Under Adena Friedman, Nasdaq is poised to take the biggest step yet in the company's evolution.
In June, Nasdaq announced a $10.5 billion deal to buy Adenza Inc., which develops software for risk management and regulatory compliance.
Investors were nervous at first – the company's stock price fell 10% on the news, though it has since recovered some of the lost ground. For Friedman, however, the deal embodies a goal she has pursued since she became Nasdaq's CEO in 2017: cementing the company's role as a core technology provider to financial institutions, including banks. The transaction is expected to close in late 2023 or early 2024.
"We find that financial institutions around the world are increasingly looking for partners that can serve as a true collaborator, ones that can help them address their toughest problems," said Friedman, the first woman to lead a global stock exchange. "At Nasdaq, we deeply understand the banks' most pressing challenges – from thwarting financial crime to managing liquidity requirements to executing a world-class risk management program – and we bring advanced technology to bear in our engagements with them."
Before the announcement of the Adenza deal, Nasdaq's largest acquisition was its 2021 purchase of Verafin for $2.75 billion. Verafin sells software and other technology used by banks and credit unions to detect financial crimes.
A native of Baltimore, Friedman grew up with finance: Her father, David Testa, was chief investment officer at financial advisory firm T. Rowe Price. She came to Nasdaq in 1993 as an intern and rose to hold a variety of leadership roles, including head of the company's data products business, head of corporate strategy and CFO. As a member of the company's management team, she played a role in numerous acquisitions, including those of INET, OMX and the Philadelphia and Boston stock exchanges.
She left Nasdaq in 2011 to join Carlyle Group as CFO, helping to take the company public. She returned to Nasdaq in 2014 and, in addition to her role as CEO, was named chair of the board in January. Nasdaq's former chair, Michael Splinter, was named lead independent director.
"The board strongly supports the new strategic vision Adena has set out for Nasdaq," Splinter said in a statement. "We believe that joining the CEO and chair roles enables us to be even better placed to execute on Nasdaq's vision to become the trusted fabric of the world's financial system."
The biggest challenge in pursuing transformation at the company has been in protecting the culture that propelled its previous successes, Friedman said. But the transformation into a tech company brings new challenges — namely, the stiff competition for digital talent.
Nasdaq leans on its purpose and its role in the economy as a means of attracting people, Friedman said. "If a young technologist wants to make an impact in the financial system and work on challenging technical problems, there is no better place than Nasdaq to work."
Technology is not the only area where she has sought to make a difference as Nasdaq's CEO, and now chair. One of her highest-profile efforts is one designed to bring more transparency to board diversity at companies listed on Nasdaq's U.S. exchange.
Under its board diversity rule, approved by regulators in 2021, Nasdaq is requiring its roughly 3,300 listed companies to disclose board-level diversity data at the end of each year. Starting with reports at the end of 2023, companies will be required to have at least one diverse director or provide an explanation of why they were unable to. Companies will need at least two diverse directors or an explanation by the end of 2025, while small-cap companies on the Nasdaq Capital Market have until the end of 2026.
The rule has faced legal challenges from two conservative groups, including the Alliance for Fair Board Recruitment, headed by Edward Blum. Blum also heads Students for Fair Admissions, which pressed a successful Supreme Court challenge to diversity practices in college admissions.
While the rule has not taken full effect, it is already having an impact, according to research by Out Leadership, a B Corp that worked with Nasdaq to include LGBTQ+ diversity into its requirement.
In a report earlier this year, the organization cited a 1,556% increase between 2022 and 2023 in the number of Nasdaq companies with LGBTQ+ inclusive diversity policies for their boards, as well as increases in other diversity policies. There was a 206% increase in gender-inclusive board policies and a 318% increase in race-inclusive policies, for example.
Stock listings, meanwhile, continue to draw attention. Nasdaq landed one of this year's highest-profile IPOs, that of Arm Holdings Ltd., a semiconductor designer backed by investment company Softbank Group.
Arm's IPO plans spurred fierce competition among exchanges in the U.S. and overseas, according to Bloomberg. Nasdaq prevailed due, in part, to the incentives it offered Arm and a face-to-face meeting in Japan between Friedman and Softbank founder Masayoshi Son, Bloomberg reported. Nasdaq did not confirm or disclose any of the information reported by Bloomberg, according to a Nasdaq spokesperson.
"It helps Nasdaq's image," Owen Lau, an analyst with Oppenheimer & Co., told Bloomberg. "The IPO market has been pretty dreadful since last year. And people were looking for a catalyst, for a high-profile deal that could jumpstart the market."
A second degree black belt in taekwondo and an avid pickleball player, Friedman has been a Class B director to the Federal Reserve Bank of New York since 2018. She also is on the boards of FCLTGlobal, a Boston-based nonprofit that works to encourage long-term investing, and Vanderbilt University, where she earned an MBA.
