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Why Access Defines the Capital Markets

On @MorningBrew’s @bizcasualpod, @Nasdaq CEO @AdenaTFriedman explains why access defines the capital markets.

The coronavirus pandemic has revealed a greater disparity in opportunity and wealth in America. As the markets continue to rebound from March lows, reaching historic all-time highs fueled by new economy stocks, millions of people remain unemployed and many small business owners are struggling to keep their doors open. To address this inequality, fundamental change needs to happen so everyone can have equal access to the capital markets, according to Nasdaq President and Chief Executive Officer Adena Friedman.

“Access is the critical word that defines the capital markets,” Friedman said during an interview on Morning Brew’s Business Casual podcast. “If it’s a democratized access and every individual has the opportunity to raise capital, grow their businesses, create jobs and be innovative as well as power the economy forward, then you have a very successful capitalist system.”

However, Friedman does not think everyone has equal access, saying it is “the issue of our time.”

“We’ve recognized the critical role that frontline workers and health care workers and all of the people who are going to work every day to serve their community play in making our economy work,” she said. “We owe it to everyone to make it so that those individuals are as valued as every other individual in terms of their access to opportunity – and how they leverage that access is up to them, but we have to give it to them.”

Access to the capital markets came under scrutiny earlier this year as some politicians and market commentators called for the markets to be closed as the virus spread rapidly across the globe. But by keeping the markets open, not only did companies have access to capital, but individuals with savings could also put their dollars to work.

“When you think of the capital markets, what you really want to have is as much participation and the ability for people to have wealth creation, to create jobs, to be able to access that capital to be able to grow their businesses and, ultimately, to grow the economy,” Friedman noted.

Still, fundamental structural issues in the U.S., such as access to education and health care, have limited opportunities and access for individuals. Friedman said the biggest threat to capitalism is the fact that there is such a wealth disparity in the country. She believes that “cooperative capitalism” – when the public and private sectors work together – will play a critical role in creating equal opportunity for all.

“It’s a combination of the public sector focusing on those core services that provide for the starting point in gaining equal access and equal opportunity, and the private sector putting together a whole range of services and capabilities so that people can exercise that opportunity once they have it,” Friedman said.

Should an individual decided to use that opportunity to participate in the markets, either through an online broker or an adviser at a professional firm, “it’s our job … [to] give them a frictionless experience – very low spreads, very fast executions – and we make so that what they see is what they get,” said Friedman.

“That part of the system is working quite well today,” Friedman acknowledged. “It’s the fundamental part of the economy that we have to continue to work on so that more people have those savings to put to work, and people who have great ideas can raise capital and turn them into businesses.”

“Whether it’s an equal opportunity for individuals or companies or small businesses, I think we have to recognize that we have a lot of work to do to achieve that vision and that goal,” Friedman said.


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