CNBC Interview with Adena Friedman, Nasdaq CEO at the World Government Summit in Dubai (cnbc.com)
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Following are excerpts from an interview with CNBC's Hadley Gamble and Nasdaq CEO, Adena Friedman at the World Government Summit in Dubai.
HG: Good afternoon everybody. Your Excellencies I'm Hadley Gamble on CNBC anchor in the Middle East and I'm joined now by the CEO of NASDAQ. I want to kick off by market volatility we've seen so much movement in pricing over the last several days in particular. We've a lot of comments about this. I got to speak with Christine Lagarde head of the IMF. She was essentially saying to me that this was a market correction this wasn't something that she hadn't been expecting at some point in the future. But I want to ask you about what that means in terms of the markets themselves. There's a lot of speculation about what's been behind these price moves and has it been technologies has it been algorithm's has it been a guy are you concerned at all about what we've seen over the last several days in terms of the regulation.
AF: No I would say that the market movements that we've seen over the last several days have been the foundation of them have been through human emotion. Right. So if you look at human and human logic so you look at the fact that the that we've got a growth environment and we have very low unemployment we have increasing growth in the economy. You now have tax reform that's providing more income into the companies that income is being shared with employees and we have a wage inflation number that came out that was a little bit surprising to people. It really did then cave gave I would say a data point that kind of supported an argument that interest rates are going to have to rise faster. So if you think about the governments they have one major lever to pull when they're managing through all the balance within, within an ecosystem an economic ecosystem they have they have to look at wages, they have to look at employment and they have to look at GDP growth but they have one mechanism and that's interest rates to be low to manage that monetary policy the ease of money or contraction of money. So I think that we think that there's a common view that as growth continues to come in and inflation becomes more of a risk that the Government may choose to increase interest rates faster and that then created I would say human emotion of saying OK well I've I've made maybe 25 30 percent of my money in the last year in the markets, so I have the opportunity to cash out I had the opportunity to kind of think about who are going to be the winners and losers and over the last month we've seen the markets rise primarily on the back of retail investors who are a little less informed. So I think that at the same time some of the money the institutional investors are saying this is a good time to exit. So that to me has been the foundation that's all humans. I think that at the same time those mechanisms are used in the market are driven by a lot of computers as well so they make a human decision they execute it through computers and that then creates and creates the role market movement.
HG: So it's not unfair to say that humans are still in charge at least at the Nasdaq?
AF: I think humans are definitely in charge of the decisions in the market. I think that the way that the algorithms are written are basically in the back of human decision
HG: Last week I had the chance to talk to the Winklevoss twins who were formerly bitcoin billionaires at least on paper and then suddenly became multimillionaires and the question I was asking these guys really revolved around you know is bitcoin a fraud like we've heard from so many people including Jamie Dimon and questions about what happens next. They are moving toward trying to set up an ETF or is it too soon for that even to be discussed do you think?
AF: Well I do think that the FCC in the US has made a determination that they believe it's too soon so the regulator in the United States has made a determination that the markets that underlie the price of bitcoin are still on unregulated markets and that means therefore that those markets are not necessarily inherently fair to all participants that they may have elements of them that create distortion in the pricing and therefore if the foundation of an ETF is a basket of prices and those prices are not reliable then the you know the SCC then can take a decision that they're not ready to have that become available to retail investors and at the end of the day the primary role is to protect retail and to create fair markets. They don't have control over the markets within the bitcoin so therefore they really focus on protecting those retail investors and so they decided that it is too early in the Nordics we actually have been working with our regulator and we have launched two hands on so exchange traded notes on the Nordic markets with a partner there and the regulators looked primarily on the ability for us to surveil that activity, the risk management around that activity and so w...