Nasdaq Eyes 2027 Equity Tokens as AI, Cloud and RegTech Fuel Growth

Nasdaq (NASDAQ:NDAQ) CFO Sarah Youngwood said the company’s decade-long expansion beyond its exchange operations has positioned it to benefit from the convergence of cloud computing, artificial intelligence and distributed-ledger technology across financial markets.

Speaking at a company event, Youngwood described Nasdaq as “the trusted fabric of the financial system,” with exchange market services and listings now representing about 30% of its business. More than 15% comes from its index business, while roughly half is tied to infrastructure offerings including marketplace technology, regulatory technology, data and financial-crime management tools.

Youngwood said the company began preparing for major technology shifts years ago, citing cloud adoption beginning about 12 years ago, distributed-ledger initiatives around nine years ago and AI investments about a decade ago. Nasdaq’s strategy has been to provide financial institutions with cloud-ready, AI-ready and digital-asset-ready systems while preserving market liquidity, integrity and transparency.

She said nearly 80% of Nasdaq’s revenue now comes from non-trading businesses. Youngwood also pointed to double-digit “alpha growth” and mid-teens revenue growth over the past two quarters, describing the company as a “rule of 70% business,” referring to a combination of growth and profitability metrics.

Tokenization Strategy Focuses on Unified Liquidity

Youngwood discussed Nasdaq’s planned Nasdaq Equity Tokens, which the company expects to launch in the second quarter of 2027. She said the proposed offering is designed to retain a unified liquidity pool while giving securities token-based capabilities.

Under the model, token holders would retain the rights associated with the underlying security and trade it in the same way as the existing fiat-denominated security, according to Youngwood. Issuers could potentially embed actions or messaging into the token, while investors could more readily use tokenized holdings as collateral.

Youngwood distinguished Nasdaq’s approach from tokenization models that use wrappers around securities. Such structures can fragment liquidity, she said, while Nasdaq’s objective is to avoid disrupting the depth and speed of existing markets.

“Money goes where liquidity is,” Youngwood said, arguing that market participants place value on connectivity, execution speed and market depth.

AI Adoption Expands Across Data, Compliance and Financial Crime

Youngwood said discussions with bank executives regarding generative AI have become substantially deeper during the past six months, with financial institutions pursuing applications ranging from data delivery to compliance and financial-crime detection.

In financial crime management, Nasdaq’s Verafin platform uses consortium data from 2,800 banks and $13 trillion in assets, Youngwood said. The company uses generative AI to improve alert quality and has deployed AI agents at 800 banks after those institutions completed AI governance reviews.

Nasdaq introduced a sanctions-focused AI agent in December and now has six agents, with two in beta, according to Youngwood. She said the sanctions agent could enable clients to process 80% of sanctions cases without human handling, potentially creating efficiencies.

Youngwood also said Nasdaq’s data business is benefiting from demand for easier-to-consume and more integrated data delivery. The company launched an MCP server for Nasdaq Data Link earlier in the year and can also deliver data through APIs and other channels. She said Nasdaq charges more, rather than less, when it delivers data in more useful formats.

Verafin Targets Large Banks and European Opportunity

Verafin’s core financial-crime management business has historically served small and medium-sized banks, which account for most of its approximately $350 million business, Youngwood said. However, Nasdaq has added about 20 large Tier 1 and Tier 2 banks, including Citigroup and Goldman Sachs, as customers.

Youngwood said the large-bank segment remains small relative to Verafin’s existing customer base but is growing quickly. The company recorded 11 large-bank signings year to date, exceeding the prior year’s total, she said.

Nasdaq sees a roughly $9 billion serviceable addressable market in financial-crime management, with large banks representing about half of that opportunity, according to Youngwood.

In Europe, she said Verafin has successful proofs of concept and sees an opportunity to support cross-border and eventually local payments. Nasdaq has not yet announced a signed European financial-institution customer, but Youngwood said the company is confident it will be able to do so in the future.

She also said partnerships are an important part of Verafin’s strategy because the platform is integrated with 70 core banking infrastructure systems. Those integrations can allow partners with specialized data or capabilities to reach banks without requiring customers to undertake extensive new systems integrations.

Growth Opportunities in Regulatory Technology, Indexes and Markets

Youngwood said Nasdaq’s AxiomSL regulatory technology business serves every global systemically important bank except one. Despite that customer reach, she estimated Nasdaq’s overall penetration in the broader regulatory technology market at about 10%, supporting a “land and expand” strategy.

AxiomSL is increasingly sold through the cloud, she said, enabling the delivery of generative AI features and helping clients manage regulatory requirements across 64 countries, 150 regulators and approximately 6,000 reports.

Nasdaq’s index business had $1 trillion in exchange-traded product assets under management and added $111 billion over the prior 12 months, Youngwood said. The company introduced 34 products in the latest quarter, including international and institutional offerings, and is pursuing themes such as AI infrastructure, data centers and semiconductors.

On the exchange side, Youngwood said the IPO pipeline remains robust following what she described as Nasdaq’s best first half on record. She cited $110 billion raised, including $86 billion associated with the SpaceX IPO, and said activity spans AI infrastructure, fintech, insurance, real estate, biotechnology, defense and consumer technology.

Youngwood also highlighted Nasdaq’s acquisition of LeveL ATS, the third-largest alternative trading system. With about half of equity trading occurring off-exchange, she said the acquisition gives Nasdaq access to an off-market opportunity and a gateway connected to 2,500 buy-side and sell-side participants.

About Nasdaq (NASDAQ:NDAQ)

Nasdaq, Inc (NASDAQ:NDAQ) operates financial markets and provides technology, data and analytics services to exchanges, brokers, institutional investors, corporations and other financial institutions. The company is best known for operating the Nasdaq Stock Market, a major U.S. equities exchange and a prominent venue for technology and growth companies.

Nasdaq’s businesses include listings, trading, market data, indexes, clearing and market infrastructure solutions. Through its technology platforms, the company provides exchange operators and financial institutions with systems for trading, surveillance, risk management, regulatory compliance and other market functions.