Nasdaq CEO Outlines 3 Ways Blockchain Can Fix Finance

Nasdaq CEO Adena Friedman sees blockchain reshaping the traditional financial system in three key ways: overhauling post-trading infrastructure, unlocking trapped capital through better collateral mobility and enabling faster, seamless payments.

“There’s so much capital trapped, whether it’s in clearinghouses or clearing brokers,” Friedman said during a discussion with Ripple president Monica Long at the Swell conference in New York on Tuesday. “If we do well, we can really make that an opportunity to provide more capital to the system.”

Post-trading processes – the systems that finalize and settle securities transactions – remain highly fragmented and often rely on decades-old infrastructure. Friedman noted that while some complexity is intentional, often for reasons such as risk management or allocation tracking, much of the friction is unnecessary. She believes blockchain could help unify and streamline those workflows, reducing inefficiencies that tie up capital and slow down financial activity.

The second major opportunity lies in improving the way financial institutions move and manage collateral – the assets pledged in business and loan transactions to mitigate risk. According to Friedman, digital assets could make it easier to transfer collateral quickly across platforms and borders. “What we really love about the idea of ​​digital assets is being able to move that collateral,” he said. “We can create a collateral mobility effort and … free up a lot of capital.”

Payments is the third area ripe for change. While Nasdaq does not operate in the payments sector, Friedman emphasized that smoother and more efficient payment systems are key to allowing investors to participate in global markets without friction.

She described today’s payment infrastructure as a bottleneck, slowing the flow of capital. If these systems could be improved or rebuilt using blockchain, he said, it could unlock significant amounts of capital currently tied up in outdated processes. That, in turn, would help investors move funds more easily across platforms, borders and asset classes – making the financial system more open and efficient.

Nasdaq has already started laying the groundwork. The exchange operator presented recently with the US Securities and Exchange Commission to support the trading of tokenized securities. Under the proposed framework, an investor could signal a trade for tokenized settlement, and the post-trading system – including the DTCC clearinghouse – would comply, allowing delivery to a digital wallet. This approach, Friedman said, maintains the core structure of existing securities while offering investors more flexibility.

She was quick to note that the goal is not to replace or fragment the US stock markets, which she described as “extremely resilient” and “highly liquid”, but to strengthen the layers of technology that reduce friction and improve investor choice.

Tokenized markets may begin as post-trading functions, he said, but could eventually replace the way securities are issued and traded. “We keep all these things great [about the U.S. markets]and then we put technology where we can really reduce friction.”