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The New Paradigm: Anything that can be Traded, will be Traded .

The future of new types of trading platforms that offer innovation and choice.

The New Paradigm: Anything that can be Traded, will be Traded

Anything that can be traded will be traded

Over the past 12 to 18 months, Nasdaq has seen increased interest and activity in creating new types of exchanges that offer innovative, creative asset classes which can be traded outside of the typical capital markets structure. These trading platforms offer investors choice beyond traditional investments.

Invention of new asset classes and creation of exchanges has occurred alongside vast technological advancement. For example, cloud computing more real for capital market organizations and, indeed, financial regulators are beginning to more broadly accept it. Cloud computing, blockchain, machine intelligence and many other technologies are opening up opportunities, creating an era of change and disruption within global capital markets.

From Nasdaq’s vantage point as the world’s largest exchange technology provider, the company is more fintech activity than ever before. This creates opportunities for traditional exchanges to diversify and new types of non-financial players, who are creating marketplaces that would not have been conceivable five years ago.

We are also seeing real use cases for the aforementioned technologies. They breed opportunity far beyond what is imaginable, especially in the creation of new asset classes and trading venues. It seems true that in the future, anything that can be traded will be traded.

In March 2017, for instance, NYIAX (New York Interactive Advertising Exchange), with Nasdaq, announced that it will launch the world’s first digital advertising futures exchange leveraging the Nasdaq Financial Framework technology platform to cover the entire trade lifecycle for the buying and selling of advertising contracts. NYIAX focuses on providing media buyers with the benefits of a transparent, trusted market structure, one where trades can be conducted efficiently and with ease. The exchange will revolutionize the process for buying and selling inventory – a process that lacked transparency and has historically not been afforded the financial rigor which its maturity now deserves. Through implementing flexible exchange technology with blockchain, in a cloud environment, NYIAX hopes to transform the ad-tech world. Would this initiative have been achievable at this pace without the advent of blockchain and the acceptance of cloud computing?

Lowering Barriers to Entry

Emerging technologies lower the barriers of entry for these types of asset classes to be invented. NYIAX fixed infrastructure costs for the exchange are drastically reduced. They benefit from the robustness and reliability of using the same technology as some of the world’s largest exchanges, while also benefiting from the cloud’s on-demand model – which will enable them to avoid paying for excess capacity during their start-up phase but still scale as they grow.

Additionally, NYIAX can take advantage of the efficiency and security benefits in leveraging the blockchain to support parts of its post-trade processing from the start. This proof of concept by NYIAX underscores and reinforces the belief that opportunity to use the blockchain is vast in markets or industries where regulatory structures or legacy infrastructure is not as much of a challenge.

Diversification for Traditional Exchanges

Creation of new asset classes and innovative structures is not limited to start-ups and entrepreneurs. Earlier this year, Nasdaq launched a brand new type of market, NPM Alternatives, which uses the blockchain and Nasdaq Linq to transfer private equity investments.

The market is a secondary liquidity platform that connects buyers and sellers through a centralized auction-based technology and helps to address the challenges of creating and finding liquidity in alternative investment funds.

It enables fund managers to provide liquidity to their investors, create opportunities for new product vehicles, and expand access points to new sources of capital, while maintaining control over the investors’ permitted access to its funds.

Nasdaq recognized a need that existed in the alternative community, outside of the company’s core on-exchange business and with the application of emerging technology, is able to further differentiate NPM’s portfolio with new offerings.

The Opportunity Ahead

The above projects are solid examples of what can be done in the not too distant future. Nasdaq truly believes that everything that can be traded will eventually be traded. To that end, those marketplaces that have first mover advantages and are open to use of disruptive technologies will be well-positioned to come out on top, differentiate, and grow their business.

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