#203 Fredrik Voss: Nasdaq – How Blockchain Technologies Will Transform Capital Markets

Transcript

[Music] hi welcome to epicenter the show which talks about the technologies projects and starves driving decentralization and the global blockchain revolution my name is Sebastian Kujo and I'm a heroine today we are talking to Fredrik was who is the vice president of blockchain innovation at Nasdaq now we will talk about how Nasdaq is approaching the blockchain space what Fredrik in particular thinks about the applicability of blockchain technology to capital markets and other topics Fredrik welcome to the show thank

you very much guys it's a pleasure to the area so before we begin tell us about your background and how you got to be interested in this technology yeah so I actually joined the capital market space in 1995 and most of that time I've been working in commodity derivatives involved in the business management and operations of commodity derivatives exchanges and clearinghouses for commodity derivatives I did that up until about two years ago when I got a question from Mass that if I wanted to be part of our blockchain innovation initiative which is at that point in time was two years old but it was more a pure engineering initiative then and we

expanded it out to involve also more business people and that's how I got sort of involved with this space and so how does a company like Nasdaq go from looking at this as sort of a an engineering space right where mostly engineers are involved in it to deciding that they should hire a VP of blockchain I think way to answer that question is to put it into a wider context in terms of how this fits into Nasdaq overall I mean most people in at least in North America would associate Nasdaq would being the stock exchange for publicly listed companies but we think of

ourselves as a engineering than in capital market and actually beyond in some cases and one of our business lines is actually to provide software solutions to other exchanges clearinghouses sees these brokers banks market surveyors organizations around the world so I think overall something like a hundred exchanges around the world run on nasdaq software and technology so any new technology or pre-existing technology that people believe can play a role in capital markets get sort of the same treatment within us that we investigate the technology we analyze it from an engineering perspective but also a business perspective to see if it can some enhance the way capital markets are

working can it bring increased efficiencies increased productivity can it enable new market structures new kinds of business models so we have about a dozen similar work track so innovation tracks going on in addition to the blockchain program so we work with machine intelligence Capital Markets leveraging cloud technology Internet of Things mobile virtual reality augmented reality etcetera etc so that's how it sort of fits into the greater picture for us nastic is explaining like all of these different technologies and their applicability to capital markets and like in your answer you mentioned that

you sort of judge these new technologies on whether they can bring increased efficiency increase productivity or sort of new business models so tell us what are the measures of efficiency or productivity that that you think can be enhanced in the capital markets today we could think big gains come from yeah so I think that also depends upon where you are in the in the sort of transaction Shane I mean we've seen over the last 20 years we have seen an incredible innovation and evolution of the price discovery part of capital markets so the exchange part the trading of securities

I mean we've gone from floors where took its - to execute a transaction to actually chasing nanoseconds now and co-locating algorithmic in high-frequency trading application with the actual central exchange matching algorithm so and we have mobile access for for retail clients in a way we didn't have before of course it's been a huge innovation over the last 20 years in the price discovery part where we have seen less innovation has been in the sort of post trade plumbing once the trade is done the actual settlement of that transaction and the payment for the shares and the delivery of the shares to

just take that X in example has not seen the same kind of innovation I think that is where this technology potentially fits in it sort of brings a promise that we can create faster cheaper processing less need for reconciliation less need for capital - covered extended periods of time between the execution of a transaction and the settlement of the transaction but also brings a promise or perhaps providing greater transparency for regulators and society as a whole into what is going on in capital markets I mean this of course remains to be proven on a large scale but those are the promises of the technology and we see that the use cases that it used for

in capital markets aims to address at least some of those points but it will be some time until we know for sure if that actually is the case but it looks pretty promising we think regarding this this idea that you know some back office systems doesn't have not evolved you know this is something that we that we see across capital markets whether it be the financial sector insurance but there has been a lot of innovation on on sort of the front end whether it be sort of front office systems for within you know banking organizations or capital markets organisations and also in terms of innovation towards clients and user experience and new services and things like that why do you think there have

hasn't been as much innovation on the backend why do you think that those systems have stagnated so much well first of all you have to admit that they actually work pretty well I mean we are these systems and processes and procedures actually function well you have a you know very small amount of erroneous trades and the sort of fails in that process in handles you know a fantastic amount of value in those systems so they work pretty well but actually it is also because there hasn't really been you haven't really had access to new

technologies that could potentially we had sort of enabled that innovation so on the front end we've had you know increasing processing capacity we have colocation we have mobile etcetera etcetera here we've had sort of been sort of leveraging the same technology that's been around for the last 20 years so the technology itself hasn't perhaps sort of enable the same kind of structural innovation that we've seen being able in in the front-end side of things and and as a VP of blockchain tell us what what is your what is your normal day look like like what are your roles and responsibilities in those things yeah so I mean it is not about still doing things like this you know

media panels evangelizing to some extent both both externally but also internally within the within the company I of course contribute to our decisions in terms of what should be the objectives of this initiative at any point in time that have a host quite quickly also proposing strategies for how to achieve those objectives because of my background in the capital markets that do get involved in the identification and selection of use cases PCs products pilots etc Nasdaq has a investment fund for the we do innovation investments and whether or a blockchain opportunities in that space we are get involved in that

as well and also helps to coordinate resources across the organisation I mean Nasdaq is not phenomenally large but it is 5,000 people dispersed across the globe and many of our initiatives are sort of decentralized we have many groups in the company in various parts of the world that are working on blockchain related initiatives and we try to I try to sort of help coordinate to make sure we don't do the same thing twice or that we pick up loose balls and get someone to run with them so I think that is that is the sort of the typical day for me okay so let's listen you know perhaps talk about Nasdaq so I think most of our listeners will have heard about Nasdaq it is not

only sort of an emblematic part of New York's skyline I guess or you know being there in Times Square and and also is the second largest Stock Exchange in the world but you mentioned earlier that Nasdaq was an engineering company that builds software in the financial markets and financial services space you know maybe expand on that and and tell us things that perhaps people don't know about Nasdaq or don't realize about Nasdaq yeah so as I said a very significant part of our business is actually providing technology to to capital market infrastructure service

providers around the world exchangers ECP's sees these etc we also do provide services to corporate investor relation solutions public governance solutions etc etc and we've sort of done this for more than ten for more than ten years we of course we you can say that we use what we sell and we sell what we use because we are also a user of this technology in Nasdaq in its own name operate the quite large number of a changes for example in North America were of course known as the NASDAQ exchange on Times Square but actually almost all of the Nordic countries in the Baltic countries are exchanges and

clearing operations that are actually run by Nasdaq with a Nasdaq brand and this gives us of course a unique position in creating valuable technology in that we we use the technology ourselves so all the knowledge that we acquire from that operation we can incorporate in our solutions but we also get a great feedback in great collaboration with our clients around the their world so we think that is a sort of pretty fruitful integration between those two business lines if you want to call them that so so Nasdaq both builds like the technology for exchanges and clearing and also operates one of the like the

larger exchanges in the US and the Nordic nations correct so in North America I think we run more than ten exchanges with socket changes in the US and in Canada we have a commodities exchange we run fixed income markets we have a large actually several derivatives markets that we run over here and the same thing in same thing in Europe where we run the exchanges in Stockholm Helsinki Copenhagen Reykjavik and the Baltic countries we run some of the Central Depository companies there and we also have a pretty big derivative Clearing House in the in the Nordics that's correct so in terms of like blockchain technology what what parts of this

technology do you think are the most interesting for Nasdaq like what capabilities from this technology would be the most impactful for your business so I mean so currently you can say that most of the the initiatives that we're working on or pilots or MVPs or or projects they they they are in one of three buckets and some of these projects actually touch more than one of those buckets so first of all we are interested in how can this technology play a role in sort of the the plumbing of the post a plumbing as we talked about a couple of minutes ago so that's one area of great interest to us the other area is you know how can this

technology help society actually and you know society typically delegate this task to regulators to get greater insight into what is actually going on in capital markets can we create greater transparency for regulators to see where systemic risks are for we're concentration risks are forming so that's the second area the the third area is can this technology somehow enhance the relationship between the issuer of an asset you know a company for example and the investor in that asset for example in the u.s. today in the public market it's a quite long distance between the company the issuing company and the investor in the company

if that communication has many intermediaries could this technology allow where you have all the parties on a network can this technology allow for a closer collaboration between companies and and its investors so typically most of the invest in sort of the initiatives that we do now is in one of those three buckets it doesn't mean that things beyond that it's not of interest but you know we have to start somewhere and and those are the ones that have been sort of closest to closest to us to start with one thing that strikes me is that a lot of the use cases that we see in blockchain and we see them sort of applied in public blockchain so for

instance like icos and trading assets and transfer of tokens representing value you know these things can be could potentially be quite disruptive to nice tax business how does that and I was like look at this technology from that point of view where it can be at the same time quite disruptive and quite disruptive to your core business but I mean while also allow for your back office to be upgraded from its current state to something that's perhaps a bit more modern where information flows much more fluidly where the regulator has a lot more insight into what's happening I

think there are two ways I'd like to answer that question the first one is like you know you innovate or you die I mean if a new technology comes along it has application to a market where you're evolved in you have to embrace it otherwise someone else will embrace it and then you then you maybe in in trouble when it comes to disruption all the businesses I think one has to be a little bit more nuanced than the than the discussion typically is and that is that there are so many components there are so many parts of a capital market transaction shade for example the price discovery the management of buy and sell

orders and the actual matching of these orders where we now see millions of those order transactions per second in today's listed markets it is difficult for us to say that this technology is so incredibly disrupted for that part where it is disruptive is of course a potentially disrupted is of course where where the core strengths of the new technology lies and that is of course keeping track of possession over the data types as if in a peer-to-peer network so yes if your business model is to to do that particular your Biff you if you if your the trusted third party that does that job of course this technology asks some questions about

that or if you can speed up things with this technology and your current business model is dependent upon there'll be an extended period of time between the transaction and the settlement of the transaction then of course this technology potentially ask questions of that model as well so yes in in in for example if you're a a securities depository you know there are there are certain parts of your activities that could be potentially challenged by this technology but it's not like all capital markets or participants at all capital market intermediaries or all capital market activities or in the from hair cross all this of this technology so one has to be

a Britain you ask for my talk about disruption capital markets where is it really applicable and where is it not and of course that piece about I mean if something new comes along either you innovate leveraging that new innovation or you know you risk that someone else does it for you so like in terms of like your interests in the intersection of blockchains and capital markets you mentioned three of them which is one is on the on the post rate process side so after a trade is done the settlement and the in the tracking of of the various assets second is like blockchain technology some way enabling greater transparency to

regulators on what is going on in the market and then the third is blockchain technology might help in improving the relationship between issuers and investors in like the communication between issue and an investor in some way so let us walk through all of these three and big dig a little deeper into what all of it means so in terms of port post rate process could you give us an overview of how the post rate process works today and at what points it might be whether it might block change my proven advantage in in that process yeah of course I mean of course how they actually work depends from market to

market an asset to asset but you can say for listed asset generically you have a a trusted third party in the middle and that is the party that keeps track of of who is doing what every single transaction that is done is copied gazillion number of times all the parties in the ecosystem have their own copy of you know have their own version of the truth and there's a lot of resources spent on reconciliation of those of that status at the end the day now if we could now have a agreed view of the of the status of the ecosystem of

course there are a lot of those activities that would you know be cheaper or not would not have to be done in the same way as today and you know an example to prove that point was a pilot that we run in the private company share space in the US and of course that what the project that we call the link project where we made an application that leveraged leveraging sort of the chain akshay technology that allowed a for example a you know when the board in a private company makes a decision to issue shares the CFO can get out to his or hers office and actually print those shares in it's a no blocking transaction issue those shares to its investors

immediately and when there were secondary market trades in those shares investors could transfer those j shares between each other independently of a of a third party course honestly what that is that is an alternative market structure that is enabled by the technology so that is an example of what we mean by that and of course the relevance of this depends is dependent upon which market you're in the current structure of that market and the needs and desires of the participants in in in in each particular market I think that is the short way to describe it in RP so are they are there

any markets in in in particular where you foresee that this application of blockchain technology will flourish first and then it will go on to the other markets so are they are they like some like signals or are there some characteristics of particular markets which make it easier for this technology to penetrate that space and not other markets well as I said a couple of minutes ago most of these sort of the post-post trade infrastructure though o actually works relatively well today it's not like we have masses of

complaints on it so but this of course this technology potentially enables alternative structures to that we don't necessarily think that that is where it's going to start actually change a market structure from a trusted third party to a peer-to-peer is a very significant undertaking and the bigger the price is they're more significant it is in terms of number of participants in terms of complexity of technical existing technical ecosystem in terms of the number of decision-makers involved to get a change to happen so we think that the initial commercial applications of this technology in the post trade plumbing piece will actually be to lift markets that currently operate on a peer-to-peer

structure but maybe using not the most efficient technologies around and actually apply this technology onto an already existing structure but you do a technology enhancement so the link pilot was an example of that we working actually with the client of us here in New York called Nyack's which is the new york international advertising exchange they've bought a solution from a stub leverage this kind of technology for for these kind of market structures in their in the advertising space so I think that's where it's going to start now if these early adoption cases proves that there is great value in this then I

think the traditional markets will be more inclined to invest in in transitions to to a new structure enabled by a new technology but they want to see some evidence of the benefits before taking that leap in our opinion so another area of application that you mentioned is greater transparency to regulators and this is obviously something that speaks that speaks to me is you can stratum is building blotching networks that allows for inter enterprise processes to be more transparent and where integrity is guaranteed authenticity of data is

guaranteed and and of course the regulator is part of this where the regulator can have sort of and to quote you in your great Forbes article a special set of goggles to peer into a process can you give us your point of view on this and how blockchain technologies can be beneficial to an organization like Nasdaq from this point of view yeah and again it goes back to this this fact that this technology could potentially enable a an alternative way of doing things that tradish you know technology could not so it goes back to that relationship between the technology and the chosen market structure and it sort of distorts with the market structure really and the

technology is just an enabling technology in a in a way but today in many markets the structure is of course built on sort of before you get to the ultimate beneficiary or the ultimate owner of an asset you have a great number of intermediaries in between that and the marketplace you have brokers you have transfer agents you have registries you have depositories to actually to find out who is holding a position is quite hard and it requires a hell of a lot of reporting of all who holds this position yeah but that position was held on behalf of someone else was holding it on behalf of someone else and down the chain goes and actually trying to reassemble who are the beneficiaries or

who holds the position is quite hard now if you actually had these participants on a network with sort of addresses attached to them you could of course potentially you could imagine at least that that sort of the accumulation of the identification of what does the market actually looks like who is long who is short which participants they not may not necessarily be named but where in the ecosystem do we have these potential concentrations that could be simplified by a network phase technology like this rather than these sort of fragmented silos that we have in many markets today but not all markets are

the same there are actually markets where you have greater insight into the who is owning what for example and a lot of that is actually not technology related that is because those are the rules in a particular market so it's a combination of what the technology can enable and particular rules and structures of a particular market you mentioned ecosystems and this this is I think something that maybe we should spend a bit of time on because I was just having an event today and talking to two insurers and I think that one of the things that corporates in the capital market space really need to wrap their head around is this this idea of

ecosystems and that the future is one of networked economies is one of ecosystems where we break down these silos where we sort of work very differently from how we did in the past right where organizations are independent and have their own siloed data can you talk about ecosystems from the point of view of NASDAQ and you know what those ecosystems could look like you know if we were to apply them to you know the your business lines that is a pretty long and difficult question to answer but when you take you take again we go so go back to exchanges and clearinghouses these are already you know ecosystems today you have you have for example the exchange the change has

members the members trade on behalf of clients you have transfer agents you have registries involved in keeping track of who is owning what and so on and that this sort of infrastructure is today a mishmash of of technology from from various sources that are that sort of integrates with various api's and so on and it may not be the most efficient way of organizing things or setting things up but they are ecosystems where there may be this sort of the the benefit that one party in this ecosystem depends upon another party doing its job properly now the question is can you can

you sort of leverage new technology to enhance the working of those eco eco systems can does that mean that certain roles and activities that some parties doing this ecosystem change yeah maybe but I think you know it's a difficult question to answer and and sort of it remains to be seen in a in a way of course in the public in the public blockchain space we we see that the way sort of you organize how those are organized and that ecosystem how those ecosystems would work sort of look you can say that of course they look significantly different from the

traditional capital market ecosystems and how they look and how they are organized so you know I think it's going to be interesting to see how that sort of evolves in the future so one of the the major challenges I think in implementing these technologies at least in in the enterprise space and coming from the coming from the point of view of a you know a company that's building consortium networks not necessarily deploying on public blockchains is is is building these consortiums where they don't exist or where they do exist where there are already ecosystems one of the I think the major challenge is figuring out the governance and getting everybody on the same on the

same page to adopt a specific technology or a specific stack to implement in a consortium Network can you give me your perspective on this and you know how Nasdaq is approaching this this challenge yeah totally I totally agree with you on that one of the that's one of the key challenges to adoption of this technology in capital markets and and while many participants subscribe to the vision of the benefits of the technology to actually be in a position to get anything implement that you of course have to agree on the on the exact details of the blueprint and how do we want this to actually work okay we can

have t plus zero settlement but maybe that's not the way we want it or governance we need to agree on governance to your point how do we want the governance to look like for for this particular initiative of this particular market but I think that is only one of the challenges to traduction all the technology on a wide scale in capital markets you also have the issue around legal and regulatory not necessarily compliance but in order to pave the way for some of these very innovative business models that could be enabled by this technology you would also have to have some legal regulatory innovation in parallel with

that because some of these models are so innovative that it's not the problem is not that they are prohibited by existing laws and regulation the problem is that they are not contemplated so there is sort of a legal vacuum in which to deploy these models and no one is going to allocate billions worth of assets to a structure where the sort of legal certainty of what does this particular transaction on the blockchain actually mean in in the eyes of the court for example so that is also an area and then of course we have the usual boring sort of coming out with the new technology it is not deployed in a in a completely new world it's deployed in an existing world

so there are also need to be a lot of integration technical integration and technical transition from old technology to new technology and of course that is not a showstopper that happens all the time but has an impact on the timeline and all of these things together with the sort of the core evolution of Lakshya technology has to happen in in in in in parallel and sort of be agreed by everybody so it's a pretty chunky initiative to see those changes being deployed on a large scale and that is one of the reasons why we think actually as I said before initial commercial opportunities is going to happen in markets where those challenges are a

little bit less than in the larger markets for example and they get sort of a trial in those in those markets and in those structures so the way we deal with it is that we work with our clients we work with our members we work with our technology partners we we work with our clients on the technology side like I've mentioned Nyack's we also work with a Swiss exchange we have a couple of other initiatives that are not yet published sized and and that sort of sort of how we try to not start with a giant consortium but to store

with a core group of dedicated people and sort of expand the the group of participants from from from there but it is not saying that the alternative approaches can work as well but this is this is sort of how we have addressed the situation at least now initially so the another item that you mentioned in sort of use cases is launching technology somehow improving the communication and relationship between the issue issuing body and the investors in the asset tell us tell us why blockchains make a difference difference

here I mean some of that is also going back to that some of this is not about the technology it's about her market is organized in the structure of the market and the number of intermediaries and so on but if you today if you are if you are a publicly listed company in the u.s. today and you want to send something to your shareholder or for voting purposes for example or you just want to you know send them a coffee coupon or a coupon for ice cream whatever it's something real simple there are it's quite complex to do that and a lot of intermedius involved to make sure that the the intents of what you want to do is actually carried out

in accordance with your intent now of course if you were on a network based technology like distributed ledger network that is super easy you can just send they did it ties asset to an address on the network and it's done so one of the use cases that we pilots that we ran to try to demonstrate this was a remote voting application that we built and we've deployed a pilot in Estonia in in in Europe and the what that showed was that for proxy voting purposes we could leverage the technology for to get

a company to actually digitize the votes send the votes to its investors in Esther's could then do whatever they wanted with those votes they could vote with them they could send them to someone else on the network to vote in their behalf and we could sort of increase the speed and the efficiency and the cost at which that happened compared to sort of how it works today so I think that is an example of what we meant by bringing parties closest to to each other I'd like to come back to this question of regulatory oversight and again I'm this I use this all the time the the special goggles for the regulator I just I just love that and so does Richard so that was a great quote by the way and so in terms of regulatory

oversight I'd start them anyway we we sort of see the regulator as a super client so we obviously work with with corporates and we work with with large companies in insurance and financial space and capital markets and but you know we we kind of see the regulator as the you know the super client in terms of oversight and sort of getting industries on board with regards to a certain set of technologies and building consortiums and building ecosystems what is your opinion on this approach and and perhaps gives some insights as to how regulators are perceived and what role they play in the US market and in the

European markets and how that might be different well I'm not an expert on on the various regulatory entities across the world but I think the role of the regulators change significantly after the financial crisis of 2008 that is really when they got interested in sort of funding standing more in real time sort of getting clever from that experience they they increase their demand and need and understood that they had a need to have greater insight into how are the risks forming in in real time and that has that has created some challenges for the capital market

community because before then sort of technology and market structure wasn't really ready to support that situation so what you have now in response to dodd-frank the regulation in the US and it's called Amir and me feed me feed one and soon make it to in in Europe is that there is a heck of a lot of recording going on instead so now these are you know gazillions bytes of data trying to portray who is one owning what he sent up the chain or market participants to regulators and then they get this sort of data sea of data and

they sort of try to make sense of that and try to distill insight into where where do we have risk in issues forming in the in the market and where are potentially some sort of shenanigans going on now to your point if you could if you could actually give regulators access to real-time access to what what sort of what is actually going on in a market and who is doing what and who is in possession of what that need and that requirement that is you know only 10 years old so it could perhaps be better satisfied but of course then you then you have to then you also have to agree across the participant in the market

that this is the way we want to organize the market this is the technology we want to use that and that takes us back to the one of the challenges to adoption so I think that is how we see the regulatory dynamics in terms of this technology the technology holds great promise but it'll be a while before we we will see it's sort of implemented to its full ability to satisfy those kinds of needs now do you think that you know in the long term this is something that is desirable I mean if you come down to I guess the perspective of consumers and users of financial services and on the other end we have the regulator and the middle we have some

companies service providers financial market participants et cetera you know the the the companies in the middle are sort of in between the the regulator that is pushing them to give them more information and to provide more reporting and provide more insight so that through their business and on the other side satisfying the needs of customers and the customers want more privacy and want more protection of their data etc where do you think the cursor lies therefore is a good balance between a regulatory oversight and protecting the data and the interests of regular citizens I mean ultimately those are political decisions actually what should the balance be between regulators

market participants and consumers I think it was fair to say that you know the lessons you know we're not super happy with what happened after the financial crisis in 2008 and that sort of moved and needled quite significantly in terms of politicians view on what that balance should look like but once you've actually agreed on a set of rules and currently we have dodd-frank and potentially in the u.s. and potentially that'll be eased up a little if the new administration gets what they what they want but fundamentally once you have a rule set the set of rules then then I think there is a common interest across

the participants in the market and regulators and investors and consumers to actually satisfy that need as cheaply and as efficient as efficiently as possible and of course is where a technique comes in that is where innovation comes in and we leverage new technology to to satisfy those requirements better but the actual decision on on how much should a regulator know one for what purpose and how do we protect privacy and so on that that is actually ultimately a political decision so Nasdaq so your company has been like sort of an active investor in some of the young blockchain startups so so tell us about your activities in

in this space what's what startup what kind of startups are you pursuing and what the company has done on the investment from yes so support of our innovation program across nastic we do have a sort of easy-like fund with these strategic investments in in startups and also it slightly bigger companies when that makes sense and in the blockchain space we of course done two investments one in chain and one in in in in Stratham and of course we are looking for situations where we have unique teams with unique capabilities with unique technology and also technology that we can integrate with with with our technology to to create both value for

us and for the company that we invested in and also to leverage our resources around the world in terms of our sales resources in terms of our business development resources in terms of our strategic resources legal or regulatory capabilities to sort of bring additional value to to the companies we invest in so we are looking for great teams great people and people that are interested in learning actually because to adopt an idea to the specific needs of capital markets is you know like a lot of markets has some unique dis arias so so a willingness to adopt of course in the core there has to be some kind of

exciting technology as well and that is actually true for both chain and stratum if we talk about specifically about the blockchain investment so far so just touching on the unchain and so we've already talked about the the post rate plumbing and we've sort of touched on link and I think most of our listeners will be somewhat familiar with the link platform so can you talk about so the long-term vision for that product from from the perspective of NASDAQ and you know how it fits and you know that with a greater picture of the Nasdaq financial framework yep so link is an application that is a part of the Nasdaq financial framework as you said that that

framework is a generic framework that can be used across all kinds of asset classes commodities fixed income stocks publicly listed stock private stocks etc basically and it's at any asset you can imagine and then we have sort of market specific applications and and Link it was for the private company space so that is now an integrated part of the NFF offering we're going to leverage that technology now when we do the implement the the contract we signed with a Swiss exchange which is about structured products in the OTC space in the Indus ways market the the actual pilot we were running on the west coast

we've sort of altered that a little bit and we sort of analyzing the results of that but the technology we continue to enhance and develop and it's actually a standard part of our offering now so to anyone around the world ok so this is actually a in production at this time the technology is available components of it are in production we're going to enhance it and evolve it and expand on it for the various projects that we implement around the world so you can say it is in production the specific pilot we were running on the west coast in the US we post that for the time be I

see and are you able to talk about sort of more specifics like trading volumes like number of users how many people are using this platform day today I mean the Gnostic price of framework is not specific to that that is generic framework that anybody across large and small clients around the world can use so it's difficult to talk about that if you look at it from that perspective we are contemplating you know thousands of users around the the world the specific pilot in in on the west coast for private company share was just a handful of companies that we were working with and was pretty confined to to that so the the idea

a link platform as I understand it is before the company goes public the they can sort of issue their shares on blockchain I'm assuming based on change technology and then people can trade these shares before the IPO yeah which is nothing new I mean that is not something that was enabled by blockchain technology that's the way the private company company's market has been operating for a very long time but this was a this was a way of proving the value of the technology in in sort of that generic space so can we expect to see other like projects come out from Nasdaq based on let's say straddles

technology or change technology yeah so we have two ways to market for for those innovations one is when we do it as part of our transaction business as we talked about before we run exchanges and sis apiece and CDs particularly in North America and in in Europe we are we have the three publicly announced initiative we've had the link pilot we have the payment solution that we did together with city here in the US we had the voting pilot in Estonia we have a couple of other initiatives that we're working on that are yet to be publicized so that's one channel the other channel is

of course the work we're doing with our clients on the market technology side and we talked about Nayak's before where we leverage the this technology for advertising forward contract purposes here in New York and we just talked about the Swiss initiative as well we also are working on a couple of design studies where the potential clients for other purposes but those are with those clients aren't exactly what that is about is is is not publicly announced yet so of course like in the blockchain space there's there's like like blockchain platforms which which which build like financial ledges distributed

financial Ledger's and then there are other startups like start on that build like proof of process technology like so if there's any particular process happening inside an enterprise recording each step of the process and making the conclusions from that process accessible to other enterprises so does your group have any interest in like this kind of proof of process technology or like certification or time stamping technology to you and it's used in capital markets I mean obviously there are the number of workflows in capital markets that that could benefit from that kind of capabilities is almost

infinite so and with regulatory demands for actually proving that your workflows and processes are secure you know that is obviously an area of interest to a to a company like Nasdaq and to to ourselves and the clients of our solutions and of course the unique capabilities of Stratham technologies is is something that was attractive to us in in making decision to do an investment in to do a sort of strategic partnership with the strata in in that space and yeah we're we're very happy to excited to have Nasdaq as an investor and as a partner and we owe and and and

are looking forward to being able to announce some some things some being able to announce some joint joint software or partner with a in the context of a partnership you know soon so before before we wrap up here we we we couldn't have you on without talking at least for a few minutes about ICS and so I'd like to ask you you know as from coming from the perspective of a Nasdaq what are your thoughts on ICO is and how do you see this this new wave of of capital coming into the blockchain space you know of course we we know the existence of these crypto assets you

know the aether and the bitcoins and the and the I cos those tokens as well I mean currently our focus versus sort of rests in the space of the sort of the technical innovation or distributed ledger technology and it's applicability to capital markets on a broad scale as I said we we know the existing of these I SEOs and that it attracts a lot of capital and an interest and yeah we just see what's going on without having a sort of a

strong opinion of whether that is a good or a bad thing we just see what's going on for the time being it's impressive to see the growth in this space so I think like from the from the ICO markets perspective that there seems to be like two interesting pieces to it a many of the I SEOs are actually like security is for good or bad so you're seeing like starters essentially issue like securities on the on the public blockchain and they the second part of it is there is this new technology which is the technology of decentralized exchange where we're not only can these securities be issued on

the public blockchain but they can be exchanged peer-to-peer without creating any kind of counterparty risk so me buying securities from you over the blockchain without without me needing to trust you in any way right so kind of like these protocols are are in operation and have you sort of been following this technology and do you think like this kind of technology can can can like create an alternative to the current way exchange works in capital markets I mean I think it's an interesting proof point in terms of the the sort of the the the functioning of the

technology in capital markets that it actually proves that that peer-to-peer processing or of digitized assets actually you know works I think we subscribed to the vision and and and that it would be fantastic that if you had a a like an internet owned of value and a sort of a rails that is global and borderless and that would be greatly sort of beneficiary to to mankind actually to have that now at the same time you do have to marry that with

existing laws and regulations which is it's critical and it's also important to to make sure that investors and consumers have sort of ample protection in in in those markets but also that the companies have suitable protection for them to be viable in the in the long term so it's I mean it's it's an exciting space to to follow right now we've sort of seen a of course a fantastic sort of boom in the use of that technology and that's structure but it's also going to be interesting to see

as time goes by and we sort of see investors or buyers of these tokens sort of also expecting delivery or what they think they're bought and that that's going to be also interesting to see how that works out over time do you think that a regular regulated exchange as as Nasdaq could one day get into trading cryptocurrencies tokens digital assets well if there is a if there is a need and desire for that kind of certainty and and you know fair and orderly markets and consumer and investor and participant protection that regulate exchange can bring you know it the Nasdaq is not doing it you know I

guess someone else will do it but ultimately there needs to be that need in that community for that to be a sort of a viable proposition - a - a - a - a marketer to a community and I'm not sure we're there yet but you know we'll see all right great well Fredrik it's great to have you on the show today it was fascinating to hear your thoughts and your perspectives coming from this book coming from the point of view of Nasdaq on on how blockchain technologies will well are developing and will develop in the coming years in the capital market space so once again thanks for coming on the show today awesome my pleasure and thanks against who our listeners for once again tuning in we are part of

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