Nasdaq's head of market technology, Lars Ottersgård, explains to Jane Cooper how the US-based stock exchange operator has expanded beyond its core business of equities trading into becoming a global technology provider active in more than 100 markets across the world.

Asking a parent whether they have a favourite child is unlikely to garner anything other than a diplomatic response. The parent is almost guaranteed to say that they have no favourite. This is the approach that Lars Ottersgård, executive-vice president at Nasdaq, takes when asked if he has a favourite project in his role as head of market technology.

He says he does not want to rank his clients and he does not have a favourite. Mr Ottersgård does, however, say that he finds the most exciting markets are the ones that are "taking action to become more competitive". "The world is becoming more global and the markets that are addressing that and taking the necessary changes to stay, or become, competitive are certainly very fascinating to work with,” he says.

Global drive

Nasdaq itself has also become more global. These days it is more of a technology company that happens to have its origins in the New York-based stock exchange that bears the same name. Through a number of acquisitions – such as European exchange group OMX in 2007 – the company has become international. And now, in the US and Europe alone, Nasdaq owns and operates 24 markets, three clearing houses and five central securities depositaries (CSDs).

Approximately 13% of all the company’s revenue comes from the market technology business, which sells Nasdaq’s technology – such as trading, clearing, CSD and market surveillance systems – to more than 100 markets around the world.

“The value of us being an exchange, a clearing house and a CSD means we have an opportunity to be a technology provider, a user of this technology and partner. That aspect is extremely inspiring for us when we see clients working with us and bringing those experiences into their markets - that is something we find rewarding,” says Mr Ottersgård.

Those markets range in their size and maturity from the likes of Fiji and Papua New Guinea to Australia, Singapore and Hong Kong. In recent months, Mr Ottersgård has overseen projects in markets such as Bangladesh (with the Dhaka Stock Exchange), the Philippines, Mexico, Egypt, Poland and Iraq.

Most recently, in January 2015, Nasdaq announced that it had agreed to provide a new derivatives trading system to the Osaka Exchange, a subsidiary of the Japan Exchange Group.

This deal “was an upgrade from an existing derivatives platform to a much more modern version”, Mr Ottersgård explains, adding that the same technology is used by the Hong Kong Stock Exchange and UK dealer broker ICAP among other large exchanges players around the world. “Using this technology will help in their ambitions to be more international and attract foreign capital,” he says.

No favourites

Mr Ottersgård does not have a favourite market, nor does he have a region where he is looking to focus his attention. He says, “We constantly stop and ask ourselves where we are the most competitive – whether it is a certain customer size or asset class – but every time we have done this we come to the conclusion that we are truly able to do it well across them all, the whole spectrum.”

Nasdaq’s core business may be in matching and clearing, but now much attention is being paid to the activities around those core solutions. One area, which is of interest to financial services at large, is big data and what to do with it - a challenge that many in the industry are grappling with. “The challenge is around data and how you get value out of the data,” says Mr Ottersgård. Also, he adds, it is not just about giving clients the ways and means of analysing data, but also providing it to them in a way so they can package and resell it to their own clients.

Another interesting area at the moment, says Mr Ottersgård, is governance, risk and compliance. In May 2012, Nasdaq acquired BWise, a company that specialises in governance, risk management an compliance software. The market technology division at Nasdaq has a number of solutions in this area, including Smarts market surveillance products, and Mr Ottersgård notes that this business has the potential to grow further.

Aside from the need for increased compliance, other regulations – such as Target2-Securities (T2S) – are having an impact this year. “The post-trade area is undergoing a big change,” says Mr Ottersgård. CSDs, he notes, are being “pushed and pulled from different angles” with a new competitive environment emerging, with consolidation taking place, as well as a number of new regulations. “T2S has opened up competition where there has not been competition before. There is going to be a lot of change in the clearing and depositary space in 2015. Going forward, we will see all markets being impacted across the world.” 


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