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Nasdaq CEO to emphasize investment in blockchain, machine intelligence

As exchanges look to grow market share in a low-volatility environment, Nasdaq Inc. is doubling down on its efforts to integrate blockchain and other technologies into its operations.

"Where we are focusing more of our money going forward is going to be and will be our [market technology business]," Nasdaq President and CEO Adena Friedman said at the 2017 Bernstein Strategic Decisions Conference on May 31.

The exchange operator has made technology a point of emphasis since Friedman took over at the helm in January. Friedman named blockchain, machine intelligence and the cloud as three areas of "real investment" that Nasdaq is looking to develop.

In March, Nasdaq said it had built a blockchain-enabled market for guaranteed advertising contracts, dubbed NYIAX. The market was built on the Nasdaq Financial Framework, and Friedman said it will be deployed on the public cloud. Nasdaq also teamed up with Citigroup Inc. to introduce a blockchain payment system earlier in May.

Friedman said the company is also developing machine intelligence technology through a variety of platforms. The company has also been working to develop a "holistic surveillance compliance solution" for broker/dealers, which would match up behavioral indicators and trading behaviors for the buy side.

As for market structure as a whole, Friedman said recent industrywide M&A activity has been a plus for the company.

In the wake of the merger between CBOE Holdings Inc. and Bats Global Markets Holdings Inc., Nasdaq's market share has grown to 41% from 38%, she said. Nasdaq is also poised to possibly benefit from the merger between Virtu Financial Inc. and KCG Holdings Inc. as it allows Virtu, a Nasdaq client, to get into the retail business and leverage its technologies and systems even more.

And while a possible Securities and Exchange Commission exchange access fee pilot may be in the works, Friedman said she does not expect to see "any sort of significant movement" regarding market structure reform fitting into the broader financial regulatory reform conversations that have been prompted by the White House.

"It's hard. You pull on one string and you unravel a lot of different things," she said. "You can't look at just pulling out one string without looking holistically at the overall [structure] that binds all of our exchanges together."