NASDAQ Chief Executive Officer Robert Greifeld told Boston-area business leaders, State Senate President Robert Travaglini and Lt. Gov. Kerry Healey Tuesday at a luncheon held by the Boston College Chief Executives’ Club that while the future of commerce lies within globalization, the process will take time.
The luncheon, part of a series affiliated with the Carroll School of Management at BC, invites leading businessmen and women to share their views about the future of the industry, according to Reid Oslin, senior media relations officer for the BC Chief Executives’ Club.
“There is a coming consolidation of world markets and this consolidation will be a marathon, not a sprint,” Greifeld said.
Affiliated Managers Group CEO Sean Healey introduced Greifeld, saying “the financial services sector is a major driver [in our economy].”
Healy said Greifeld’s company is one of the world’s largest and most innovative stock exchanges, noting that “NASDAQ pioneered the electronic trading model 35 years ago.”
With newly-created online stock exchanges competing for investors, Greifeld said his company remains the authority in the popular arena of electronic trading.
“The world has followed our lead,” Greifeld said. “[Stock] exchanges have been globalized and their investor base has been globalized.”
Despite the consolidation of markets brought on by globalization and new technology, Greifeld said barriers such as regulation and operating costs keep businesses from trading internationally.
“The cost to access a global market is 10 to 20 times higher than [the cost to access] a domestic market,” he said.
Regulations from market to market also vary, Greifeld said, adding that, “as we go to globalization of markets, we’re not going to a globalization of regulation.”
In the United States, regulation slows globalization, he said. In the wake of the Enron scandal, Congress passed the Sarbanes-Oxley law, enacting increased government oversight of trading. Nevertheless, Greifeld said the market is still deregulating.
“The impact is not as great as you might hear in the press,” he said. “We see a global race to the bottom with respect to regulation.”
While companies compete for the minimum regulations required by law, NASDAQ goes the other way, Greifeld said, adding that “we proudly proclaim that we have the highest [level] of regulations on the planet.”
NASDAQ enforces its own stricter regulations instead of meeting the government’s minimum requirements, giving the exchange company a more informed of view companies’ compliance, Greifeld said.
“It’s very difficult for the [Securities and Exchange Commission] by itself to stay up with the market today,” he said. “One of our issues is keeping them educated.”
According to Greifeld, the whole market benefits from NASDAQ’s high standard of regulation.
“We put it out there not as a competitive advantage, but as a global advantage to the capital market,” he said. “If not, the government will be forced to intervene, and that’s a sad ending.”