Lauren Dillard joined Nasdaq as Head of Global Information Services in May 2019. Markets Media recently caught up with Lauren for an update on the business.

How would you describe your first (almost) year and a half leading Nasdaq’s Global Information Services? 

The Information Services business is strong across all three of its subdivisions—indexes, data, and analytics.

Invesco recently launched a suite of products that expand the NASDAQ-100 ecosystem, building on the strength of the flagship QQQ ETF that tracks the NASDAQ-100 index. The N-100 represents the modern-day industrials, reflecting the world we’re all living in, including everything from Apple to Zoom.

Investors have recognized that, and we’ve seen strong inflows: in the second quarter, more than half of the performance in our index business was from inflows vs market performance. The NASDAQ-100 is one of the most liquid indexes in the world, and international interest has been strong.

Our market data business continues to be strong. We recently began providing real-time market data to eToro users, further expanding our footprint among individual investors. Earlier this year we launched Nasdaq Cloud Data Service, which disseminates our data on the cloud. Lowering the cost and barrier of entry for brokers and others that serve the investing public.

I think we’ve seen the most growth, however, in our analytics business. Whether it’s about supply chain, consumer spending, indications of travel, or anything else, the need for alternative data sets increased dramatically this year.

A common theme across the information services group is asset class expansion. We expanded the capability of the Nasdaq Fund Network, which was originally a mutual fund quotation service, to more asset classes including Collective Investment Trusts (CITs), which we announced with Wilmington Trust a year ago and have continually expanded with other partners. People want more transparency in these products, and we’re delivering that.

Our eVestment platform launched nearly three dozen data sets and in March we acquired Solovis, which brought a great team and was a natural strategic fit as a way to expand eVestment. Solovis solutions are available through eVestment now and broaden eVestment’s capabilities. Combined they offer an exceptional suite of pre- and post-investment research, analysis, management and information-sharing capabilities to the institutional investment community.

What have been the unique challenges/opportunities in 2020?

Obviously, everyone had to adjust to the pandemic quickly. Executive leadership had to get everyone home, make sure everyone was okay, and that we could function as a dispersed workforce. Information services has 900 people all over the world, so it was a challenge.

Information services as a business is built on the need for better data, transparency, and technology solutions, which are needed now more than ever. We have seen people accelerate their digital roadmap and that amplifies the need for more sophisticated data.

What are the biggest sustained changes that 2020 has brought?

I’d say just a more rapid digitization and an acceleration in the need for intelligent insights. If you didn’t have a data set or online access to your portfolio when we shifted to a remote work environment, you quickly realized you needed it. Our retail clients needed data and needed it fast, which is why we have invested in our use of the cloud, which we’ve been doing since 2008.

If you’re an asset manager, you want to see where the dollars are going to track how the pandemic may change that. We have eVestment’s Market Lens, Asset Flows and other solutions that offer transparency into what investment mandates are coming available, which asset classes and strategies are getting new mandates, where money is flowing around the world, and what strategies are in more or less favor. Having all of this information and being able to access it quickly, online, from anywhere has never been more important.

I don’t think any of this is going to unwind post-COVID. If anything, it will continue to accelerate. In a sense, every company needs to be a data and technology company for their customers.

Talk a little bit about the significance of the Solovis acquisition? 

Solovis is a natural extension of eVestment, which is where institutions go to research investment opportunities and managers. Solovis is a cloud-based platform that allows you to see and rebalance your portfolio, spanning both public and private markets. About 30% of institutional investment allocations are in private markets, so having a tool to see both is a distinct advantage, especially in times of volatility.

Solovis’ client base is mostly U.S. asset owner clients—family offices, pensions, endowments. eVestment has a more global client book. More than 1,000 investors and consultants from around the world use eVestment to review the almost 24,000 active institutional investment strategies from asset managers in the database; it’s a great combination.

What is your long-term vision for Global Information Services?

We want to be the pre-eminent data and technology provider to the investing community. Everything we do flows from that, whether it’s technology workflows, or passive investing through our index business, or providing data and intelligence for investors to make better decisions.

We have two key growth themes, starting with international expansion. We’ve recently launched products in Japan and Taiwan, and we see tremendous demand from the Middle East and Latin America. The second theme is expanding to new asset classes. Our Nasdaq Veles California Water Index futures will be launched by CME, which also recently launched futures on our VOLQ index. And as I mentioned we recently expanded our partnership with Invesco via the new QQQ Innovation Suite.

Ultimately, our thesis is that we are a technology provider, and our specialty is data insights. The investing community needs the data and the insights, but they’re in the investing business. They should be focused on giving advice and making the right investment decisions, not whether they can access or gather their data or why it doesn’t all match up. That’s our job — to provide the technology and the data.

This article first appeared as FLASH FRIDAY on Traders Magazine. FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura Company.

It’s no secret — the rise of computerized trading over the years has greatly reduced the need for human traders. 

Full-time trading, sales and research positions at 12 of the biggest U.S. banks declined from 49,200 in 2010 to 32,200 in 2019, CNBC reported, citing Coalition data. The ranks of equity traders at Goldman Sachs have declined from 500 to 3, according to an industry anecdote cited in the CNBC report.

Industry veteran Jack Hughes foresaw the shift — somewhat. Along with many others, Hughes didn’t expect that the trading floor “football fields” of the early 2000s would become obsolete as quickly as they did.

“I didn’t see the dissipation of employment to the extent that has happened in the trading arena,” Hughes told Traders Magazine on Oct. 21. 

Hughes started his career in 1976 at WH Newbold, where he spent 14 years and rose to the level of vice president and trading manager. He was profiled in Traders Magazine in 2002 as the new chairman of the Security Traders Association. At the time, he was 12 years into an 18-year tenure at Janney Montgomery Scott, where he was director of equity capital markets. 

“I knew electronic trading was big, and it was necessary,” he said. “When I started in the business, a heavy volume day was 2 million shares. You could see that there was a need for more” capacity, he said.

But there is a downside to relying so heavily on machine trading, such as when a computerized feedback loop exacerbates a market decline by executing more programmatic sell orders as stocks fall. 

“Human intervention would say, there may be something illogical about this, let’s stop and take a look,” Hughes said. “I didn’t anticipate we’d go as far as we did (with computerized trading). I think some of it is to the detriment of the trading system, and to the investor.”

Hughes has run his own regulatory consulting firm since 2008; his clients include Wealthforge Securities and Prodigio Trading Systems. “I was always involved in the regulatory side of the business — I always took a liking to that side,” he said. 

“I’ve gotten a bit further into the weeds than I thought I would, because I’m more away from the trading compliance side, and closer to the retail and advertising side and what you can and can’t do there,” Hughes added. “I’ve grown a lot in my knowledge of the compliance side, and it’s been rewarding. I’ve met a lot more people in different aspects of our industry than ever before.”

—–

From the October 2002 Traders Magazine article “On a Mission Impossible?”:

“One of the trading industry’s new leaders has a busy year ahead of him. Here are some of the troubling issues that will be on his crowded plate: Convince ECN officials that SuperMontage will be a good deal and ADF will be an expensive nothing. Obtain vital rule changes from the Securities and Exchange Commission. And bring peace to the various parts of an often-contentious trading industry. And, to accomplish the latter, he will have to sell them on the idea that the Security Traders Association will, in fact, represent their various interests. And, while he is trying to accomplish all this, he will be leading an industry that has been floundering through the worst of times since the early 1970s. 

Welcome to the STA high command, Jack Hughes.

Hughes, 52, is the Security Traders Association’s new chairman. He has an ambitious agenda for the year in which he will occupy the post. Hughes is senior vice president and director of Nasdaq and listed trading with Janney Montgomery Scott. He succeeds Michael Bird of Merrill Lynch as STA chairman. The difficulty of achieving most of his agenda can be seen in an issue such as ECN access fees. Hughes hopes the SEC will take on access fees, which is a sore point for many of his members but are acceptable to others just as they are today.”