Nasdaq at Morgan Stanley Conference: Tech Transformation Insights

On Tuesday, 10 June 2025, Nasdaq Inc. (NASDAQ:NDAQ) took center stage at the Morgan Stanley US Financials Conference 2025. President Tal Cohen shared insights into Nasdaq’s strategic transformation into a technology and platform provider, focusing on fintech evolution and market dynamics. While Nasdaq’s commitment to resilient market infrastructure and AI integration was highlighted positively, challenges remain in implementing twenty-four-five trading and expanding into digital assets.

Key Takeaways

• Nasdaq plans to launch twenty-four-five trading by late 2026, driven by demand from North Asian retail investors.
• The company is focusing on AI integration to enhance product efficiency and client experiences.
• Nasdaq is strategically positioning itself in the crypto and digital asset space, awaiting regulatory clarity.
• Strong retail participation and increased foreign ownership of US equities contribute to market dynamics.
• Verifen, Nasdaq’s fastest-growing revenue stream, is expanding over 20% annually with a focus on new markets.

Market Dynamics and Volatility

• Record volumes were observed, with equities options surging in April and normalizing in May.
• Message traffic peaked at 550 billion messages on a single day, indicating robust market activity.
• Despite a 20% initial decline, the Nasdaq index is up 2.5% year-to-date, with European markets outperforming US counterparts.
• Retail participation remains robust, with foreign ownership of US equities doubling over the last five years.

Twenty Four Five Trading Initiative

• Nasdaq’s initiative is driven by North Asian retail investors’ demand and aims to maintain market integrity.
• Collaboration with DTCC and other infrastructure providers is essential for implementation.
• Challenges include staffing, operational support, and implementing volatility guards for less liquid hours.
• Future opportunities include expansion into options markets and digital assets, contingent on regulatory clarity.

Strategic Pivot Towards Information Services

• Initiated in 2017, Nasdaq’s shift focuses on risk management, regulatory reforms, and technology modernization.
• The fintech portfolio includes Verifen for financial crime management and Calypso for capital markets solutions.
• Nasdaq leverages its regulated entity status to provide clients with proven technology solutions.

Acxiom and Calypso Integration

• Sales cycles have normalized, with strong demand across all products.
• Acxiom targets international markets with cloud-based solutions for smaller banks.
• Calypso’s XVA accelerator uses AI to enhance efficiency in complex derivative valuations.

Verifen Growth and Opportunities

• Verifen is expanding rapidly, focusing on new geographies such as the UK, Nordics, and Canada.
• Opportunities exist in small and medium banks, leveraging a "One Nasdaq" approach for global expansion.

AI Integration and Benefits

• AI is integrated into products to enhance functionality and improve client experiences.
• Calypso’s AI initiatives include predicting settlement failures to optimize capital management.

Digital Asset Strategy

• Nasdaq offers trading and surveillance technology for digital assets and lists ETFs like iBit.
• The company explores collateral management solutions, connecting traditional finance with digital rails.

Q&A Highlights

• Sales cycles have returned to normal after economic uncertainty.
• Verifen is leveraging Nasdaq’s existing technology franchise for new market penetration.
• AI benefits are being quantified through improvements in development and cost savings.
• Nasdaq focuses on capital efficiency and collateral management in the crypto space.

For a deeper dive into Nasdaq’s strategic plans and market insights, refer to the full transcript below.

Full transcript - Morgan Stanley US Financials Conference 2025:

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Alright. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. Note taking of photographs and the use of recording devices are not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. Alright.

With that out out of the way, good morning, everyone. Thanks for staying with us here on day one of Morgan Stanley’s financials conference. I’m Mike Cyprus, lead analyst covering brokers, asset managers, and exchanges for Morgan Stanley Research. And, welcome to our fireside chat, with Nasdaq, and it’s my pleasure to welcome Nasdaq’s president, Tal Cohen. As many of you know, Nasdaq could be a, global exchange operator.

But in recent years, Nasdaq has been transforming the business through a series of acquisitions to become a technology and a platform provider to serve corporates, investment managers, and financial institutions as they navigate and interact with the global capital markets and, the broader financial system. So, Tal, thank you for joining us today to, discuss the transformation of, of Nasdaq.

Tal Cohen, President, Nasdaq: Yeah. Thanks for having me.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Why don’t we start off on the the market side? A lot of volatility, from a macro standpoint. We have seen record equities options volumes in April since normalized a little bit into into May. So I guess how is the exchange navigating here? What’s different or maybe even similar this time around in terms of retail participation that you’re seeing in the markets versus maybe prior periods of volatility?

And how do you think about the volume growth and sort of market share dynamics as we roll forward from here?

Tal Cohen, President, Nasdaq: Yeah. So there’s a lot there. Yeah. So I think we’ve all experienced quite a bit of volatility in the you know, five plus months of the year. I’m just gonna provide a little bit of information or stats, and this should give you a sense of what we’ve seen in the markets.

So of all, we’re really, really proud of the fact that we can ensure that the markets are well functioning, resilient, and inspire investor confidence. You may not always like the prices you see, but we’re giving you the most accurate real time prices in the market so people can make decisions and apply, their view of the market against what they see in the market. So in in the beginning of the year, we braced ourselves for some level of volatility, but we saw that kind of roll through our markets. The in the March. We started to see a little bit of, volatility roll through our options markets, so before, Liberation Day.

And then we got to Liberation Day, and and I just wanna give a few stats on that. We broke records, almost every record we had in terms of message traffic and volumes. We did a 100,000,000 as an industry, in options, a 100,000,000 in contracts that is, 31,000,000,000 shares, in equities, and we had five of the six largest days ever in equities in April and four out of the the six largest days in options. From a message traffic in the April, from a message traffic perspective, if you were to ask me in early twenty twenty four what a really active day in our options market would have been, I would have said a 100,000,000,000 messages, really active day. We we got to just about 200,000,000,000 messages in our options market alone on Liberation Day plus two.

That’s just incredible. And we managed it and so did the industry flawlessly. And then in terms of our overall, all of our systems, the inbound and the outbound message traffic, this is a stat for you. We again, in 2024, if you would have said, what’s a big day? I would have said 250,000,000,000 messages running through the system in and out would have been a a pretty big day, a really impressive day.

We did over 550,000,000,000 messages in a single day, and the markets operated all mission critical infrastructure operated as as it should. So that that was pretty incredible. And and the markets, if you guys recall in early April again, we had down days and up days of plus five, minus five, on those days. So it it’s just astounding. And we sit here today off of our lows where the Nasdaq was down about 20%.

The Nasdaq’s up two and a half percent on the year. It’s incredible if you think about how the market has responded in the better part of two months to what we’ve seen, with respect to the to the tariff conversations. And so the market has proved resilient. The economy has proved resilient. And, and one last stat is the European markets, and we operate markets in Europe, are outperforming The US markets.

You know, if you sit if you sat here in November and asked if, you know, Europe would outperform The US in the couple months of the year. I don’t know if I would have said that to be the the case, but Europe is also performing well. We run markets in The Nordics and The Baltics, and we saw, again, in all of those markets, records in terms of message traffic, strong resiliency, and we continue to invest in our infrastructure. And the last thing I’ll say is we took markets for the cloud over the last couple of years, and those markets are performing extremely well from from a latency and capacity perspective.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: And anything you would note around retail participation?

Tal Cohen, President, Nasdaq: Sorry. Retail, extremely resilient. Retail has continued to be a big part of the market, in particular, the equities market. We’re seeing strong retail participation in the options market too. And, of course, we’re seeing a lot of, foreign retail activity.

So you can talk about it in the context of twenty four five, but, I think foreign foreign ownership of US equities has doubled in the last five plus years. So retail, not only here, but retail globally has proven to be very resilient. It is not the retail that you thought of in 02/1617, much more sophisticated. They are playing both sides of the market. They’re using better tools.

They’re getting better information. And so retail is is definitely more advanced, and we see them in the market in in particular on the option side in a more advanced sophisticated manner.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Great. Maybe sticking with markets, I think your intention is to launch twenty four five trading, by the second half of of twenty six. Maybe just talk a little bit about the rationale behind that move. What are the types of market participants that this could appeal to most? And and what sort of steps, hurdles, infrastructure need to sort of be overcome, built in order to achieve the sort of 2026 time frame?

Tal Cohen, President, Nasdaq: I’ll start with the last part of your question. So the and maybe just as an overview, is twenty four five trading is happening today, and it’s happening off exchange today, and it has been. There are ATSs that are operating today, But we have seen an increased demand, in particular from retail from North Asia, predominantly North Asia, and it’s unidirectional. It’s not necessarily that US, retail wants to invest in the world, although we are seeing a little bit of that. It’s much more that Asia and the world is coming into The US and has been for the last, you know, three, four, five years.

And and as we looked at the landscape, we noted that these are mostly Nasdaq companies that they wanna trade. And, and so we started to think about the opportunity in twenty four five, and we walked through it in the following way. One is we said if we’re going to do it, we wanna make sure that we preserve the integrity and the quality of the market. We’re in exchange. If we enter the space, we’re gonna wanna do it, in our words, the right way.

And the right way means bringing other mission critical infrastructure providers with us, DTCC, the securities information processor, and the trade reporting facility, which is there for all the off exchange activity, provide transparency for all of that. So in coordination with DTCC and the SIP and TRF, we all agree that we’re gonna go to twenty four five together the right way. The thing is we saw a number of proposals out there that added to the complexity. So other exchanges put out twenty two five, twenty three five, and we looked at it said, it’s time to harmonize. And if we wanna get to twenty four five, let’s just get to twenty four five the right way.

And so harmonizing and aligning the exchanges on twenty two, twenty three, twenty four was really important. Bringing the infrastructure providers along, very important. And so those are the two things we’ve been focused on, and we’re gonna do in in collaborating with the industry. We’re bringing the issuer voice to the discussion because we don’t want issuers looking at their stock at 02:00 in the afternoon, seeing that it’s up 2%. At 02:00 in the morning, it’s down 3%.

That’s a bad call, and people would ask why. So we wanna make sure the issue is brought into the conversation. The last things that we wanna do is make sure that volatility guards are there. We can handle corporate actions, and we also can apply, the resiliency and, and controls that we have during market hours. So those are all the things we think about.

We think this is a long game. We think there’s a real opportunity. I think 24 to five trading will be mostly retail on day one. We will preserve the sanctity of our open and close. That’s important for institutions to hear.

You know, that that open and close is really important to those that are benchmark focused. I’ll also note that we are sixteen hours today. So we open at four in the morning. We close at eight at night. So we’re talking about being open another eight hours, of the day, just to be very clear.

And then if we do this and if we do it well, then it opens us up to other opportunities. We can think about, twenty four five for our options markets or proprietary products. CME is already open twenty four five today for futures. There’s questions around digital assets and crypto. And if there’s regulatory clarity there, we can position ourselves to, again, offer those products if we can prove ourselves in equities in twenty four five.

So I I just think there’s a a number of opportunities we look to if we can get twenty four five right for equities, and we’re very, very focused on the operational aspects of that.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: So eight more hours, you make it sound like it’s sort of easy. But what would you say the biggest hurdle is

Tal Cohen, President, Nasdaq: to get that? It’s not easy. So the the technology the technology itself is not the challenge. We can operate the technology. It’s the operational elements that I just noted, which is where where do you staff yourself twenty four five?

How do you ensure you have staffing? You it’s a follow the sun model that you have to have when you do twenty four five. So from a staffing perspective and an operational perspective, we wanna think about that. We wanna have the same level of service and support and resiliency during those eight hours. The other one is what you just mentioned is operationally working with DTCC and figuring out when the cutoff is.

What is what is the trading day? When do you cut it off? What what’s ex dividend? How do you manage corporate actions seamlessly? And then how do you ensure that the markets, they’re less liquid and wider, you have the proper volatility guards?

And that that requires the collaboration with the industry. So it’s those operational elements of service, support, resiliency. How do you handle corporate actions, how do you handle, you know, the trading day, when do you provide DTCC with that, like, how do you agree with all of the industry in terms of what that true that new trading day looks like is are things that we’re just gonna have to solve together before we go live.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Great. Why don’t we shift and, talk about Nasdaq’s strategic pivot towards information services? Where are we in this journey here, which you have embarked on, I guess, this point nearly ten years ago, I guess, about eight years ago. So, I guess, how do you see Nasdaq’s role in the ecosystem evolving as you look out over the next five, ten years?

Tal Cohen, President, Nasdaq: Great question. So in 02/2017, when our, current CEO, Dina Friedman, came in place, we conducted a strategic pivot, but that was after a long evaluation of what the the current megatrends were, what we saw structural trends in the market. And and we got a number of those right. A number of those we looked at and we thought about, and and they didn’t play out the way we did, but there are a number that did. And as a result of that, we’ve built up a financial technology business, and the acquisition of Edensa plays right into that theme and into that strategy over the last ten years or eight years.

And and the trends that we were playing into exist today, which is in 2017 and and afterwards, we we felt like there was a megatrend in terms of financial institutions wanting to better manage risk, all types of risk, in real time more accurately. Operational risk, credit risk, market risk, managing risk in a world that is changing faster than it’s ever changed before was incredibly important. We also saw that regulation, the the regulation, the pace and intensity of regulatory reforms, We felt as a highly regulated entity ourselves, we feel it. We feel how much it it requires of us. We just saw that it was gonna be global, was gonna go downstream, and it was gonna hit both sides of financial institutions on the banking side and the trading side.

And then finally is modernization. And this is before AI, was a big topic. At that point, we were thinking about cloud and how all of you and all of us were going to modernize our tech, in to take advantage of the opportunities we had in front of us. Again, blockchain, DLT, AI now. But how do we modernize our tech to meet evolving client needs and make sure that that tech debt wasn’t impacting our resilience and wasn’t creating more complexity within all of our businesses.

And all of that, all of what I’ve just mentioned was then taken one up one level into one theme that we articulate, which is there’s going to be increasing complexity in the world. So we, as Nasdaq and have we have a trusted brand, we wanna be our client’s trusted partner in helping them solve their toughest, most pressing operational challenges. That’s how we thought about it. It was that simple. And since then, we’ve made a number of acquisitions, and now we have an incredible portfolio of companies under our financial technology division that allow us to do a few things.

We have, financial crime management with Verifen. It’s a leading solution. We have a capital markets offering that, looks at the full trade life cycle from Calypso and Market Tech, and now we have a regulatory technology subdivision with surveillance and, and Axiom, and that allows us to protect our clients’ reputation and brands. So we feel really good about the collection of assets we have. We feel really good about our ability to solve our our clients’ toughest problems, be your trusted partner, and we we’re continuously trying to earn that right.

And we earn that right, and this is what makes us unique because we’re highly regulated. We consume a lot of the technology we sell, and we adopt and integrate a lot of the advanced technology that we talk to you about. No client wants to talk to you about the cloud unless you’ve done it. No client wants to talk to you about how do you input AI and and bring it into your products unless you’ve done it. They wanna know what the blueprint is, what proof points do you have, what pain did you go through.

So our ability to share that with clients is incredibly valuable. So, really proud of what we built over the last eight years. We have a great collection of assets. And what’s different again is each of these assets are either number one or have or or leading assets in in the services and capabilities that they provide.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Great. Why don’t we dig in there a little bit starting with Acxiom and Calypso? It’s about, maybe about a year or so into the integration. Revenue ARR growth have been been pretty strong there. Recently, you did call out a little bit of elongated sales cycle, which could weigh on on revenue growth for for the year.

Walk through for us what you’re seeing in in in each of those businesses and what it’s going to take for the sales cycle to normalize and and even potentially accelerate?

Tal Cohen, President, Nasdaq: So so I’ll just take the last part of that question again and say that we came out early in the year and talked about sales cycles, in particular with respect to Calypso. And what we should recognize, there was a moment in time that’s transpired in the market. That moment in time, again, the markets were down 20% a month and a half ago, and now they’re up 2%. So everybody was feeling that moment in time. And as a result of that moment in time, due to the uncertainty around tariffs, there was an understandable pause in the market where in Calypso for bigger deals, we saw more people in the room and more decision makers and a buying process that involved more people.

And that was understandable. Since then, we’ve seen that normalize. Since then, we we have seen the sales cycle across all of our products, continue demand continues to be strong. Competitive position continues to be strong. And, and the sales cycle, matter that we raise with respect to Calypso has has kind of solved itself where we now see it being much more, if you will, typical in the way that we’re approaching clients and and the clients are approaching us on the decision making side.

So that that is what we’re seeing now. In terms of just demand and and how we see demand by product is, I think, was your question. I’ll run through a product by product real quick. On the regulatory side, regtech solutions for Acxiom, Internationally, there’s a number of countries and economies that are trying to level up in terms of the integrity, of the banking system. They’re trying to modernize the way that they report, modernize their their ability to manage capital and liquidity.

That presents opportunity for us because Acxiom is in 60 plus countries, serves a 130 regulators. So it’s global and comprehensive, and it is an incredible solution for those countries and the banks and those and the financial institutions in those jurisdictions that are looking to modernize and advance their their integrity. So that’s an opportunity. The the other opportunity for Acxiom is also a down market. We’re looking at the down market opportunities.

So banks under a 100,000,000,000 represent an opportunity from a financial reporting perspective. We have spent a lot of time trying to design the solution, a cloud version of the solution that would serve that market. So the right price point, the right functionality, the right delivery model, the right support model and the right go to market and that presents an opportunity for us on Axiom. Surveillance, there’s, you know, two or three really trends that are very clear to most people. One is crypto.

Crypto is is a tailwind. A lot more trading in crypto. And as the reg regulation comes in place, there’s more regulatory clarity, that’s gonna be a tailwind for us. The the, elevated volumes and volatility, when markets are up one day plus five down day down minus five, there’s a lot of questions about trading activity and what kind of trading activity we’re seeing. So that has been a tailwind.

And then the last one is just from a regulatory perspective, we’re seeing regulators, very interestingly, do much more with data to help regulate across asset classes and across asset classes that were previously not as transparent. They’re getting their hands on fixed income data, OTC data, and asking questions about related securities. How does, like, trading in one security affect trading in another security? So that is great for surveillance. It’s a tailwind for us.

And in surveillance, we have this community of exchanges, regulators, broker dealers. So we have this three sided community, and it’s wonderful because it is powering a lot of our demand. So a lot a lot going on in surveillance, and and demand has been very constructive. On the capital market side for Calypso, collateral management, risk management. Risk management in normal forms I shared earlier, but collateral management, capital efficiency is top of mind.

Managing your balance sheet, managing risk, and automation and straight through processing has been a large and big tailwind for Calypso, especially in the segments that we serve, tier two and tier three banks. So that’s been great. And it’s global. And it’s global and multi asset class with a strength in OTC security, so that that also has been playing into a trend if you if you will, where a lot of the banking community now is also thinking about their global footprint. Market tech and and our which is our trading and our post trade and risk solution, that has been all about modernization.

We have just launched next gen solutions there. Modernization is top of mind for all critical market infrastructure providers. If you’re sitting there and you’re in exchange today or market today and volumes have been persistently high for the last four years and volatility has been persistently high, you’re thinking, it’s here to stay. Like, how do I manage this for years to come? And it could get even greater.

So I think when we came out of 2020 and 2021 and we had, you know, the meme phenomenon in January 2021, people ask, you know, is this volatility and volume gonna stay with us? And then we had ’23, ’24, and now ’25 where I gave you stats where we double. And so people are seeing this as a need as as must do in terms of modernizing and making sure they have the capacity and the performance and the determinism they need. So that that is a big driver for those solutions. And then Verifen, the the just the anecdote I’ll share with you is I don’t oversee Verifen, but in every conversation I have on the voice of customer tours that I do around the globe, whether it’s in The Philippines or Latin America I was in Lithuania last week.

The question I get is fraud’s a big problem. Fraud is a massive problem. It is for digital banks and others, and for growing economies, developing economies, maybe their number one issue. And so Verifen is sitting in in a with a tremendous opportunity in front of it. It’s solving a a problem that is a drain on the economic system.

It’s a drain on on on capital markets in general. And so from a fraud and AML perspective, I think, again, Verifen’s really, really well positioned. And the demand for that is only growing because, like I said, in The UK, the the governments now understand there needs to be a private public partnership, and they’re holding banks accountable. And that’s also creating an incentive and a demand driver for us there. So across all of our products, we’re seeing different types of demand, but these levers are really powerful for us, and I think they’re structural.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Maybe just on the last one with Verifen. Why don’t we dig in there just for a moment? That’s your fastest growing revenue stream at Nasdaq today growing over 20%, top line annually. Maybe just talk about how you’re adjusting the offering as you look to enter other markets? You mentioned overseas.

So how do you adjust the offering as you go into new markets, new channels? And then what are some of the opportunities you’re most excited about as you look out over the next couple of years? And maybe just update us on the pipeline of tier one, tier two bank opportunities.

Tal Cohen, President, Nasdaq: There continues to be a long runway in small and medium banks, which is very thin sweet spot. So we continue to think there’s a long runway there. There’s much more we can do there, and and we continue to be excited about serving, that community. And then in terms of tier ones and tier twos, we’ve had success there in proving out that we can reduce false positives. We can help them identify, if you will, financial crime that they can identify on their own, and that’s because we have built a a franchise where we have 2,600 clients, over 650,000,000 accounts that we look at.

Verifen looks at the payor and the payee, which is different than most solutions, and and we also do fraud. So we we really feel like we can, tier one and tier two enterprise, which accounts for about 50% of the TAM, serve that market well, and early indications are that we can, and we’ve had some success there. But there is still a long road ahead of us, in terms of being able to do that. And then the last part, which is maybe to your question, is when we look at new geographies, and we are The UK, The Nordics, and Canada, we’re implementing a one Nasdaq approach. And that’s what you can do when you have the financial technology franchise that we have.

So Verifeng can leverage the Calypso footprint that we have in Europe, for example, the fintech footprint that we have in Europe to go in and establish. We have resourcing on the ground. We have client relationships on the ground. We have the right tooling in place. We have the right incentive model in place, and that allows us to export Verifin and take advantage of the financial technology business and franchise that we’ve established.

And that’s what we’re doing in in Europe. In Canada. Again, we’re doing the same thing. We have really good relationships with the larger banks in Canada as well as the smaller banks. And so having this one Nasdaq approach, elevating those discussions at at to the c suite, which we can, which really is a differentiator for us when you’re trying to cross sell, has been very, very powerful.

So very early innings. It’s gonna take some time to manifest itself. You gotta have the right go to market. You’re gonna tune that. You’re gonna make sure that the pitch is right in the markets you’re in, but we’re we’re committed to that global expansion.

I’m really excited about how we’re working together in its early days.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Great. Why don’t we shift and talk about AI? It touches Nasdaq and and many areas, notably Verifen, which is cloud native that uses machine learning. Maybe just talk about some of the new offerings that embed AI capabilities at Nasdaq, sort of what the rollout traction has been, and how might you quantify the benefits so far? What are some of the other areas you’re exploring?

Tal Cohen, President, Nasdaq: So the way that we look at AI is there’s two vectors for us, in the product and on the business. And your your question is more about in the product, but I also wanna talk about on the business just for a moment. Because on the business has to do with how we’re developing software, the productivity gains, the efficiency gains, and and we think they’re going to be significant and material benefits to us. The quality of the code, the speed at which we can deliver code, the speed in which we can implement. And then there’s the client experience piece.

So our service and support model will benefit from AI, all the tooling that we can put in place, all the automation we can put in place. And that’s really important because our clients’ happiness, our clients’ satisfaction with our products has to do in part with our products, but in part with how we support and service our clients. So it’s really important that we have a holistic view and and think about both of those vectors. In terms of in the product, I’ll just speak to a few. I’ll give you just a few examples.

CALYPSO, this is a great example. We have something called XVA, x valuation adjustment, and it’s a mark to market adjustment of complex derivatives. And today, to use XVA in CALYPSO, you are running thousands of Monte Carlo simulations, thousands, maybe 10,000. And that is compute intensive, and it takes all day. And the accuracy is really good, but but could even be better.

So we’ve implemented and just launched XVA accelerator. And remember what I talked about in terms of managing risk. And when you’re looking at XVA, you’re looking at market risk, credit risk, operational risk. Right? You’re trying to do a mark to market on a pretty complex asset.

And and that drives how you manage collateral and and manage, risk. And and now with XVA accelerator, which is using machine learning, we can run this in a matter of a half hour. And we which means that you’re getting it quicker. It’s less compute intensive, much less compute intensive, so it’s less expensive. You can do it faster, and we’re finding that it’s more accurate.

So if you’re a client of ours thinking about managing complex derivatives and we come to you and have this very, very easy kind of explanation of what XCA Accelerator can do for you, it’s incredibly powerful. And so the way that we look at that is it’s an add on feature. There’s an upsell opportunity. We will there’ll be a price to it, and we’re going through that, and identifying the banks that already have XVA or in the past have said to us, we have our own risk modeling in place because we need to do it in more in a in a real time manner. And XVA, for whatever reason doesn’t meet our our requirements.

So it’s allowing us to go to our existing clients and upsell. It’s allowing us to approach new clients, and it’s strengthening the competitive offering. So when we go and we do we have a bake off with somebody else, it you know, being able to tell the story of how we’re implementing AI through our product in a very meaningful, tangible way is incredibly powerful. And we’re doing two other things, by the way, in Calypso that are great too, is one is, we’re predicting settlement failure. So we’re helping them manage settlement failure through the data that we have on the platform and say, hey.

Listen. You might wanna look at this counterparty. It’s likely to fail based on the experience and the data that we have. Really powerful. That’s in a POC.

And and think about how much capital you tie up or can free up if you better manage settlement failure. Massive. Massive on the OTC side. And and so that’s just another very, very powerful but simple to understand use case for AI. Great.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: I know we have a few minutes left, but I do wanna get a a crypto and digital asset question in here. It seems like a a more business and regulatory friendly environment now for crypto and digital assets. Maybe just talk about Nasdaq’s digital asset strategy, what role Nasdaq may play in the ecosystem today and in the coming years, and how digital assets may contribute, to Nasdaq in the coming years.

Tal Cohen, President, Nasdaq: So we are in crypto and digital today in the following way. We offer trading technology, post trade technology, and surveillance technology. We also list on our our Nasdaq markets ETFs, like iBit, from BlackRock and others. And so we’re we’re we’re in crypto and DA, in digital assets, in a number of different ways. Alright.

As we look at what’s possible, we see a number of opportunities if there is regulatory clarity. Of course, everybody wants to talk about the trading of of crypto and digital assets, but we’d like to see more regulatory clarity there. We’d like to understand the taxonomy of of how they look at, digital assets and crypto, and so we’re we’re paying attention to that. But the more pressing problem and the one that we keep hearing from the industry, and and I’m curious, like, if we would have a big open discussion, what you guys are hearing is, it’s all about capital efficiency and collateral management. So in crypto, it’s prefunded.

It’s overfunded. Collateral is hard to move on on ramps and off ramps. And so we’re looking at Calypso, our trade management platform, which has a best of breed collateral management solution. And we see an opportunity to connect to digital rails and offer collateral management, by accepting stablecoins and tokenized assets, whether it’s treasuries or money market funds, which can serve as the other side of a trade, right, of an OTC trade. Think about like a a OTC crypto derivatives trade.

Like, one side might be a a Bitcoin option. The other side of that could be a treasury or some tokenized money market fund or a stable coin. Right? And so being able to then manage your collateral, manage your capital through Calypso along with alongside of all your other assets, right, in in a tool that gives you initial margin, variation margin, allows you to optimize collateral and look at it holistically, have a 360 degree view of it in real time is incredibly powerful, especially if these assets become bankable. So stablecoins and tokenized treasuries and other, tokenized assets become bankable, then it’s incredibly powerful to manage your capital and your collateral through, an application and a tool and solution like Calypso.

So that that’s a really interesting app opportunity for us, and that allows us to do something great, which is merge the traditional world with digital rails, which we’re a big believer. We need to merge the digital world and and what people would call the trad fi world because you don’t want two separate systems. You know, digital assets will never fulfill their promise if there aren’t standards, fungibility, and interoperability, and that’s what we drive.

Mike Cyprus, Lead Analyst, Morgan Stanley Research: Great. Well, I’m afraid we’re out of time. Please join me in thanking, Nasdaq’s Tal Cohen. Thank you.

Tal Cohen, President, Nasdaq: Thank you. Thanks for having me.

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