All right. For important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. Note that taking photographs and the use of recording devices are not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. All right, with that out of the way, good morning, everyone. Thanks for staying with us here on day one of Morgan Stanley's financials conference. I'm Mike Cyprys, lead analyst covering brokers, asset managers, and exchanges for Morgan Stanley Research. Welcome to our fireside chat with Nasdaq. It's my pleasure to welcome Nasdaq's President, Tal Cohen. As many of you know, Nasdaq to be a global exchange operator. In recent years, Nasdaq has been transforming the business through a series of acquisitions to become a technology and platform provider to serve corporates, investment managers, and financial institutions as they navigate and interact with the global capital markets and the broader financial system. Tal, thank you for joining us today to discuss the transformation of Nasdaq. Yeah, thanks for having me. Why don't we start off on the market side? A lot of volatility, from a macro standpoint. We have seen record equities options volumes in April. It has since normalized a little bit into May. I guess, how is the exchange navigating here? What's different or maybe even similar this time around in terms of retail participation that you're seeing in the markets versus maybe prior periods of volatility? How do you think about the volume growth and sort of market share dynamics as we roll forward from here? Yeah, so there's a lot there. Yeah. I think we've all experienced quite a bit of volatility in the first, you know, five-plus months of the year. I'm just gonna provide a little bit of information or stats, and this should give you a sense of what we've seen in the markets. First of all, we're really, really proud of the fact that we can ensure that the markets are well-functioning, resilient, and inspire investor confidence. You may not always like the prices you see, but we're giving you the most accurate real-time prices in the market so people can make decisions and apply their view of the market against what they see in the market. In the beginning of the year, we braced ourselves for some level of volatility, but we saw that kind of roll through our markets. In the middle of March, we started to see a little bit of volatility roll through our options markets, before Liberation Day. We got to Liberation Day, and I just wanna give a few stats on that. We broke records, almost every record we had in terms of message traffic and volumes. We did 100 million as an industry in options, 100 million in contracts that is, 31 billion shares in equities. We had five of the six largest days ever in equities in April and four out of the six largest days in options. From a message traffic perspective in the beginning of April, if you were to ask me in early 2024 what a really active day in our options market would've been, I would've said 100 billion messages, really active day. We got to just about 200 billion messages in our options market alone on Liberation Day plus two. That's just incredible. We managed it, and so did the industry flawlessly. In terms of our overall, all of our systems, the inbound and the outbound message traffic, this is a stat for you. Again, in 2024, if you would've said, "What's a big day?" I would've said 250 billion messages running through the system in and out would've been a pretty big day, a really impressive day. We did over 550 billion messages in a single day, and the markets operated, all mission-critical infrastructure operated as it should. That was pretty incredible. The markets, if you guys recall in early April, again, we had down days and up days of plus five, minus five, on those days. It is just astounding. We sit here today, off of our lows where the Nasdaq was down about 20%, the Nasdaq is up 2.5% on the year. It is incredible if you think about how the market has responded in the better part of two months to what we have seen, with respect to the tariff conversations. The market has proved resilient, the economy has proved resilient. One last stat is the European markets, and we operate markets in Europe, are outperforming the U.S. markets. You know, if you sat here in November and asked me if, you know, Europe would outperform the U.S. in the first couple of months of the year, I do not know if I would have said that to be the case. Europe is also performing well. We run markets in the Nordics and the Baltics, and we saw, again, in all of those markets, records in terms of message traffic, strong resiliency, and we continue to invest in our infrastructure. The last thing I'll say is we took markets to the cloud over the last couple of years, and those markets are performing extremely well from a latency and capacity perspective. Anything you would note around retail participation? Sorry, yeah. Retail extremely resilient. Retail has continued to be a big part of the market, in particular, the equities market. We're seeing a strong retail participation in the options market too. Of course, we're seeing a lot of foreign retail activity. You can talk about it in the context of 24/5, but I think foreign ownership of U.S. equities has doubled in the last five-plus years. Retail, not only here, but retail globally has proven to be very resilient. It is not the retail that you thought of in 2016, 2017, much more sophisticated. They are playing both sides of the market. They're using better tools. They're getting better information. Retail is definitely more advanced, and we see them in the market, in particular on the options side in a more advanced, sophisticated manner. Great. Maybe sticking with markets, I think your intention is to launch 24/5 trading by the second half of 2026. Maybe just talk a little bit about the rationale behind that move. What are the types of market participants that this could appeal to most, and what sort of steps, hurdles, infrastructure need to sort of be overcome, built in order to achieve the sort of 2026 timeframe? I'll start with the last part of your question. The, and maybe just as an overview, is 24/5 trading's happening today, and it's happening off exchange today, and it has been. There are ATSs that are operating today. We have seen an increased demand, in particular from retail, from North Asia, predominantly North Asia. It's unidirectional. It's not necessarily that U.S. retail wants to invest in the world, although we are seeing a little bit of that. It's much more that Asia and the world is coming into the U.S. and has been for the last three, four, five years. As we looked at the landscape, we noted that these are mostly Nasdaq companies that they want to trade. We started to think about the opportunity in 24/5, and we walked through it in the following way. One is we said if we're going to do it, we wanna make sure that we preserve the integrity and the quality of the market. We're an exchange. If we enter the space, we're gonna wanna do it, in our words, the right way. The right way means bringing other mission-critical infrastructure providers with us: DTCC, the Securities Information Processor, and the Trade Reporting Facility, which is there for all the off-exchange activity, provide transparency for all of that. In coordination with DTCC and the SIP and TRF, we all agree that we're gonna go to 24/5 together the right way. The second thing is we saw a number of proposals out there that added to the complexity. Other exchanges put out 22/5, 23/5. We looked at it and said, "It's time to harmonize." If we wanna get to 24/5, let's just get to 24/5 the right way. Harmonizing and aligning the exchanges on 22, 23, 24 was really important. Bringing the infrastructure providers along, very important. Those are the two things we've been focused on, and we're gonna do it in, in collaborating with the industry. We're bringing the issuer voice to the discussion because we don't want issuers looking at their stock at 2:00 P.M. seeing that it's up 2%. At 2:00 A.M., it's down 3%. That's a bad call. People would ask why. We wanna make sure the issuer's brought into the conversation. The last things that we wanna do is make sure that volatility guards are there, we can handle corporate actions, and we also can apply the resiliency and controls that we have during market hours. Those are all the things we think about. We think this is a long game. We think there is a real opportunity. I think 24/5 trading will be mostly retail on day one. We will preserve the sanctity of our open and close. That is important for institutions to hear. You know, that open and close is really important to those that are benchmark-focused. I will also note that we are 16 hours today. We open at 4:00 A.M., and we close 8:00 to 8:00 at night. We are talking about being open another eight hours of the day, just to be very clear. If we do this, and if we do it well, then it opens us up to other opportunities. We can think about 24/5 for our options markets or proprietary products. CME is already open 24/5 today for futures. There are questions around digital assets and crypto. If there is regulatory clarity there, we can position ourselves to, again, offer those products if we can prove ourselves in equities in 24/5. I just think there are a number of opportunities we look to if we can get 24/5 right for equities. We are very, very focused on the operational aspects of that. Eight more hours and make it sound like it's sort of easy. What would you say the biggest hurdle is to get there? It's not easy. The technology itself is not the challenge. We can operate the technology. It's the operational elements that I just noted, which is where do you staff yourself 24/5? How do you ensure you have staffing? It's a follow-the-sun model that you have to have when you do 24/5. From a staffing perspective and an operational perspective, we wanna think about that. We wanna have the same level of service and support and resiliency during those eight hours. The other one is what you just mentioned is operationally working with VTCC and figuring out when the cutoff is. What is the trading day? When do you cut it off? What's X dividend? How do you manage corporate actions seamlessly? How do you ensure that the markets, when they're less liquid and wider, you have the proper volatility guards? That requires the collaboration with the industry. It is those operational elements of service, support, resiliency. How do you handle corporate actions? How do you handle, you know, the trading day? When do you provide VTCC with that? Like, how do you agree with all of the industry in terms of what that new trading day looks like are things that we're just gonna have to solve together before we go live. Great. Why don't we shift and talk about Nasdaq's strategic pivot towards information services? Where are we in this journey here, which you have embarked on, I guess at this point, nearly 10 years ago, I guess about 8 years ago? I guess how do you see Nasdaq's role in the ecosystem evolving as you look out over the next 5, 10 years? Great question. In 2017, when our current CEO, Adena Friedman, came in place, we conducted a strategic pivot. That was after a long evaluation of what the current megatrends were, what we saw as structural trends in the market. We got a number of those right, a number of those we looked at and we thought about, and they did not play out the way we did, but there were a number that did. As a result of that, we have built up a financial technology business, and the acquisition of Adenza plays right into that theme and into that strategy over the last 10 years or 8 years. The trends that we were playing into exist today, which is in 2017 and afterwards, we felt like there was a megatrend in terms of financial institutions wanting to better manage risk, all types of risk in real time more accurately. Operational risk, credit risk, market risk, managing risk in a world that is changing faster than it has ever changed before was incredibly important. We also saw that regulation, the regulation, the pace and intensity of regulatory reforms, we felt as a highly regulated entity ourselves, we feel it, we feel how much it requires of us. We just saw that it was going to be global, was going to go downstream, and it was going to hit both sides of financial institutions, on the banking side and the trading side. Finally, modernization. This is before AI was a big topic. At that point, we were thinking about cloud and how all of you and all of us were going to modernize our tech, to take advantage of the opportunities we had in front of us. Again, blockchain, DLT, AI now. How do we modernize our tech to meet evolving client needs and make sure that that tech debt was not impacting our resilience and was not creating more complexity within all of our businesses? All of that, all of what I have just mentioned was then taken up one level into one theme that we articulated, which is there is going to be increasing complexity in the world. We as Nasdaq have a trusted brand. We want to be our clients' trusted partner in helping them solve their toughest, most pressing operational challenges. That is how we thought about it. It was that simple. Since then, we've made a number of acquisitions, and now we have an incredible portfolio of companies under our financial technology division that allow us to do a few things. We have financial crime management with Verafin. It's a leading solution. We have a capital markets offering that looks at the full trade lifecycle from Calypso and Marketech. Now we have a regulatory technology subdivision with surveillance and Axiom. That allows us to protect our clients' reputation and brands. We feel really good about the collection of assets we have. We feel really good about our ability to solve our clients' toughest problems, be your trusted partner. We're continuously trying to earn that right. We earn that right, and this is what makes us unique because we're highly regulated. We consume a lot of the technology we sell, and we adopt and integrate a lot of the advanced technology that we talk to you about. No client wants to talk to you about the cloud unless you've done it. No client wants to talk to you about how do you input AI and, and bring it into your products unless you've done it. They want to know what the blueprint is, what proof points do you have, what pain did you go through. Our ability to share that with clients is incredibly valuable. I am really proud of what we built over the last eight years. We have a great collection of assets. What is different, again, is each of these assets are either number one or are leading assets in the services and the capabilities that they provide. Great. Why do not we dig in there a little bit, starting with Axiom and Calypso? It is about, maybe about a year or so into the integration. Revenue, ARR growth have been pretty strong there. Recently, you did call out a little bit of an elongated sales cycle, which could weigh on revenue growth for the year. Walk through for us what you are seeing in each of those businesses and what it is gonna take for the sales cycle to normalize and even potentially accelerate. I'll just take the last part of that question first again and say that we came out early in the year and talked about sales cycles in particular with respect to Calypso. What we should recognize, there was a moment in time that's transpired in the market. That moment in time, again, the markets were down 20% a month and a half ago. Now they're up 2%. Everybody was feeling that moment in time. As a result of that moment in time, mostly due to the uncertainty around tariffs, there was an understandable pause in the market where, in Calypso, for bigger deals, we saw more people in the room and more decision-makers and a buying process that involved more people. That was understandable. Since then, we've seen that normalize. Since then, we have seen the sales cycle across all of our products, continued demand continues to be strong, competitive position continues to be strong. The sales cycle matter that we raised with respect to Calypso has kind of solved itself where we now see it being much more, if you will, typical in the way that we're approaching clients and the clients are approaching us on the decision-making side. That is what we're seeing now in terms of just demand and how we see demand by product 'cause I think that was your question. I'll run through a product-by-product real quick. On the regulatory side, RegTech Solutions for Axiom, internationally, there's a number of countries and economies that are trying to level up in terms of the integrity of the banking system. They're trying to modernize the way that they report, modernize their ability to manage capital and liquidity. That presents opportunity for us because Axiom is in 60-plus countries, serves 130 regulators. It is global and comprehensive, and it is an incredible solution for those countries and the banks and the financial institutions in those jurisdictions that are looking to modernize and advance their integrity. That is an opportunity. The other opportunity for Axiom is also down market. We're looking at the down market opportunity. Banks under $100 billion represent an opportunity from a financial reporting perspective. We have spent a lot of time trying to design the solution, a cloud version of the solution that would serve that market. The right price point, the right functionality, the right delivery model, the right support model, and the right go-to-market. That presents an opportunity for us on Axiom. Surveillance, there are, you know, two or three really trends that are very clear to most people. One is crypto. Crypto is a tailwind, a lot more trading in crypto. As the regulation comes in place, there is more regulatory clarity. That is gonna be a tailwind for us. The elevated volumes and volatility when markets are up one day plus five, down day, down minus five, there are a lot of questions about trading activity and what kind of trading activity we are seeing. That has been a tailwind. The last one is just from a regulatory perspective, we are seeing regulators, very interestingly, do much more with data to help regulate across asset classes and across asset classes that were previously not as transparent. They're getting their hands on fixed income data, OTC data, and asking questions about related securities. How does, like, trading in one security affect trading in another security? That is great for surveillance. It's a tailwind for us. In surveillance, we have this community of exchanges, regulators, and broker-dealers. We have this three-sided community, and it's wonderful because it is powering a lot of our demand. A lot going on in surveillance, and demand has been very constructive. On the capital market side for Calypso, collateral management, risk management, risk management in all the forms I shared earlier. Collateral management, capital efficiency is top of mind. Managing your balance sheet, managing risk, and automation and straight-through processing has been a large and big tailwind for Calypso, especially in the segments that we serve, tier two and tier three banks. That's been great, and it's global. It's global and multi-asset class with a strength in OTC security. That also has been playing into a trend, if you will, where a lot of the banking community now is also thinking about their global footprint. Marketech, which is our trading and our post-trade and risk solution, has been all about modernization. We have just launched next-gen solutions there. Modernization is top of mind for all critical market infrastructure providers. If you're sitting there and you're in exchange today or market today and volumes have been persistently high for the last four years and volatility has been persistently high, you're thinking, "It's here to stay. Like, how do I manage this for years to come?" It could get even greater. I think when we came out of 2020 and 2021 and we had, you know, the meme phenomenon in January 2021, people asked, "You know, is this volatility and volume gonna stay with us?" Then we had 2023, 2024, and now 2025 where I gave you stats where we doubled. People are seeing this as a need, as a must-do in terms of modernizing and making sure they have the capacity and the performance and the determinism they need. That is a big driver for those solutions. Then Verafin, just the anecdote I'll share with you is, I don't oversee Verafin, but in every conversation I have on the voice of customer tours that I do around the globe, whether it's in the Philippines or Latin America, I was in Lithuania last week. The first question I get is, "Fraud's a big problem. Fraud is a massive problem. It is for digital banks and others, and for growing economies, developing economies, maybe their number one issue." Verafin is sitting with a tremendous opportunity in front of it. It's solving a problem that is a drain on the economic system. It's a drain on capital markets in general. From a fraud and AML perspective, I think, again, Verafin's really, really well-positioned. The demand for that is only growing because, like I said, in the U.K., the governments now understand there needs to be a private-public partnership, and they're holding banks accountable. That's also creating an incentive and a demand driver for us there. Across all of our products, we're seeing different types of demand, but these levers are really powerful for us, and I think they're structural. Maybe just on the last one with Verafin, why don't we dig in there just for a moment? That's your fastest-growing revenue stream at Nasdaq today, growing over 20% top line annually. Maybe just talk about how you're adjusting the offering as you look to enter other markets. You mentioned overseas. How do you adjust the offering as you go into new markets, new channels? What are some of the opportunities you're most excited about as you look ahead over the next couple of years? Maybe just update us on the pipeline of tier one, tier two bank opportunities. There continues to be a long runway in small and medium banks, which is Verafin's sweet spot. We continue to think there's a long runway there. There's much more we can do there, and we continue to be excited about serving that community. In terms of tier ones and tier twos, we've had success there in proving out that we can reduce false positives. We can help them identify, if you will, financial crime that they can't identify on their own. That's because we have built a franchise where we have 2,600 clients, over 650 million accounts that we look at. Verafin looks at the payor and the payee, which is different than most solutions. We also do fraud AML. We really feel like we can, for tier one and tier two enterprise, which accounts for about 50% of the TAM, serve that market well. Early indications are that we can, and we've had some success there. There is still a long road ahead of us, in terms of being able to do that. The last part, which is maybe to your question, is when we look at new geographies, and we are the U.K., the Nordics, and Canada, we're implementing a One Nasdaq approach. That is what you can do when you have the financial technology franchise that we have. Verafin can leverage the Calypso footprint that we have in Europe, for example, the FinTech footprint that we have in Europe, to go in and establish. We have resourcing on the ground. We have client relationships on the ground. We have the right tooling in place. We have the right incentive model in place. That allows us to export Verafin and take advantage of the financial technology business and franchise that we've established. That's what we're doing in Europe, in Canada. Again, we're doing the same thing. We have really good relationships with the larger banks in Canada as well as the smaller banks. Having this One Nasdaq approach, elevating those discussions to the C-suite, which we can, which really is a differentiator for us when you're trying to cross-sell, has been very, very powerful. Very early innings. It's gonna take some time to manifest itself. You gotta have the right go-to-market. You're gonna tune that. You're gonna make sure that the pitch is right in the markets you're in. We're committed to that global expansion. I'm really excited about how we're working together in its early days. Great. Why don't we shift and talk about AI? It touches Nasdaq in many areas, notably Verafin, which is cloud-native, that uses machine learning. Maybe just talk about some of the new offerings that embed AI capabilities at Nasdaq, sort of what the rollout traction has been, and how might you quantify the benefits so far, and what are some of the other areas you're exploring? The way that we look at AI is there's two vectors for us: in the product and on the business. Your question is more about in the product, but I also want to talk about on the business just for a moment because on the business has to do with how we're developing software, the productivity gains, the efficiency gains. We think they're going to be significant and material benefits to us: the quality of the code, the speed at which we can deliver code, the speed in which we can implement. Then there's the client experience piece. Our service and support model will benefit from AI, all the tooling that we can put in place, all the automation we can put in place. That is really important because our client's happiness, our client satisfaction with our products has to do in part with our products but in part with how we support and service our clients. It is really important that we have a holistic view and think about both of those vectors. In terms of in the product, I will just speak to a few. I will give you just a few examples. Calypso, this is a great example. We have something called XVA, X-Valuation Adjustment. It is a mark-to-market adjustment of complex derivatives. Today, to use XVA in Calypso, you are running thousands of Monte Carlo simulations, thousands, maybe 10,000. That is compute-intensive, and it takes all day. The accuracy is really good but could even be better. We have implemented and just launched XVA Accelerator. Remember what I talked about in terms of managing risk. When you're looking at XVA, you're looking at market risk, credit risk, operational risk, right? You're trying to do a mark-to-market on a pretty complex asset. That drives how you manage collateral and manage risk. Now with XVA Accelerator, which is using machine learning, we can run this in a matter of a half hour, which means that you're getting it quicker. It's less compute-intensive, much less compute-intensive, so it's less expensive. You can do it faster, and we're finding that it's more accurate. If you're a client of ours thinking about managing complex derivatives, and we come to you and have this very, very easy kind of explanation of what XVA Accelerator can do for you, it's incredibly powerful. The way that we look at that is it's an add-on feature. There's an upsell opportunity. We will, there'll be a price to it. And we're going through that and identifying the banks that already have XVA or in the past have said to us, "We have our own risk modeling in place because we need to do it in more, in a, in a real-time manner." And XVA, for whatever reason, doesn't meet our requirements. So it's allowing us to go to our existing clients and upsell. It's allowing us to approach new clients, and it's strengthening the competitive offering. When we go and we do, we have a bake-off with somebody else, you know, being able to tell the story of how we're implementing AI through our product in a very meaningful, tangible way is incredibly powerful. We're doing two other things, by the way, in Calypso that are great too. One is, we're predicting settlement failure. We're helping them manage settlement failure through the data that we have on the platform and say, "Hey, listen, you might wanna look at this counterparty. It's likely to fail based on the experience and the data that we have." Really powerful. That's in a POC. And think about how much capital you tie up or can free up if you better manage settlement failure. Massive, massive on the OTC side. And so that's just another very, very powerful but simple-to-understand use case for AI. Great. I know we have a few minutes left, but I do wanna get a crypto and digital asset question in here. It seems like a more business and regulatory-friendly environment now for crypto and digital assets. Maybe just talk about Nasdaq's digital assets strategy, what role Nasdaq may play in the ecosystem today and in the coming years, and how digital assets may contribute to Nasdaq in the coming years. We are in crypto and digital today in the following way. We offer trading technology, post-trade technology, and surveillance technology. We also list on our Nasdaq markets, ETFs like iBIT, from BlackRock and others. We are in crypto and digital assets in a number of different ways. As we look at what's possible, we see a number of opportunities if there is regulatory clarity. Of course, everybody wants to talk about the trading of crypto and digital assets, but we'd like to see more regulatory clarity there. We'd like to understand the taxonomy of how they look at digital assets and crypto. We are paying attention to that. The more pressing problem and the one that we keep hearing from the industry, and I'm curious, like, if we would have a big open discussion, what you guys are hearing is it's all about capital efficiency and collateral management. In crypto, it's pre-funded, it's over-funded. Collateral is hard to move on, on ramps and off ramps. We're looking at Calypso, our trade management platform, which has a best-of-breed collateral management solution. We see an opportunity to connect to digital rails and offer collateral management by accepting stablecoins and tokenized assets, whether it's treasuries or money market funds, which can serve as the other side of a trade, right, of an OTC trade. Think about like a, a OTC crypto derivatives trade. Like, one side might be a Bitcoin option. The other side of that could be a treasury or some tokenized money market fund or a stablecoin, right? Being able to then manage your collateral, manage your capital through Calypso, alongside all your other assets, in a tool that gives you initial margin, variation margin, allows you to optimize collateral and look at it holistically, have a 360-degree view of it in real time, is incredibly powerful, especially if these assets become bankable. If stablecoins and tokenized treasuries and other tokenized assets become bankable, then it is incredibly powerful to manage your capital and your collateral through an application and a tool and solution like Calypso. That is a really interesting app opportunity for us. That allows us to do something great, which is merge the traditional world with digital rails, which we are a big believer. We need to merge the digital world and what people will call the TradFi world because you do not want two separate systems. You know, digital assets will never fulfill their promise if there are not standards, fungibility, and interoperability. And that is what we drive. Great. I'm afraid we're out of time. Please join me in thanking Nasdaq's Tal Cohen. Thank you. Thank you. Thanks for having me.