- Jeff Sprecher, CEO of the Intercontinental Exchange, said the recent consolidation in financial markets has made it prime for disruption.
- Sprecher said having fewer market participants and a more organized ecosystem makes it easier for a newcomer to pitch products.
- The new environment has led ICE to make more investments in fintechs in an effort to not get displaced, he said.
It’s never been a better time to be a newcomer with fresh ideas in the financial markets.
That’s the view of Jeff Sprecher, CEO of NYSE’s parent company Intercontinental Exchange, who said the markets are prime for disruption.
That might sound counterintuitive, considering the number of market participants has shrunk in recent years due to acquisitions and mergers. Sprecher’s own company is an example of that, as it’s one of three major exchange groups, along with Nasdaq and Cboe Global Markets, that run all but one of the US stock exchanges.
Sprecher acknowledged the market has condensed — citing the decrease in brokers, hedge funds and high-frequency trading firms — but said it’s for that very reason that the markets are ready for change.
“Today an upstart competitor or an out of industry competitor could step into a market where things are relatively organized and the number of participants is relatively few,” said Sprecher while speaking at a conference on Wednesday. “And so you don’t have to knock on that many doors to get attention on whatever your new innovation is.”
That’s in contrast to years past when the markets were still forming and there was an abundance of participants, Sprecher said. During that time, the focus was just on trying to bring the market together and getting some sense of standardization. Nowadays, Sprecher said its easier to launch a product because the industry is so clearly defined and organized.
That’s why Sprecher fully believes in the continued investment firms are making into fintech companies. In 2018 alone venture-capital firms invested $11 billion into the space, the highest amount in eight years.
Sprecher and ICE haven’t shied away from making investments of their own in new technology. In August 2018, ICE announced plans for Bakkt, a digital asset platform that allows firms to trade physically delivered bitcoin futures contracts.
“I think the fintech revolution that is going on is real,” Sprecher said. “It’s why I think my company and many of my colleagues up here are investing in new technologies, new systems, because we feel the urgency to be on top of that so we won’t be displaced.”
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