Nasdaq CEO Adena Friedman believes that blockchain technology will revolutionize the traditional financial system in three major ways: by revamping post-trade infrastructure, improving collateral mobility, and facilitating faster and more efficient payments.
During a discussion with Ripple President Monica Long at the Swell conference in New York, Friedman highlighted the vast amount of capital currently trapped in clearinghouses and clearing brokers. She sees this as an opportunity to inject more capital into the financial system through blockchain technology.
The post-trade processes in securities transactions are currently fragmented and outdated. Friedman envisions blockchain as a means to unify and streamline these workflows, reducing inefficiencies and freeing up capital that is currently tied up.
Another area for improvement is in the movement and management of collateral by financial institutions. By utilizing digital assets, collateral can be transferred more quickly and efficiently across different platforms and borders, enabling a more fluid capital flow.
Lastly, Friedman emphasized the need for smoother and more efficient payment systems in order to facilitate global market participation without obstacles. She believes that blockchain technology can enhance or rebuild existing payment infrastructure, unlocking capital that is currently held up in outdated processes.
Nasdaq has already taken steps towards integrating blockchain technology, such as filing with the U.S. Securities and Exchange Commission to support trading of tokenized securities. This approach aims to maintain the core structure of securities while providing investors with more flexibility in settlement.
Friedman clarified that the goal is not to replace or disrupt U.S. equity markets, but to enhance them by incorporating technology that reduces friction and enhances investor options. Tokenized markets may initially impact post-trade functions, but could eventually transform how securities are issued and traded.
Ultimately, the vision is to preserve the strengths of the U.S. markets while leveraging technology to minimize obstacles. “Let’s retain the positive aspects of the U.S. markets and enhance them with technology to reduce friction,” Friedman concluded.
