NASDAQ Composite Index uses AI to combat financial crimes

Zhitong App has learned that Adena Friedman, CEO of the NASDAQ Composite Index (NDAQ.US), stated on Wednesday that the index is strongly supporting technology to prevent financial crimes, as the market demand for stopping sophisticated criminals is on the rise. Friedman said, "We are investing heavily in this technology." She mentioned that the anti-financial crime business is also the fastest-growing segment for the NASDAQ Composite Index, with a YoY growth of about 20%. The index is leveraging artificial intelligence (AI) to enhance its anti-crime services, as AI can predict and expedite the identification of criminal activities and eliminate bad actors in the industry. The company is collaborating with banks, other exchanges, and brokerage firms that can use such software to eliminate threats.

"This is just the next phase of our growth," Friedman said.

Since becoming CEO in 2017, Friedman has helped the NASDAQ Composite Index expand beyond the exchange. Over time, the company has shifted its resources to more predictable revenue streams rather than relying solely on trading and market volatility. Last year, the NASDAQ Composite Index completed its largest-ever acquisition, purchasing software provider Adenza for $10.5 billion, helping the trading and market company transform into a mature financial services firm.

Friedman also discussed the approval of a physically-backed Bitcoin ETF by the U.S. Securities and Exchange Commission on Wednesday. The NASDAQ Composite Index is one of several exchanges applying to list new Bitcoin products on its exchange. She stated that ETF products are regulated, highly liquid, and allow for greater exposure to Bitcoin without directly owning it.

"It opens up easier access to this particular asset class," Friedman said.

Looking at the broader capital markets, Friedman expects the IPO environment to be "more active" by 2024. "We are cautiously optimistic," she said. In a year of subdued trading, the NASDAQ Composite Index surpassed the New York Stock Exchange to become the exchange with the most listings.

Friedman mentioned that while the cost of capital remains high, financing activities may rebound.

"There are some big companies looking to go public," including those in the biotech sector. AI may also play a role, as some companies have demonstrated how they utilize the technology as a way to differentiate their business.

The number of listed companies will also depend on the economic environment. Friedman suggests that as inflation rates decline, interest rates may also decrease over time. "Many economic unknowns have become known." "Investors are more willing to allocate more funds this year."