Nasdaq Sees $1.5 Billion of Demand for New Trading Platform

Nasdaq Inc.’s new trading venue for closely held companies has plans to grow quickly and go global, Chief Executive Officer Adena Friedman said Wednesday.

The platform could capture $500 million to $1.5 billion of market demand, Friedman said in a Bloomberg Television interview Wednesday. Nasdaq announced the joint venture with SVB Financial Group, Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley on Tuesday.

We “see a huge opportunity in the private-liquidity landscape,” Friedman said. Companies are looking at staying private longer while finding ways to provide liquidity for investors and employees, she said. The total opportunity has yet to be determined but is “very large.”

Nasdaq Sees $1.5 Billion of Demand for New Trading Platform

Demand for investing in private companies has grown in recent years along with a boom in novel ways to bring them public, including the use of blank-check firms. Nasdaq said its platform will give closely held companies, brokers and investors the ability to access, manage and execute their stock transactions through a global marketplace, which will in turn increase liquidity.

Nasdaq is considering expanding the joint venture over time with additional banks who can contribute investment dollars to the business, particularly overseas, executives said on a call with analysts earlier Wednesday. The New York-based company is looking to eventually take the platform worldwide, which would require accreditation for institutional investors, they said.

The program isn’t yet “a global platform at this point, but it’s certainly something we have on the agenda,” Friedman said on the call.

Nasdaq, which is contributing its Nasdaq Private Market to the joint venture, will remain the largest shareholder of the standalone company after the deal is completed, Friedman said. The business reported $20 million in revenue over the past 12 months.

The joint venture should be completed quickly, with approval already underway, Friedman said. “We’re seeing a lot of interesting and additional interest from institutional investors and other shareholders to use the Nasdaq Private Market for price discovery, continuous trading” and other programs, she said.

Shares of Nasdaq rose as much as 3.4% Wednesday morning after the company reported that second-quarter revenue climbed 21% from a year earlier, supported by growth in its market-services and solutions divisions.

Looking ahead, Nasdaq hopes to have a more “direct relationship” with retail brokers and have order flow come directly to Nasdaq, Friedman said on Bloomberg Television. In Europe, where the company owns and operates markets in Nordic countries, most retail volume comes directly, and those orders “get to be part of the price discovery,” she said.

Also among Friedman’s comments from the television interview:

  • Demand for public-market listings is “as strong” as it was six months ago, she said.
  • China’s reworked foreign listing rules may have an impact on Nasdaq “in the short term” as new criteria are developed, Friedman said. “But we continue to have very active dialog with Chinese companies expecting to be able to come to the U.S. markets in the second half of the year.”

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