Thanks to the growing popularity of retail trading platforms and lasting stay-at-home orders, the start of 2021 in markets has been unprecedented. While the initial steam behind retail trading may have cooled off, the associated democratisation of trading (e.g. lower fees and commissions) is still largely seen as a positive for the market. The outsized impact of news around retail trading and other retail-driven stock gains has ingrained retail traders into the short-term investing narrative.
To win in the long-term, retail traders need to rely on all of the data available to them to make the most informed decisions. Whether that means self-sourced datasets or real-time data piped into their favorite brokerage app via API, quality data is now, more than ever, critical for individual investors.
Discussing the more engaged Main Street and the likely changes that the stock market will see in the coming years is Oliver Albers, Nasdaq’s Global Head of Data. Nasdaq, Inc. is an American multinational financial services corporation that owns and operates three stock exchanges in the United States: the namesake Nasdaq stock exchange, the Philadelphia Stock Exchange, and the Boston Stock Exchange, and seven European stock exchanges. The Fintech Times spoke to Albers to find his views on how Nasdaq plans to evolve with the typical stocks no longer being as popular with the rise of cryptocurrency.
What are the benefits of a more engaged Main Street?
Financial markets create opportunities for millions of investors every day. Championing inclusive prosperity is core to Nasdaq’s purpose and we believe that greater access to financial markets is a key ingredient of a more equitable society. A diverse base of market participants also contributes to the overall health of the market by providing new sources of investment, perspectives, and liquidity.
How does Nasdaq enable retail investors with market data?
Nasdaq started on the notion that investors should be able to trade or have access to information about their investments anywhere at any time, what we like to call on-demand finance. Our business and the financial industry is evolving faster than ever. Today, Nasdaq is best known for our U.S. stock exchange, but we are a technology, analytics, and services provider for the global financial markets and beyond.
Our use of cloud technology to bring data to the investing public will yield benefits for decades to come. All new technology startups are born in the cloud. Engineers and developers want to access data quickly and without legacy infrastructure. Nasdaq developed NextGen Solutions to lower the barrier of entry for smaller firms and make it easier and faster to bring market data to Main Street.
What role do data and technology play in supporting long-term investments for retail traders?
Data and technology are the driving forces of this transformative change we see in the financial services industry today. Consumer behaviors are changing. People are more comfortable managing their money and business online, and they expect a better user experience and faster access to a wide range of financial information. Established companies and startups are embracing the agility and flexibility promised by technology solutions to develop innovative financial products that help people manage their money in new ways. With institutional-grade tools powered by data and technology, individual investors are better equipped to make informed trading and investing decisions that help them reach their long-term financial goals.
It is clear that investing is changing, as the new generation are choosing to invest in a different way. What is Nasdaq doing to engage the next generation of investors?
Through our extensive work with retail trading platforms and financial news sites, Nasdaq provides the next generation of investors around the globe with the information they need to make more educated investment decisions. Our goal is to provide data in a clean, easy-to-use format that enhances the trading experience of Main Street investors and finance professionals alike.
As this new generation of investors becomes increasingly involved in the markets, it is the responsibility of the regulators, exchanges, and market participants to work together to continue to ensure that all investors have a fair and balanced experience with all the tools and education to succeed.
With the next generation of investors investing differently but also in new things, how does Nasdaq plan to evolve the business to account for crypto and digital assets?
We have been following the global development of cryptocurrencies and continuously assess our role in this evolving space as a technology provider and regulated market operator. Currently, we provide surveillance technology for a number of crypto exchanges. Coinbase recently joined Nasdaq through the largest direct listing. This is monumental for the industry as it highlights the institutionalisation of the emerging crypto market.
Nasdaq is also involved from a data standpoint. Last year we launched the Nasdaq Crypto Index (NCI) to provide a rules-based benchmark that is truly representative of the cryptocurrency space, as reflected in the collective movement of several top cryptocurrency exchanges. Leading Brazilian asset manager Hashdex launched the first crypto index fund (HASH11) tracking NCI on Brazil’s B3 exchange in April. The success of our partnership with Hashdex speaks to the growing interest from investors globally in gaining exposure to investible digital assets.
What can be seen from the responses is that there is a great desire to keep with the evolving direction of stocks. The next generation of investors are being provided with the guidance and all the tools to understand the market. With technology, users are able to control their investments at a higher level and are given access to information in one place, enabling a more informed final decision to be made.