The exchange operator Nasdaq plans to invest in financial technology companies by setting up a venture capital arm, says Reuters. Being invested already, the decision formalises its technology orientation and followed other financial service companies including JPMorgan Chase, Citigroup and the CME Group that set up similar business units to remain competitive.
Besides operating stock exchanges around the globe, Nasdaq is one of the largest providers of technologies to other exchanges and trading companies. Setting up a venture capital arm to invest in financial technology start-ups thereby aligns the company with Adena Friedman’s, Nasdaq’s new CEO, plan to increase the focus on technology. "Areas of focus for us in terms of big projects are all around technology," Friedman said last month on CNBC, says Reuters.
The plan thereby formalises the company investing activities that it has pursued already. Nasdaq has been an early supporter of the blockchain technology that can revolutionise trading platforms by its speed, accuracy and trading costs. While the amount to be invested in further early stage FinTech companies has not been disclosed, Reuters learned that the funding provided will be “modest” relative to its earning and capital plan. Besides capital, Nasdaq will offer companies support to develop their technologies faster, said Reuters' sources.