00:00I want to talk about all the success of your institution in just a moment but one particular name that
00:04jumps out SpaceX and it's going to be on the NASDAQ and they changed a couple of rules to maybe
00:09encourage them to go over there and not over here. What did you make of those rule changes. Well from
00:14our perspective market integrity is not something that is a competitive dynamic and some of the rules that have been
00:22changed to woo some of the the large companies you reference SpaceX are are questionable.
00:30And from our perspective what is most important to us is protecting investors particularly the mom and pops in the
00:38market. And when you think about the ETFs and that they invest in and the rules that have been changed
00:45it's a question mark. Let's talk about the so-called seasoning period. So for the S&P 500 to enter
00:50that I believe the seasoning periods about 12 months for the NASDAQ 100 for these particular names it'll be 15
00:55days. What kind of complications does that introduce for individual investors.
00:59So I actually think that the fast track aspect does merit a discussion and I know S&P for example
01:07has a consultation out to the market today whether it should be 12 months or it should be six months.
01:13I don't know what the right number is there.
01:16I know that the index providers I know that the index providers particularly those that don't have conflicts of interest
01:21are going to figure it out to the benefit of retail investors allowing companies to be included in the flagship
01:30indices like the S&P 500 in a quicker form.
01:34So I think that is actually a good discussion to have rushing that type of rule change out though is
01:44in order to accommodate a listing is a question mark.
01:48I think the bigger thing which you've heavily covered on Bloomberg is the float multiplier that should be looked at
01:57more closely and I guess we'll figure out what happens in the next couple of weeks.
02:02Can I follow up on that? So let's talk about it. I'll be talking about some of these names and
02:05I'll say they've got a market cap of like two trillion whatever the number might be.
02:08The actual float. Just how low is the actual float going to be. I mean I think the S1 is
02:14really what you should look at for the percentage of that will actually be floated.
02:19But what I'm referring to is the three times multiplier that Nasdaq in particular has put on SpaceX.
02:29Just to give some context people are worried that some of the new IPOs are going to have a disproportionate
02:33impact in waiting in some of the indexes.
02:35How much do you see that as a potential liability especially without a longer seasoning period to really protect retail
02:43investors?
02:44Yeah. I mean it comes back to what I was saying earlier. It's about market integrity and the protection of
02:49retail investors.
02:52To be honest I just don't know what effect this is going to have on the market.
02:57And it's something that economists have covered heavily. Economists independently have covered heavily.
03:05So it will be interesting to watch.
03:06In the meantime this is a real sea change when it comes to market dynamics.
03:09Because we've talked about the shrinking IPO market and how the shrinking public equity space has really strained a lot
03:16of people's expectations of exactly how capital markets should progress.
03:19How much do you welcome all of the IPOs this year versus get a little bit concerned that it could
03:26overflow a market that hasn't been used to this type of supply?
03:30You know it's been a good year so far for IPOs.
03:34I know that the big three that you flashed earlier are the ones that are getting a tremendous amount of
03:38attention.
03:39But there have been a great amount of IPOs coming to market already across all industries.
03:45And we're working with a variety of other companies to bring them public too.
03:51I think that actually speaks to the diversification that is coming to market across all industry.
03:59You've got the energy markets.
04:00You've got the consumer names coming to market.
04:03Industrials are very much having a moment.
04:06So it's across multiple sectors.
04:08And I think that's actually welcomed by retail investors.
04:11They don't just want to invest in Elon Musk, despite the fact that he is one of the great innovators
04:19in history.
04:20They want to invest.
04:21They want to have a balanced portfolio.
04:23You just got to spend some time with Elon Musk.
04:25I did.
04:26I was just with him in China.
04:27Yeah, I was on that trip as well.
04:28Can you pull back the curtain for us and tell us what Chinese officials actually told American businesses?
04:34Yeah.
04:34I mean, the message that America was really delivering on that trip, I think it was the first time in
04:39history that an administration had ever brought 20 of the leading CEOs cross-sector of the market to a state
04:52visit.
04:52The message that we were delivering was that business could really be transformative in transcending geopolitical barriers and could play
05:02an incredibly important role and does play an incredibly important role in the geopolitical dynamic.
05:07How do you see this relationship developing?
05:09Do you see Chinese companies at one point being able, more of them, coming on to American stock exchanges?
05:15It really depends on the governance.
05:18One of the things that we're focused on is how our markets continue to be transformed over the long term.
05:28But we would never sacrifice the transparency that the U.S. stock exchanges in particular require.
05:38Can we finish on integrity?
05:40Because it's something we've talked about repeatedly on this program.
05:42It's been a sense, particularly with this war in the last two months or so, that people might have information
05:47ahead of time.
05:49I'm sure you're having those conversations as well.
05:52I worry that if people start to believe someone's got an edge that they don't have, that they're training on
05:56information that nobody else has, before it becomes public, that people would disengage and it will affect liquidity.
06:02These are the kind of things I'm sure you worry about, too.
06:04How important is it to get to the bottom of what's been taking place in just the last two months
06:08alone?
06:08I mean, one of the things that is very much focused on, and continues to be focused on, is anyone
06:14with inside information and market integrity.
06:18And I think our regulators do an excellent job at surveilling those markets to ensure that people don't have information
06:27ahead of the general public.
06:30Are there conversations happening now to get to the bottom of some of the price action through March into April?
06:36I mean, I think the regulators are continuing to increase the amount of tools that they have at their disposal.
06:42I think actually AI is going to present an amazing opportunity.
06:47In what way?
06:48It will present opportunity for regulators to surveil markets at a much greater speed.
06:55It's something actually one of our first use cases has been deploying AI to surveil our markets, given the increasing
07:03messaging that we have at our matching engines.
07:07Because you and I are both long capitalism.
07:09We've got to buy us.
07:10Absolutely.
07:11We aggressively love capitalism and free markets.
07:13And I just wonder, is it losing faith a bit so far this year?
07:17I don't think they're losing faith.
07:19I'm the eternal optimist, though.
07:21I'm the person that's going to see the glass is half full.
07:24And that's why it was such an honor to represent the U.S. last week in China to talk about
07:30the role of American markets.
07:32We just turned 234 years old this past weekend.
07:36We've survived multiple pandemics, wars, financial crisis, you name it.
07:42And every time our markets have become stronger, more transparent, more liquid.
07:47And that's because of the development of technology, technology tools that enable price discovery to happen in the most efficient
07:55fashion possible, and enable our regulators to surveil those markets and continue to build that trust.
08:05Are you concerned that if there is some sort of deflation of the enthusiasm around AI, that that could undermine
08:12people's confidence in markets akin to what happened in the aftermath of 2008?
08:17I think there has been a bit of a broadening out of the aperture of what is happening in the
08:24world today.
08:24So if you look at coming back to your question on IPOs, some of the IPOs that have come to
08:30market are industrials, their energy, their infrastructure plays that aren't just focused on AI.
08:38Our grid needs modernization.
08:40And I think there's a acknowledgement in the administration that our grid has needed modernization for some time.
08:47So you actually look at great industrial companies, great energy companies coming to market that are going to benefit and
08:55are going to really drive that industrial revolution, the next phase of it, be it AI or anything that's required
09:05in the grid.
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