When Adena Friedman takes up the role of CFO of Nasdaq OMX Group Inc. in July, she'll face many challenges in overseeing the finances of the world's largest exchange by value traded. Among them: the global recession, increased competition and uncertainty about new regulation. Challenges can be opportunities, says the 39-year-old, who's now executive vice president of corporate strategy and global data products.
She sees the market's demutualization in 2005, intense competition in the trading space and the acquisition of Nordic and Baltic exchange operator and technology provider OMX AB last year as important milestones during her tenure. Emerging from the shadow of the National Association of Securities Dealers, which founded Nasdaq (NASD Automated Quotations) in 1971, was key.
"Going public in 2005 was critical because it allowed us to look at a broader constituent base, rather than existing on behalf of broker-dealers," she says. "Now, we can balance out those interests [of broker-dealers and shareholders] and make the best decisions for the company. There's a lot more choice available to us."
As the original electronic trading venue, Nasdaq faces fierce competition from smaller electronic trading platforms, such as BATS and Direct Edge, that are targeting its lead in trading volume. That battle for market share contributed to a 22% drop in Nasdaq's net profit in the first quarter.
"Competition in trading has been both a challenge and an opportunity, because it means we can also compete for companies that are not listed on our exchange," says Friedman."On the trading side, it comes down to: 'Are you cheaper, better, faster?" Nasdaq's matched market share of New York Stock Exchange listed stock is 16.5%.
Nasdaq has taken pains to diversify its business, acquiring OMX in February 2008 and then making four more acquisitions and four strategic investments, including a move into the $350 trillion interest rate swap market.
Friedman, who led the OMX acquisition team, is proud of how quickly the two organizations have been integrated. Now, she says, her emphasis will be on wringing the most value from the company's other recent investments.
"We're going to focus on optimizing and leveraging those acquisitions," she says. "There are a lot of opportunities within the company right now."