BLOOMBERG MARKETS You started at Nasdaq as an intern and just became CEO, which sort of proves the theory that you should always be nice to the interns because, you never know, they might be running the show someday.

ADENA FRIEDMAN That’s a great point. My two boys are in college and interning now, so it’s fun to watch them with the process and then go, “OK, how are we running our internship program?”

BM But really, how did you end up here? Why the securities ­business?

Cover artwork: Oriol Angrill Jordà

AF I feel like I grew up in the investment business. My dad was at T. Rowe Price his whole career. We lived in Baltimore and had a small social circle, so most of my dad’s friends also worked for T. Rowe. He was pretty great about bringing me to the office. I got to hang out with the trading guys, which was a fun place to be. I used to draw pictures for them on their whiteboard and help out the women in the office who, at that time, were mostly administrative assistants. I grew up knowing that firm very well. And my mom actually went back to law school when I was 9. She became a lawyer two years later and, eventually, the first female partner at her firm. But watching her go to school and study for the bar, I remember thinking, Well, I definitely don’t want to do that! It was interesting, being old enough to understand: This is not the path I want to take, but boy, do I love my dad’s office!

BM What was it about his office?

AF T. Rowe Price is a unique place. Almost everyone has worked there their whole career, and it feels very much like a family atmosphere, but it’s also a high-performing firm. I ­became very interested in what my dad did. I would go around asking people questions—a lot of questions—and got to ­understand the firm pretty well. My brother, who now runs a hedge fund, grew up doing the same thing. So I always had a real interest in the financial industry. I was interested in politics, too. In college I majored in political science and ­interned for my congressman and then Al Gore, but I became ­disillusioned with politics.

BM Was it Gore’s internship program?

AF (Laughs) This was the summer before he became vice ­president, and I was at his field office. You just realize that the political ­process is not as pristine as you’d expect. You walk in as an idealist in college and think, This is where power is. This is where everything gets done. And it does get done there, but it gets done in a way. Lobbying is a big component.

BM And then you went to business school at Vanderbilt’s Owen Graduate School of Management. What resonated there?

AF I really loved finance. I really loved marketing. And I ­really ­wanted to apply marketing to the financial industry.

BM When was the first time you heard “Nasdaq”?

AF My second year of business school. At Owen they have this capital markets group run by a professor named Hans Stoll, who brought the markets into some of his classes. So I started to kind of understand the territory during my second year. But the first time I ever considered Nasdaq as an employer was when I was starting to look at interviewing. I wanted to work in D.C., but in the financial industry, and my dad said, “By the way, ­Nasdaq is headquartered there.” [The company moved its corporate headquarters to Manhattan in 2001.]

BM Did your dad have a connection for you?

AF Well, Joe Hardiman was the CEO at the time, and he was from Baltimore, so that got me an interview.

BM All roads lead back to Baltimore. Take us a little further back—how about Roland Park Country School? Did you fit any of the ’80s stereotypes? Which John Hughes character were you?

AF I went to an all-girls school in a very cliquey environment. I ­hated the cliques; I was not in any clique. I was a floater, but I always had my best friend, and we’d float around together. We were friends with a lot of people.

BM Is she a CEO now, too?

AF She’s not, she’s a teacher. But I loved being in an all-girls environment. You think, Gosh, I’d love to be in a co-ed ­environment. But looking back, and once I got to college, I really started to appreciate that all-girls education. I was voted most inquisitive; I asked a lot of questions. Being in an all-girls environment made it so you felt free and comfortable to ask ­questions, to have a voice in a math or science class, and to be in front of the classroom.

Photographer: Philip Montgomery

BM And here you’ve made your career in what’s considered an all-boys club. Is there a connection there?

AF I think all-girls schools tend to have the mantra, “The sky’s the limit.” And that’s really what they tell you every day: “You can be anything.” A disproportionate number of girls in my class became doctors. I saw Sally Ride become an astronaut and thought, That is pretty damn cool, I want to be an astronaut, too. Women were also getting into the financial industry for the first time and wearing the big shoulder pads. It was an ­empowering time to become a teenager, and the school really ­reinforced that message. I think I found my voice in high school, and it carried through to college, where I found myself in these co-ed classrooms asking just as many questions as in high school. And the other girls were silent. I was like, That’s so weird.

BM So the college internship with Al Gore didn’t work out, but the Nasdaq one did. Do you remember your first assignment?

AF I was in what we used to call “trading and market ­services.” At the time, Nasdaq was owned by a not-for-profit organization, but Nasdaq was a for-profit entity. They started to realize they had all these products and maybe they weren’t optimizing them from a business perspective. They were like, “You went to business school, you can write business plans!” The first was for a product called Portal, a debt securities trading system. Then I moved to marketing for a few years before coming back to product as an owner—and I ended up owning product I’d written business plans on.

BM That was a pretty interesting time in stock market history, too. What stands out to you now?

AF When I joined, Nasdaq had control over 97 percent of the trading [of Nasdaq-listed stocks]. Chicago was the only real competitor at the time. Once a company listed on Nasdaq, the trading all occurred within Nasdaq systems. It wasn’t like today, where everything is executed through an automatic matching engine.

BM So you were a product person, but soon you were working across teams and gaining exposure to Nasdaq’s senior ­leadership. What was the big break?

AF We reorganized the company after Next Nasdaq, a ­McKinsey-led program, and that’s when we began to reorient around trading, listing, indexing, data—and they tapped me to run the data business.

BM Which you oversaw until 2011 when you became CFO of Carlyle, which you took public. What did you learn there?

AF Carlyle is a great organization with great people, and they were at a really unique moment. I had the chance to be the CFO who took the company public, which was a great opportunity for me—to see what it really means to take a company public, with all the complexities that come with it. At Carlyle, I loved being able to see how they monitor their investments, measure success, look at returns, ­operate, deal with regulators—all while experiencing a different culture. It’s a collaborative ­culture—a partnership—and that’s a very different way than what I would call an operating company. 

BM You were at Carlyle for three years. How did that time away help when you returned to Nasdaq? 

AF I got to see another side of the industry—the buy side— and learn how they look at the life cycles of a company ­differently. I’m very comfortable with the life cycles that occur within companies because the public market is a part of almost all of them. But when a ­company goes into private hands, it’s usually to do something different—to either execute a specific strategy or do a big efficiency program, and then take it back to the public or sell it.

BM Was the potential to get this job part of the discussion when you began talking about coming back?

AF The job was president. That’s what I was walking back into, and I knew that. What I really liked about that job was the fact that it was all the businesses other than trading—a much broader spectrum than what I’d been managing before. And it was back to being a business person as opposed to a CFO. I liked being a CFO, but I loved running businesses. So I got a chance to come back, run an eclectic group of great ­businesses, and have a meaningful role in the leadership of the firm. 

BM By the way, we forgot to say congratulations—you’re the first female CEO of an exchange. What do you want to be known for?

AF I want to make sure that we provide the most innovative and meaningful solutions for making the capital markets as efficient and effective as they can be. And that’s what we do today. But, really, ­taking innovation and actually executing on it is what I want to be known for—making a meaningful difference to the efficiency of the capital markets. Frankly, one of my proudest projects I worked on was when in 2004 we created the ­closing cross [the process that sets closing prices between buyers and sellers]. It was one of those moments where I felt like, Wow, I just made a real difference. I changed the way millions of investors are able to get an execution of the close. I loved that. So I want to continue to make a difference in the efficiency and effectiveness of the global capital ­markets—our own markets or ­markets where we serve a meaningful technology need.

Photographer: Philip Montgomery

BM You’ve also mentioned that you don’t like to use the word “feminist.” Yet you’re now a female CEO on Wall Street, and there’s bound to be expectations of you as a leader from the feminist community. How do you approach that role?

AF I’ve been really fortunate that being a woman has not ­defined my career so far. I think that being a smart person who brings good ideas to a room, who has a deep understanding of things, who can drive projects from concept to reality … I’m a driven individual, I can organize groups well, I can lead people well. I think all those characteristics have gotten me the job I’m in today; I don’t think gender has. So, yes, I’m a woman. But I would like to be known as a great leader, not as a great woman leader. When I walk into a room, I don’t care if it’s all men or if it’s half women and half men. I just care about what contribution every person is going to make. 

BM Isn’t the room better off if it includes more women? 

AF I think there are certainly benefits that come from having different perspectives in a room. A well-rounded environment is a wonderful thing for any company. What I really hope is that young women realize anything is possible. You can be the CEO of a company if you want to be, or become an astronaut, or find a cure for cancer. In financial services there’s nothing that limits you from reaching the top of an organization. And at the end of the day, it’s all about the contribution you make to the company that’s most important.

BM Bob Greifeld, your predecessor, was something of a mentor. Where have the two of you disagreed?

AF Bob and I have more in common than we’ve ever had in differences. He’s very analytically oriented, and so am I. He’s very action-­oriented, and so am I. He’s a true believer in ­meritocracy, and so am I. Therefore he did a good job of taking gender out of the picture for me and for others, and that’s kind of how I’d like things to continue. We didn’t have a lot of differences, but I do bring a different perspective on things. I came up through the data side and transformed the business from a ­global fintech perspective. Those are the most exciting areas to grow and expand the business. Trading is a foundational ­element. Where we’re going to grow is in what else we can provide the industry and the rest of the ecosystem.

BM Speaking of which, listings is the bedrock for your ­ecosystem. How competitive has that space become?

AF It’s very competitive today. We compete for every single company, every ETF, that chooses to come to market—and I would argue that we have the best value proposition of any ­exchange. We’ve lived with competition for a long time.

BM One of Nasdaq’s more interesting diversification efforts has been expanding into the private markets. You probably don’t want to expand that business at the expense of the ­public business, so how do you balance the two? And have you courted Uber with a fruit basket for its possible IPO yet?

AF We don’t actually see it the way you’re seeing it. Every company has a life cycle. Some of those life cycles might be that they remain private for a really long time before they tap the public market. Some of those life cycles mean that they might go private, then they go public, then they go private again.

Photographer: Philip Montgomery

BM Why are companies staying private?

AF One trend that we did recognize early was that the JOBS Act would allow companies to stay private longer. Not that we see that as a bad thing. We see it as a way for them to mature as private companies and to put themselves in a situation that, when they go public, they feel secure and successful and can deal with the scrutiny. Therefore they have longer periods of time to grow and mature as private companies and yet still offer some liquidity to early investors and ­employees. What Nasdaq’s ­private market does is allow them to facilitate those liquidities as private companies and then ultimately mature themselves into the public market over time. Most investors who ­invest in private companies don’t expect to hold on to that investment forever. They expect to have some liquidity options. The private market offers them episodic liquidity; the public market offers them continuous liquidity. Most investors want that continuous liquidity opportunity, so we see that as a natural part of the life cycle. It is, however, a great opportunity for us to grow our relationships with these private companies, show that we have real value to them, and introduce some of our corporate solutions to them early on in their life cycle. That way, when they do go ­public, they see us as a natural partner.

BM How long can a unicorn graze in its own private forest?

AF I don’t try to predict the life cycle of every company. There are other trends going on, too—large mutual funds and pension funds getting engaged in companies while they’re still private, for instance, with the expectation that they will ultimately enter the public markets. They’re offering funding in the private setting and allowing these companies to grow to become unicorns, but there still is an expectation that they will end up going into the public ­market—or that these ­mutual funds and pension funds will have an exit. That exit could go a number of different ways, whether the company gets sold or goes public. But I think that the ultimate expectation is that these companies will tap into public markets.

BM What distinguishes Nasdaq when they decide to have that event? What do you provide that your competitors don’t?

AF We look much more holistically at the needs of a company as they enter the public market. Obviously we present a world-class trading experience for them, and when we look at the data that looks at the trading quality, we feel confident saying we offer the best trading experience they can find. We also shepherd them through the IPO process—where, ­lessons learned, we’ve completely revamped the way that we open IPOs. We’ve embraced transparency, kind of my roots in data, offered up a full book for the lead underwriter to see. We allow every member to see how their orders will interact with the book. It’s incredibly transparent, and we put the ­control in the hands of the underwriter to press “Go.” It’s a world-class ­experience for them to go public. And then, once they’re a public company, we wrap around them a whole suite of solutions giving them a ­better understanding of who’s buying and selling their stock, better tools to allow them to manage their investor relations, press release distribution, and webcast capabilities that allow them to manage their lives. That’s all owned and operated by Nasdaq. And for the ­largest companies, they then also have the opportunity to join the Nasdaq 100 and get a nice passive investor in their stock. So we think we have a truly differentiated value proposition for any company that wants to go public, but certainly for the ­unicorns that are ­coming to the market.

BM You’ve indicated that Dodd-Frank should be loosened so banks can take more risks again. What would that look like?

AF We can’t take a revisionist history approach to this. We have to reflect on what occurred leading up to the credit ­crisis, what regulations were put in place to protect against that occurring again, and then look at all the other regulations that have been put in place that may have either not had an impact or may have created harm by inhibiting a bank’s ability to serve in its proper role. I would say that if you look at the financial-­services industry holistically, and certainly the capital markets ­specifically, our role is to provide the fuel for economic growth. Economic growth means jobs. Economic growth means people feel their livelihoods are improving. That fuel is really important. In some ways, Dodd-Frank created the proper protections for the industry and for consumers and investors to make sure these banks are secured and they’re not going to have a major crisis. Capital ­requirements, consumer protection agencies, looking at how mortgages are created—these are all ­important things. But if you look at the context of much larger capital requirements, then you look at the fact that they cannot add ­liquidity to the market on their own account. In some ­cases, they cannot properly provide capital to their clients on their own­ ­account. That’s when you start to realize that the rules are inhibiting their core job. And the liquidity in the Treasuries market and others ­really declined—and that drives more volatility. The Volcker Rule was, to me, an overstep in relation to all the other regulation that was put in place, particularly because I think that was part of what banks are supposed to do for a living: take ­reasonable risks to provide capital to the market.

BM Do you see a lack of liquidity causing volatility?

AF I would say it’s more volatile today than it used to be, the reason being there just isn’t enough liquidity from the big players coming to the banks. There are new players who’ve popped up, but they don’t have the same obligations as banks. They don’t see their role as helping manage liquidity events. They just see their role as opportunistic. Whereas in the past banks have seen their role as trying to manage liquidity events—and they do it well. So for regulators to take that ­expertise and capital out of the market is unfortunate.

BM Speaking of regulation, is there a regulatory risk with this new administration you’re worried about? Everyone likes to criticize regulation, but what do you replace it with?

AF It’s always good to try to optimize things. If the administration says, “Let’s optimize the regulations we have today,” that would be great. If they’re throwing them all out the window, a lot more risk comes with that.

BM One big technology story of late has been hacking, which Nasdaq has experienced before. Is that an ongoing struggle, dealing with people trying to get into your systems?

AF What you’re referring to happened in a nontrading system in 2010. I’m not trying to diminish it at all; I’m just trying to make sure that it’s clear that it wasn’t within our core trading systems. Clearly you learn a lot from every single incident; there’s a lot more collaboration now, which wasn’t the case then. We make sure that we have a ­senior person who’s our CISO [chief information security officer]. He’s extremely focused on bringing in every possible technology available to us. We increase our cyber spending every year, and we’re ­constantly bringing in new ­technologies.

Photographer: Philip Montgomery

BM Where does hacking rank on the list of things that might keep you up at night?

AF I believe every CEO should feel like the cyber risk is something that should keep them up at night. It doesn’t keep me up at night ­because I feel we’re properly focused on it and that I’ve got great people working on it. But it certainly is an area where you just have to be sure you’re ever vigilant.

BM Especially because Nasdaq technology basically runs 85 markets now?

AF We run more than 100 if we count ourselves. So if you look at our clients, not only do we run our own markets, but we provide the technology that runs more than 85 other markets around the world. That’s a little-known fact about us and one we rarely talk about, so I’m glad you brought it up. But it’s something that people don’t quite understand about Nasdaq, and also why we consider ourselves a world-class financial technology company. Everything we do for our own clients and markets we provide for dozens of other markets. We’re the preeminent ­provider of market technology in the world.

BM You’ve lived the fintech revolution for two decades now, both as a disrupter and as someone facing disruptive influences. How do you see this playing out?

AF That’s a good question. When we talk about financial technology, we define it differently than, say, a peer-to-peer lending firm. What we look at is, can we provide technology that basically replaces what humans used to do? Our surveillance solution, for instance, brings machine intelligence into unstructured data. Clients can look at intent to behave in e-mails, chat rooms, anything. And also, can we provide technology that ­really furthers the efficiency of the capital markets? That’s our job.

BM You’ve made some acquisitions of late—four last year. What was your strategy?

AF We’re still in an offensive mode of using acquisitions to ­expand our offerings or to really double down in a space we know well. We know we’re really good at options, so buying ISE [International Securities Exchange] is an offensive play—a way for us to have more exchanges, provide more capabilities to the industry, put it on our platform, and make it super high-­performance. So that’s a good offensive play in a business we’re bulking up in, whereas something like Dorsey Wright was an acquisition where we wanted to expand into smart beta and ­indexing with a unique strategy. We tend not to buy things at their beginning stages. We want them to prove their business model, have clients, and get to a profitable state. Then we will start to look at them as acquisition targets.

BM You expanded into energy futures, too. Are there any ­other markets you’re eyeing?

AF I think we are pretty well-diversified today. We have U.S. equity, U.S. options, U.S. Treasuries, U.S. energy, and then we also have energy in the Nordics and in Europe, primarily focused on power. We also have the Nordic equities options and futures, so we feel like we’re ­pretty well-diversified across asset classes. Now it’s a matter of, what else can we do with those clients? What else can we do in terms of serving them with our products? Can we do things more in the data space or in the index space when it comes to these assets? Can we take the technology we’ve created for these great asset classes and apply them to other markets and serve them with our technology? We now have world-class surveillance capabilities. We tend to look at trading and then branch out, but there’s a lot of other things you can do once you understand an asset class from a trading perspective.

BM And now we come to the part of the interview where we ask about your black belt in taekwondo. Tell us everything!

AF I have two sons who are now 21 and 19. When the ­younger one was 4, he was challenging the adults, and we ­decided, Let’s teach him discipline and respect. So we started him in ­taekwondo. And it worked! He’s a black belt now and is really good at taekwondo. My older son joined him, and before long my husband got into it, and then the boys got a little bit older and were allowed to take the adult classes—and that’s when I started, because I was like, I’m not going to sit there and watch them. I might as well take it myself! When I was a kid, I’d ­always wanted to take karate, but my parents wouldn’t let me because I did a lot of other things, including ballet. And there’s a dance component to taekwondo, a balance/­coordination/core component that I find extremely appealing. And then there’s the discipline of it. And then there’s the fighting. I like the first two a lot. The fighting I don’t like as much, but it’s a great discipline. I think I’ve been taking it for nine years now.

BM Do you think it impacts how you manage?

AF The head of our studio is an inspirational guy and a great teacher: “It’s all about you. It’s you who’s got to decide you’re going to get better at it. It’s you who’s going to work on it.” He teaches all these great life lessons, and I’ve taken a lot away from it. You internalize it and realize there’s a lot that’s ­relevant to the business world.

BM What are you working on?

AF Personally? Obviously taking on the role of CEO—

BM No, no, in taekwondo.

AF My favorite kick is the roundhouse. I’m very capable of kicking a tall person in the head with a roundhouse. But I’m working on my ­defense. I can punch and kick pretty well, but I just sit there and wait for someone to punch and kick me instead of dodging. So that’s my … I have to get better at defense.

BM And professionally?

AF Taking on the role of CEO is a major transition for me. It’s still ­early, but what’s been really interesting is that I haven’t seen a significant change in my daily routine. I was largely managing much of the businesses, and Bob worked with me to lead to a smooth transition. Obviously, I do feel the weight of the ­company is now on my shoulders. And that’s a huge responsibility, but it’s also a huge opportunity. We do things extremely well here. We’re well-operated, we’re ­efficient, and in the areas where we’re in active business, we’re excellent. Where we need to continue to propel ourselves, though, is in finding those next opportunities and executing well on them. I think that’s the challenge in every business. But in our business, technology is changing at a rate that’s never before been seen. And if you name any major technology trend—blockchain, the cloud—it’s going to impact the financial industry in some way. So we need to make sure that we stay ahead of those trends, that we ­embrace them, that we incorporate them, and that we continue to execute well to build the business and serve our customers.

BM When you think back, what was that initial spark that brought you here?

AF What I found really quickly when I walked in the door is that Nasdaq is a mission-driven company. That appeals to me. Our mission is to make sure we provide the most efficient and ­effective capital markets, which allow economies to grow. I­ ­believe in that mission deeply. It’s ingrained inside of me. The best way for economies to grow is to have great capital markets. And what I love about what we’ve been able to grow into is that we’re not only doing that for the United States and the Nordic countries, but we’re doing that for Indonesia, the ­Philippines, Abu Dhabi, Nigeria, the Swiss exchange, Hong Kong’s ­exchange, and more. We have the opportunity to help these economies grow by ­creating really efficient capital ­markets. And that to me is a great mission.

Regan is the lead blogger for Markets Live at Bloomberg News in New York. Weber is the editor of the magazine.

(Corrects how long Friedman worked at Carlyle Group throughout.)