traders Magazine spoke with Greg Ferrari, Head of Exchange Business Management for North American Markets and Nikolaj Kosakewitsch, Head of EMS Sales, European Equities & Derivatives, and President of Nasdaq Copenhagen, who won Best Global Exchange Group at the 2024 Markets Choice Awards.
What is your reaction to winning the Award at the 2024 Markets Choice Awards?
Greg Ferrari: Nasdaq was thrilled to win the Best Global Exchange Group Award from Markets Media. At Nasdaq, we are committed to redefining the capital markets landscape by continuously pushing boundaries and setting new standards in market operations. We strive to enhance liquidity, resiliency, and integrity across our 18 owned and 130+ operated markets worldwide.
Nikolaj Kosakewitsch: This award is a testament to the hard work, creativity, and passion of every member of our global team. Together, we have made significant strides in shaping the future of finance and making a positive impact on the industry.
What are the upcoming trends for the global securities market?
Greg Ferrari: Currently in North America we are focused on the changes to clearing that come with the move to T+1. We have been working closely with our exchange clients in testing and with the broader industry through our Trade Reporting Facility to take this necessary step forward toward more efficient capital management.
Another of the trends we have seen, particularly in the US, is the continued growth of the options market. Investors have embraced options as a valuable tool for hedging risks against market volatility, with an average daily message rate in 2023 of more than 72 billion. One area of options that has had explosive growth in recent years is index options, including index options on NDX. In Q1 2024 relative to Q1 2023, NDX’s average daily volumes increased by 84.4%. We anticipate the growth in this product to continue throughout the rest of this year and into 2025 as well.
Nikolaj Kosakewitsch: Looking at our European and Nordic markets we are observing several notable trends that are shaping the landscape of financial markets in the region. One prominent trend is the increasing adoption of sustainable and responsible investing practices, driven by growing investor demand for ESG integration in investment decisions. Additionally, there is a continued focus on technological innovation and digitalization, with advancements in areas such as fintech and AI transforming the way financial services are delivered and accessed. Furthermore, regulatory developments, including MiFID II reforms and ongoing efforts to harmonize market regulations across the EU, are influencing market structure and shaping the regulatory environment in the Nordic region through CMU. Overall, these trends underscore the dynamic and evolving nature of the European markets, presenting both opportunities and challenges for market participants and stakeholders alike.
How do you improve clients’ experience for your business?
Greg Ferrari: Client communication is a key element to Nasdaq’s continued success. We take client and market participants’ feedback very seriously, using it to help guide product development and expansion.
One example being the expansion of our short-term options program. Our clients gave us feedback that targeting volatility events through options was an increased priority. As a result, we worked diligently with them and the regulator to offer more products in short-term options becoming the first exchange to expand our short-term options program to include five highly liquid commodity and treasury-based ETFs, USO, UNG, GLD, SLV, and TLT, with additional Wednesday expirations.
Nikolaj Kosakewitsch: Nasdaq is a trusted technology and market services provider and partner to our clients, especially now that we have successfully integrated Calypso and Axiom SL, allowing us to provide mission critical systems for risk, regulatory and trade management.
In European Market Services we have developed, in alignment with client requests, Nordic@Mid which offers automatic execution of non-displayed orders at the central order book mid-price as well as overall price improvement. It can also be used to avoid market impact for large orders.
We are also working with several measures to improve liquidity on our markets through auction trading of illiquid shares and a new pilot project to investigate the effects of increasing tick size on First North.
What are recent accomplishments for Nasdaq?
Greg Ferrari: Recently we successfully rolled out the Dynamic Midpoint Extended Life Order (Dynamic M-ELO). Dynamic M-ELO is the first exchange AI powered order type to receive approval from the SEC. It is designed to deliver optimal outcomes to market participants by intelligently adapting to real-time market conditions and improving overall execution quality and fill rates.
Nikolaj Kosakewitsch: We recently launched Custom Basket Forwards – an innovative derivative product addressing the rising demand for a simpler and more efficient way of handling tailored equity exposures. It offers a cost-efficient alternative, combining bespoke elements with the benefits of central counterparty clearing and trading on a regulated market. With the launch of Custom Baskets Forwards more clients are given access to a simple and efficient solution for ex. ESG & climate investments, thematic investing, ETF replications, tailor-made indexes, and equity financing.
What are your current initiatives at Nasdaq?
Greg Ferrari: Nasdaq is continuing to prioritize market modernization and emerging technologies across all of its markets. In North American Markets, we are specifically focused on, expanding our data center, further leveraging the power of cloud to facilitate our continued AI adoption.
Nikolaj Kosakewitsch: We focus on continued development of our technology leadership, marketplace excellence and strong commitment to sustainability, to deliver a world class capital market offering for both companies and investors in Europe.
