Speaker 1:
From the library of the New York Stock Exchange, at the corner of Wall and Broad Streets in New York City, you're inside the Ice House. Our podcast from Intercontinental Exchange on markets, leadership and vision in global business. The dream drivers that have made the NYSE an indispensable institution for global growth for more than 225 years.
Speaker 1:
Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism. Right here, right now at the NYSE, and at ICE's 12 exchanges, and seven clearinghouses around the world. Now, here's your host, Josh King, head of communications at Intercontinental Exchange.
Josh King:
In the history of the NYSE, 66 men have been its president. Today, we welcome inside the Ice House, the 67th president and first woman to lead NYSE Group. The announcement came on May 22nd. Stacey Cunningham would lead the group, which includes the New York Stock Exchange, and three other equity, and two options' exchanges, all subsidiaries of Intercontinental Exchange. Stacey's a familiar face here and anyone who regularly watches the opening or closing bells. I watched her on the podium yesterday, as she welcomed the legendary Ralph Lauren to close the day's trading. NYSE ticker symbol, what else? RL listed here for 21 years.
Josh King:
Stacey's history at the exchange too spans decades. She started out on the trading floor in the 1990s, most recently serving as Chief Operating Officer. She also spearheaded the rollout of NYSE's new state-of-the-art trading system called NYSE Pillar. It's one of the most ambitious technology programs ever completed by a global exchange. In some ways, it's like planning a moon launch, lighting a candle on a new trading system managing billions of shares. Certainly, the largest job Stacey was ever tasked with, as an engineer until now. Our conversation with Stacey Cunningham and how she'll shape the future of this institution right after this.
Speaker 3:
Are you looking for a new way to invest in some of the most widely traded stocks from a select group of high performance and innovative companies? The NYSE FANG+ index consists of the five, core FANG stocks, including Facebook, Apple, Amazon, Netflix, and Alphabets Google, plus another five actively traded technology growth stocks, Alibaba, Buydo, NVDIA, Tesla, and Twitter all equally waited for a more diverse and representative capital, efficient portfolio. We'll hear about FANG+ options from Ivan Brown, New York Stock Exchange's head of options later in the show.
Josh King:
After graduating with an engineering degree from Lehigh University, Stacey Cunningham began her career as a market maker or specialist, as they were then known, right here at the New York Stock Exchange. It was 1996, the heyday of the open outcry system and Stacey was responsible for making markets in a panel of stocks under her watchful eye.
Josh King:
Back then, there were more than 5,000 traders on the floor and the NYSE handled the vast majority of equities trading. In the 20 years that followed, a lot has changed in equity markets and like the flight ops team at NASA, Stacey's had a front row view to much of it. She now sits in the cockpit. Welcome to the Ice House, Stacey.
Stacey Cunningham:
Thanks, Josh. It's been so exciting for me to listen to the podcast from so many visitors that have come through the Ice House. So sitting in this seat, I'm really honored.
Josh King:
I think we've had a number of engineers, as well.
Stacey Cunningham:
Yes.
Josh King:
I think there's always the memories of our youth, the kids who tool around with Lincoln Logs, or erector sets and Legos and usually, that's it. What makes someone progress beyond that? What was your entree to engineering?
Stacey Cunningham:
It was the drive toward math and science. I just enjoyed working in that environment. I enjoyed solving problems, looking at how to break things down into smaller pieces, and put them back together. So when I was choosing a major to study, I felt like it would be in that direction and I chose to go to school for engineering.
Josh King:
Are your parents people who would fling word problems in your direction?
Stacey Cunningham:
No, not at all. In fact, my dad was in the financial markets but never talked about it. Never said much about what he did for a living. In fact, I used to think he was a sock trader instead of a stock trader because he did never draw that distinction. My brother went into engineering. He's a little bit older than I am, too. That may have influenced my decision to head that way.
Josh King:
A few weeks ago, it's a Tuesday night around 9:00 PM when the Wall Street Journal breaks the story that the NYSE has named its 67th president. Mere hours later, you're sitting on the set of CNBC. The first question comes from Bob Pisani. He asks what needs to happen to convince more companies to start going public? He's seen a lot of them certainly in his career, but was that the right first question to ask?
Stacey Cunningham:
Why companies choose to go public today has evolved a little bit over time. Historically, the need to raise capital was a major driver for companies to go public. They have alternatives to that now. There's a lot of access to private capital so they're choosing to leverage that, while they grow into much larger companies.
Stacey Cunningham:
But then they recognize the fact that building on their brand recognition, providing a way for their investors to have liquidity, also to create a currency so that they can go out and buy other companies, merge with other companies. All those are the reasons why ultimately, you do see some of those large companies going public. I'm not sure if that's the first question to kick off on my tenure, but it's the first one I got.
Josh King:
As you're sitting there at Post 9, which used to be posts for DMMs and specialists, you're looking out at the floor and these people, who now report from our floor every day. What are your thoughts as you're saying, "Well, this is the place where I came in as a kid. Now, I'm here on the set of CNBC and I'm the new president."
Stacey Cunningham:
Yeah. It's a little bit surreal. When I first started on the trading floor, I was studying engineering at the time and I was a summer intern so I hadn't expected to go into that industry. And while my father was in the industry, he really didn't talk about it at all. I walked onto the floor thinking I was going to finish this job for the summer, and then go back to school, and study engineering.
Stacey Cunningham:
But it took about 15 minutes for me to realize that's where I wanted to be. I felt it in my blood right away. I could tell that it was home for me. To fast forward almost 25 years and sit there at Post 9, talking about the fact that I'm leading the place, just wasn't something I ever saw coming.
Josh King:
So now that you've been in the role all of these two weeks, what do you see as the main responsibilities of the job?
Stacey Cunningham:
I think it's the main responsibilities of the job that I had before, right? We're still here trying to achieve the same goal to help companies raise capital, raise money so that they can scale their businesses, and provide more opportunities for investors around the world, provide more jobs for people around the world, and that's what our goal is every single day. That's still my job. We've changed the way we do it, and it's evolved a lot over the past few decades since I've seen it and watched it.
Stacey Cunningham:
When I first started on the trading floor, there was no such thing as an ETF. And now we list over 1,500 exchange, traded products, representing $3 trillion of AUM. So when I look at what our mission is, our mission is the same, but how we accomplish it going to certainly change. I've been surprised by how quickly my profile has changed. I've been so closely involved with the New York Stock Exchange for so long. And I was really surprised by how much outreach there was, as I stepped into that role and how different that was.
Josh King:
What does that say about the brand of this building?
Stacey Cunningham:
It says a lot about the brand of this building. I've been invited to join groups and to attend senior weekends because I'm the president of the New York Stock Exchange. And I think that that is really indicative of the global brand that the New York Stock Exchange has. And it's an icon and people recognize it as that. It brings with it a lot of recognition and that's something that we look to how can we take what we have in our brand and help apply it to the benefit of our listed companies?
Josh King:
Dick Grasso was one of your predecessors. He was the president of the exchange when you first joined. I want to hear him lay out how the NYSE changed from when he joined in the 1960s to 1997, when he gave this speech.
Dick Grasso:
New York Stock Exchange finished last year, as the most active in its history, some 133 billion shares having changed hands on the big board. That would be 100 times the first full year of my experience at the NYSE. And as Harry mentioned in the introduction, I did indeed join the New York Stock Exchange in the 20th century. In a period of some 30 years, we've gone from a marketplace with evaluation of less than a trillion dollars to one that today, approaches $12 trillion.
Josh King:
So that was one of your legendary predecessors, Dick Grasso, Stacey. There's a photo that circulated after your announcement was made of you standing next to one of the market maker booths, probably it was your own, and Grasso standing next to you. What are your memories of him and how he brought this exchange into prominence?
Stacey Cunningham:
Dick was larger than life. And he was a visionary in that he really knew what the value of the New York Stock Exchange brand was, and how he can leverage that with companies so that they can get that benefit. And he really focused on showing everybody how special and unique a place the New York Stock Exchange is. And I've certainly learned a lot from him.
Josh King:
The volumes that Dick was mentioning in that clip pale to what the NYSE sees today, even though there have been significant fragmentation in the marketplace. Trading systems now handle in the vicinity of not billions, but trillions of messages per day. The NYSE Group also operates four, distinct equity markets. Can you explain a little bit about how those markets work each of them and how you've modernized them to adapt to new technology?
Stacey Cunningham:
The technology is underpinning of what we do every day. So when I first started on the trading floor, there's always been technology, as part of the New York Stock Exchange offering, but the people were represented all lot more of the work. We've shifted that scale to try to allow technology to do the majority of the work and really apply the human element where it's most impactful. And can lead to the best result for our issuers, which means that we need to make sure our technology operates seamlessly through all market conditions.
Stacey Cunningham:
Whether there's news out, and there's a lot of all, that's when we see a lot of message spikes. So we focus on making sure it's simple so that it can scale and it limits risk. That it's simple so that our customers can interact with it without spending too much energy, and that our own teams can interact with it. So simplifying that is a big focus for us. When we look at each of our markets, we want to make sure that they're using the same technology, that they're on the same platform.
Stacey Cunningham:
Over a year ago, we didn't even have one market that was completely rolled out onto the NYSE Pillar technology. Now, as of this week, we have four markets on exactly the same code base, with exactly the same interface for our customers to use. That means if they want to make changes to the systems that they use to interact with us, they can do that once and use it across four markets. It gives them scale, which means they're able to achieve and focus on many other things that are more interesting for them.
Josh King:
Largely invisible to the outside world, but a huge transformation in the guts of this building.
Stacey Cunningham:
Absolutely. When you're 226 years old, you have a lot of legacy systems around there. So we've spent the past few years cleaning all that up, simplifying, putting them onto single systems and getting rid of a lot of the things that have been building up over the years.
Josh King:
In addition to all those investments that we just talked about creating Pillar, we've not only kept operating on the trading floor, but also invested in it to make sure it remains operational for years to come. With so many of the open outcry of floors now closing up shop, consigning that form of trading to relic status, why did the NYSE and ICE double down on their investment on the floor?
Stacey Cunningham:
Nobody can offer issuers or investors what we offer them when they don't have a trading floor like that. Having that expertise in that judgment is truly unique. So expanding that, investing in it, and we just expanded trading to all securities because floor brokers can now, for the first time ever, offer their customers the ability to get their unique benefits in stocks that aren't listed on the New York Stock Exchange.
Stacey Cunningham:
So we've been expanding the floor more broadly. There are a couple of exceptions to that model is that if you're not listed on the New York Stock Exchange, you don't receive a designated market maker. That's value that we provide just to NYSE listed companies. And we don't run opening and closing auctions, because again, that's value that the New York Stock Exchange listing gets for our companies. But other than that, the floor brokers can offer their customers their unique access and their unique method of trading in all names now.
Josh King:
You're keeping your eye on some of these names. The numbers are ticking up day to day, aren't they?
Stacey Cunningham:
Yeah. Right out of the gate, we saw a large adoption and there was immediate demand from customers.
Josh King:
What's the feedback from the floor community about having the new capability?
Stacey Cunningham:
Well, they love it. They love it. They're now able to accept crosses and put them up where they have two sides of a trade that where their customers want to trade. They can interact in names where they had to turn that order flow away before.
Stacey Cunningham:
And it's a great development for them. The New York Stock Exchange on some days, traded more shares than any other exchange out there when it was only trading half of the market. That's part of the reason why we wanted to expand trading to all symbols.
Josh King:
Stacey, the New York Stock Exchange is the largest lit exchange providing pricing to the roughly 50 dark pools and alternative trading systems where stocks can be traded. What is a lit exchange? And in our increasingly digital age, how important is it to have transparent trading?
Stacey Cunningham:
It's critical to have transparent trading. It's really crucial. And when we refer to lit exchanges, we're talking about the exchanges that are publishing quotes. So if you go log into your online retail account and you want to see what's the best price I can buy a stock at, and where's the best price I can sell it? That's the public quote. Knowing what those prices are, we're determining those prices each day and they're transparent.
Stacey Cunningham:
They're lit, they're published out to the market. That's what we're talking about there. There are other ways to trade, as well. You can trade in things known as dark pools, or in other venues, but they're largely taking the prices that we set and then they're matching trades at those prices, or within those prices on separate venues. That lit quote is really critical.
Josh King:
So if I'm buying or selling 100 shares of General Electric in a dark pool, is that bad for me, as a retail client?
Stacey Cunningham:
No. It isn't that it's bad for you, but we want to make sure that we have the right incentives in place to promote that public price discovery. Determining what the real value is of a security is our core function, and we're setting those prices and that's critical. So as we look at making any market structure changes, we just want to make sure that we're always protecting two things, the public quote and investor confidence, because that really drives our mission.
Josh King:
The new trading platform that we talked about earlier, where a year ago, none of our exchanges were on it. Now, four are. It's called NYSE Pillar. Why did you call it Pillar?
Stacey Cunningham:
We had a contest internally, as to what we should name NYSE Pillar. There are a number of reasons. It's one of those names that can mean a number of things. And if you look at the building outside, you'll see the defining pillars that are the iconic facade of the New York Stock Exchange. But our technology is the pillar underneath our trading each day so it has that double meaning there.
Josh King:
Most exchange groups choose to buy existing exchange platforms, then adapt them for their purposes. Why did you choose to build it yourself?
Stacey Cunningham:
We could build exactly what we wanted, and we could build what our customers wanted. So when we started out on the initiative to develop Pillar, we took the time to go out and talk to customers, tell them how we were thinking about it, what our ideas were, so that we could really build a best of breed technology platform. They provided a lot of feedback. We altered our plans in many ways to facilitate meeting their needs. And then we started building it and it's really unique. You mentioned that it's such a big lift, ambitious project, technology project in the exchange space.
Stacey Cunningham:
It's the first exchange migration I can remember where a very large exchange that was already existent. Not a new one that was an upstart, was migrating to brand new technology. So we've seen exchanges merge with other exchanges, and move their technology onto existing technology platform that one of them was already using. But NYSE Pillar is brand new technology for NYSE, as well as for our customers to be using. It's a little bit like changing the wheels on the race car while it's going around the track, which was an ambitious project.
Josh King:
If you think back over the last year, what were some of the biggest challenges or those nights when you might have gone home and said, "Boy, this is really getting the best of us?"
Stacey Cunningham:
When we see what we have today, we realize why we decided to undergo this project, why it was worth it for us, and why it was worth it for our customers. We have the most deterministic trading system. What that means for those that don't live and breathe this world is that the customers can count on their experience. Our goal is not to be the fastest trading platform, but we want to be the most consistent trading platform.
Stacey Cunningham:
So that anytime a customer sends us an order, our system reacts in exactly the way they expect it to react with the same level of performance, and we've achieved that. When we hear from our customers what kind of results they're getting, we're clearly operating the best technology platform out there.
Josh King:
Ticking through some of the things that people may not appreciate about today's New York Stock Exchange, three different markets for different issuers.
Stacey Cunningham:
Yeah. That makes us really unique, I think, from our competitors. When you look at some of the other exchange groups, we each operate a number of different exchanges, but ours are really differentiated by our issuers. So we have NYSE, which is the largest venue or it lists large, corporate venues, and it has the trading floor, and a unique market model that includes the human element. Then we have NYSE Arca, which lists 82% of ETF assets under management. That's a fully electronic market. Then we have NYSE American, which lists small to mid-size growth companies.
Stacey Cunningham:
It has a market model that includes a speed bumper delay mechanism, which some institutional investors prefer. And then we just launched NYSE National, which is not a listing venue but it offers a unique pricing model for trading, which facilitates some goals that some of our customers have. So the way we've laid it out is we've really tried to provide choice for our issuers and for investors, so that they can choose to interact with each of our markets in the way that they want. And that we can finally tailor the solution that we're offering to issuers that really meets their needs, based on the style company, size company or product that they're issuing.
Josh King:
You mentioned earlier, NYSE Arca and the growth of ETF, and the real trend toward passive investing now. I think it could be 80% or 90% of ETFs are listed right here at the New York Stock Exchange on ARCA.
Stacey Cunningham:
Yeah, exactly. 82% of all of the assets under management in ETF space, we list $3 trillion of ETF assets under management on NYSE Arca. That really started with the launch of the very first ETF 25 years ago. SPY, the SPDR fund was launched 25 years ago in conjunction with NYSE American or the American Stock Exchange, which is now NYSE American. But we've consolidated all of the ETFs onto NYSE Arca so that we can really tailor that venue, specifically for ETFs.
Josh King:
So in addition to its role as a trading venue, the NYSE has nearly 2,400 listed companies representing the biggest, most innovative companies from across the globe and long after their IPO. What does the NYSE mean to them year in, year out? I want to hear a little bit of Ralph Lauren, who was here yesterday. I want to hear what he said and have you talk about the NYSE, as a home to companies like his on the other side of his comments.
Ralph Lauren:
21 years, I remember ringing the bell and watching everyone scurrying around. I said, "Oh my God, this is scary." What you see in the pictures in that film is my life. That's a very glamorous part of my life. I didn't necessarily start out like that. I lived in the Bronx, I got married in the Bronx. I married my wife. I went to her high school graduation from college, and I worked hard. I never knew what I was going to be and what I was going to do. My father's an artist, but struggled all his life. I went out there, felt I had an idea. I worked for a tie company.
Ralph Lauren:
They were a good company. I thought I was only 24 at the time. And I said, "Can we do this? Can we do that?" And the company said, "Ralph, we don't think so." I remember that very clearly. I remember my boss saying, "You're not ready," but I was ready. I never thought I was going to be a designer. I never thought I'd be standing in front of everybody, but I was ready because something told me I had good ideas. And when I had an idea and I saw someone else come up with it. And I said, "Why didn't I? I wanted to do that. Why didn't I do that? Why did I wait for someone else to do it?"
Josh King:
Ralph Lauren, the American dream.
Stacey Cunningham:
There is no better example. That's exactly what we celebrate here every day. Ralph started selling ties in the Empire State Building over 50 years ago. He now runs a global company that employs over 20,000 people. That's what we're here for, right? We're here to improve the quality of life so that people have jobs, and they can invest in that success, and that growth and plan for their own retirement, and that of their families. And in the case of Ralph, they look a little better while they're doing it, too.
Josh King:
And skyrocketing up over all those years, right here at the NYSE to an $11 and a half billion dollar market cap.
Stacey Cunningham:
Yeah. It's exactly the American dream and it's something that we celebrate. When you talk about what we do here on Wall Street, it's often painted in a negative light, as if it's about making the rich richer and it's not. It's about providing opportunities for the masses.
Josh King:
This guy in the Bronx, who was making ties and just thought he could do it better than he could inside that tie company where they wouldn't let him pursue his dream.
Stacey Cunningham:
Yeah. And it's so inspiring to hear him. He had an idea, and he wanted it to grow, and he needed money to do that. So he came to the New York Stock Exchange.
Josh King:
You've taken an active role in advocating on behalf of companies like Ralph Lauren. Recently, your COO, John Tuttle, sent a letter to issuers where you stated that the transaction fee pilot, if adopted by the SEC, would harm the quality of the prices displayed by the public lit equities exchanges, such as the NYSE. What's the purpose of the transaction fee pilot?
Stacey Cunningham:
The markets have evolved a lot over the past 10 years in large part because there's been regulations that were adopted and it's changed. It's led to competition, which is good. So the cost to trade has come down significantly, but it's led to very significant fragmentation and that's not so good. And so there's some frustration among investors by that. What the SEC is looking to test now is if they adjust pricing, that exchange is charge, how will that change the dynamics? Our concerns around that, you just don't want to be testing the results and have our listed companies be the guinea pigs of that test.
Stacey Cunningham:
We want to make sure that any changes that we're making are thoughtful and that are going to lead to, as I said before, higher investor confidence and public displayed quotes. We do get concerned that the pilot, as proposed right now, would lead to wider spreads. So a wider bid ask spread that would lead to worse prices for investors. And frankly, we ran some analysis and very conservative estimate is it would cost investors over a billion dollars a year if we were to implement the program as designed.
Josh King:
You think about Ralph Lauren and the way his stock trades versus the way a competitor like Abercrombie and Fitch, A&F trades. These equities that compete against each other every day could be in different buckets and assign different fees and rebates.
Stacey Cunningham:
We don't want to get into a place where our regulator, our exchanges are picking winners and losers. And that's one of the reasons why we've been so vocal opposing it. We've also seen that the issuer voice is just missing from the market structure dialogue. And that'll be one of my primary focuses, as I step into this role is to make sure that when we're down in DC, talking to politicians and talking to regulators, that we're representing what our issuers are asking for.
Josh King:
So if you're a CEO or a CFO of a company that's listed not only on the NYSE, but on other lit exchanges where's your voice in this?
Stacey Cunningham:
Yeah. You have no say, right? So we view that as one of our obligations is to advocate on behalf of our listed companies, because we have access to the conversation to make sure that their voices are in there. And we're appropriate to bring their voices in more directly. But the way it's worked so far, the issuer voice hasn't been part, they don't have a say in it. Advocacy has been a big area of focus for us, and it will be going forward.
Josh King:
One of the first things you did in your role as president of the NYSE, as you'll have to for this time going forward, is speaking at investor conferences. You were this week at the Sandler O'Neill conference, as was Jay Clayton, the chairman of the SEC. I want to hear him talking about small and mid-cap companies. Have you react on the other side.
Jay Clayton:
To go back to what you're saying, Rich, if we aren't improving the performance in smaller and mid-cap stocks, the attractiveness of the public markets continues to go down. When I talk to people who have a choice, do I do another private equity round, or do I come into the public markets? One of the ideas on their mind is, "How's my stock going to perform? How's it going to trade?" They're actually starting to say, "Is it really worth it? Or do I have to wait until I'm in that much larger category to have the liquidity benefits of the public markets?"
Josh King:
You've spoken about your concern about the decreasing number of public companies. Where do you and the chairman agree and disagree about where the barrier to entry is and how do we bring that barrier lower?
Stacey Cunningham:
I agree with the chairman that we have created a market structure that really seems to be designed for large, public companies and large investors. And it's harder for the small or mid-size companies to take advantage because it's costly.
Stacey Cunningham:
There are a lot of things that they need to do to make sure they can comply with regulations. There's a lot of access to private capital. So we want to make sure that the barriers to entry for the public markets aren't so high that only big companies can step over them.
Josh King:
There was a huge company that went public on the New York Stock Exchange. Not too long ago, you worked with Spotify to clear the way for their unique listing. Let's listen to its founder and CEO, Daniel Eck, make his case for listing before their successful appearance on the public stage.
Daniel Eck:
And this is because I think the traditional model for taking a company public just isn't a very good fit for us. The typical IPO requires a lockup and we don't think that's the right thing to do. Our most valuable asset is our people. We want to treat them fairly and we want to empower them. And we have allowed shareholders and employees to buy and sell stocks for years. And that shouldn't stop just because our stock is becoming more widely owned. And since Spotify isn't selling any stock when we go public, we really entirely focused on the long-term performance on the business.
Daniel Eck:
So for us, the most important day isn't our listing day, but it's the day after, and the day after that. And this is when we'll continue the hard work of helping one million artists to be able to live off of their art. Another thing you may notice today is that we're actually live streaming today's event to anyone that wants to watch. And one of the reasons for this direct listing is that we want to be as transparent as possible and give everyone equal access to information about the company.
Josh King:
So Stacey, listening to Daniel, what were you thinking on that day of their direct floor listing, as the large crowd gathered around the Citadel DMM Post, it felt like a throwback to the days of old.
Stacey Cunningham:
It did. It did. I had been thinking about it for a long time, because we worked with Spotify for almost a year and a half on their plans. They really were innovative in how they wanted to access the public markets. They clearly saw the value in the public markets, but they didn't want to do it the way everyone else had done. And as Daniel said, they didn't need to race capital so they had a little bit of flexibility.
Stacey Cunningham:
So price discovery didn't happen during an underwritten offering the night before. It was really happening primarily during the opening of trading that day. So the trading crowd was very large and very animated, as they were trying to determine where Spotify going to start trading. And ultimately, it opened at 165.90 after a few hours.
Josh King:
Did the human element make a difference in that instance?
Stacey Cunningham:
Absolutely. It was the designated market maker that was working closely with the floor broker.
Josh King:
Peter Giochi.
Stacey Cunningham:
Yeah. Peter Giochi from Citadel was working with the brokers specifically, Morgan Stanley, who was the financial advisor for Spotify and was very active in that opening process. And trying to find where's our equilibrium, where do we match off buyers and sellers? Unlike an IPO where you have some reference to where shares traded hands the night before, it was really happening just on that opening process. So having that human judgment, finding that equilibrium, establishing where things have settled in was really unique. And the NYSE trading floor makes that possible.
Josh King:
What's the future for other events like that? The NYSE direct floor listings, large, still private companies like Uber and Airbnb may have all the capital they need, but they may want to provide liquidity for their stock or a currency to make acquisitions. Should we expect to see other unicorns lining up to take advantage of it?
Stacey Cunningham:
It's a small universe of companies that might want to consider a direct listing. If they don't need to raise capital right away, that's something that makes them a candidate for it to start but there are a couple of other things. Spotify had a very strong brand already. And so they weren't using the roadshow to really raise their awareness of their company. I don't think there are so many companies that fit that profile, where they have a strong brand and they don't need to raise capital. I don't think it's going to be a new trend, but there are some that might consider it.
Josh King:
After the break, Stacey and I talk about her path from the trading floor to becoming head of the exchange, and what it means for her and others that she became NYSE president.
Speaker 9:
Recently, my colleagues at ICE created the NYSE FANG+ index, which represents 10 of the next generation leading technology companies. It's an index that's equally weighted and consists of the FANG stocks like Facebook, Amazon, plus a few more like Buydo and Alibaba. We launched a future and now we're building on that franchise with a cash settled index option. An option gives an investor the right, but not the obligation to buy or sell a given security at a particular price at a point in time.
Speaker 9:
Now, we're doing that with the FANG+ index. NYSE FANG+ index options are cash settled, European exercised with $100 multiplier. And deliver fast and easy access to either increase your exposure to or hedge your existing exposure to the set of underlying securities. NYSE FANG+ index options are now available to trade exclusively on the NYSE Arca and American options platforms.
Josh King:
Welcome back. Joined by Stacey Cunningham, president of the New York Stock Exchange. Your appointment coincided with another personnel move of sorts. Let's hear from CBS.
Savannah Guthrie:
New York's popular, fearless girl statue is getting a new home in front of the New York Stock Exchange. You'll remember it first went up in March of last year, across from the famous charging bull statue near Wall Street. It was only supposed to be there a few days, but it became such a draw the city allowed it to stay. That's actually similar to what happened with the charging bull statue, which was itself, put up in secret without a permit in 1989.
Josh King:
Savannah Guthrie called you fearless girl. Do you accept that mantle?
Stacey Cunningham:
I think each of us has to be fearless. We need to not be turned away by any prejudices or biases. And I'm not just talking about gender. I'm talking about anything. We just talked about Spotify, who wanted to do a unique style listing. You need to be fearless. You need to take on the world and that's the message that fearless girl delivers. I view it as I'm just showing up for work, but if I want to set my sites high and make sure that we can make this organization the best it could possibly be, you need to be fearless.
Josh King:
State Street Global Advisors, which installed fearless girl sort of focused their message around greater representation of women in positions of senior leadership and on boards of directors. You've certainly got an earful about that in your first few weeks, as president of the NYSE. Has that idea percolated much since you've become president of this organization?
Stacey Cunningham:
Yeah. It's somewhat shocking when you look at the numbers. I mean, the fact that less than 5% of Fortune 500 CEOs are women and that number is shrinking is really surprising in 2018. It's definitely a topic that comes up a lot, especially as a woman leading the exchange, I get asked about it. I certainly hope that whether it's fearless girl or other high profile initiatives, we can come together and drive better change.
Josh King:
You wrote on LinkedIn a week or so ago that you've heard from people all over the world, including a male friend who said that he can now tell his daughter that they can grow up to be head of the NYSE or head of the CIA, as Gina Haspel got her new job the same day you got yours. Other feedback that has come in from around the world beyond that note that you publicly referenced?
Stacey Cunningham:
It's been a lot. It's been really frankly, very touching to see how many notes I've gotten and some of them in languages I can't read so I imagine they're saying something nice. But there's been a lot of sentiment around the fact that people I used to work with are happy to see that hard work could pay off. That you can climb the ranks.
Stacey Cunningham:
That's been really to touching. I've heard from people I haven't spoken to in 20 years that were excited to see my progress. I think the fact that there were so many people that referenced the message for children today is important. I frankly think we wait too long, too late in someone's life to tell them that they can go do whatever they want. We set some of those tones early on and not always the right way.
Josh King:
You said before that you never had to think too much about being a woman at the exchange because of the women who came before you. The first one was Muriel Siebert. Let's talk about her after this.
Muriel Siebert:
That was creating something no one had ever done before. There were people that I didn't expect who helped me and there's also a lot of hostility. You can't break a tradition that's 187 years old and have everyone love you. And the first day I went into the luncheon club people I knew very well, some of them would not even say hello to me. They were that angry. But three, former chairman came over and kissed me. One of the governors said to me, the day I joined, "How many more are there behind you?" Like I was going to lead a parade. For 10 years, I could say 1,365 men and me so it was pretty slow.
Josh King:
That's a range of comments from Muriel Siebert, but really was a trailblazer and someone who served as a North Star for you.
Stacey Cunningham:
Yeah. After the fact, I didn't know Muriel, I didn't know Mickey, as she was known. And when I started on the trading floor, I didn't realize that I owed that fact to her. And the point is that she pushed her boundaries for herself. She knew what she wanted and she went out and got it. And she may not have been thinking about how that was going to influence those that follow her.
Stacey Cunningham:
Frankly, she referenced the parade she wasn't planning, but I was part of that parade and I didn't know it. I didn't know I was getting in line behind until later. I looked back and I realized the significance of the fact that I was working in such a male, dominated environment that wasn't open to women just a few years prior and that's because she did that.
Josh King:
I don't know if you know this, Stacey, but Muriel also actually left the NYSE for a few years, like you did during your career. She served as the state of New York superintendent of banks before returning to her member firm. You spent some time learning a new skill at the Institute of Culinary Education or ICE. When most people make a major career move it's to reduce stress in their life. What made you leave the trading floor for an equally stressful environment?
Stacey Cunningham:
I knew it was time for me to move on. The floor was at a bit of an intersection in its evolution and adopting to technology. And the pace was a little slower than I would've wanted so I decided it was time for me to leave. And I knew I was always going to eat and that I like food so it was just fun for me. I wanted to go learn how to cook in a more professional environment. AI knew at the time it wasn't going to be a career for me, but it was just a passion. I just feel like I've been successful by following my passions.
Josh King:
Did you take any restaurant turns during the course?
Stacey Cunningham:
You had to as part of school. I spent about six weeks working in a restaurant on the Upper West Side called West. The executive chef was Tom Valenti, and I spent some time there, very quickly learning the ropes of the prep kitchen throughout the day. But once the internship wrapped up, I decided it was time to go back to work.
Josh King:
And what brought you back to the NYSE?
Stacey Cunningham:
I didn't come directly back to the NYSE. In fact, I spent a few years over at a competitor for a while. I ultimately came back to the NYSE in December of 2012. And it's interesting because I ended up going from one ICE to another because it was just 10 days after that, that the news that the Intercontinental Exchange was going to be acquiring the New York Stock Exchange.
Josh King:
You came back here in 2012 and it's now 2018 and you're in charge. What's the difference between then and now?
Stacey Cunningham:
We've built an entirely different team. Some of that team is from people, who were here and who have been at the New York Stock Exchange for 20 years, but were maybe in roles that weren't as high profile as they could have been. They shared the goal of wanting to be the best exchange out there so we elevated them.
Stacey Cunningham:
And then we coupled them with some new talent and people who had different perspectives, who maybe came from different either exchanges or other parts of the industry, or even outside the industry, to really build a team that was forward thinking. And when sitting here at the New York Stock Exchange, we have great pride in our history and our past, but we are so future focused and that comes from ICE.
Josh King:
Also, this focus, Stacey, toward maybe not necessarily the old, big board club, but the listed companies that put their trust and faith in us. The floor that we're standing on the sixth floor, the seventh floor, the old big board club, which was just about the traders and brokers, is now completely given over to the use of our companies that list here.
Stacey Cunningham:
Yeah. We have the world's greatest collection of companies so we felt kick ourselves out of this big space. I don't need a giant sized office and let's turn it into space that they can use. And our companies, their profiles have evolved. Some of them changing their own in a single company changing a lot throughout the years. But other than that, they're standing side by side with technology companies.
Stacey Cunningham:
In 2017, 86% of money that was raised for technology IPOs was raised on the New York Stock Exchange. They're standing alongside the General Electrics and the star ward companies that have been around for centuries. What we're doing is bringing them together so that they can make themselves stronger, as being part of the NYSE community, building that network, and facilitating their interactions.
Josh King:
ICE had a track record of modernizing exchanges in technology, and also closing down trading floors. What were your own expectations when ICE entered the frame and what was the reality?
Stacey Cunningham:
It was an interesting time and I've always been fortunate. I think every good career has a little bit of luck in it. The timing of my move to the New York Stock Exchange, I think was very, very lucky for me personally. Because ICE came in and the expectation was they might shut down the floor, but they certainly were going to shake things up. And if you look at the fact that a 12-year-old company was announcing its plans to acquire a company that was 220 years old, that in itself is surprising. But ICE really built its brand and its company on thinking about where the market's going, thinking about where their customers are going.
Stacey Cunningham:
Trying to determine how they can be well positioned to facilitate their customer's advancements and that was fun for me. I joined a company that was now, I had such passion for the New York Stock Exchange. I grew up on the trading floor of the New York Stock Exchange. But to get to be part of a team that was going to reinvent it and figure out where we were taking it, I couldn't have asked for more. The timing was really perfect. In fact, I remember at one point when we were trying to hire somebody into the exchange, and it was somebody that I knew pretty well, and I hadn't given him the hard sell on coming.
Stacey Cunningham:
I was trying to let him use the right path for him. Towards the end, when he sounded like he might not actually take the job, and he might go somewhere else, I just said to him, "Come help me reinvent a global icon," and I had him. There's not that many times you get to say something like that.
Josh King:
In this conversation, we've spanned a lot of time. We've heard from Muriel Siebert, we've heard from Ralph Lauren, we've heard from Dick Grasso. And yet here we are in 2018, headed in the years ahead under your leadership. Where do you think this all goes under ICE's culture and where the exchange can evolve from here?
Stacey Cunningham:
I think the ICE culture is built on being adaptive, built on being ready to seize opportunity and drive change. And Jeff Sprecker, our CEO, that's how he's created, not just his own path, but for everybody here. He's built a team of people that are ready to adapt to the market. And so we're going to see where our customers going and what new trends are out there. And we're going to make sure that we can help them get there.
Josh King:
Stacey Cunningham, good luck. Thanks so much for joining us in the Ice House.
Stacey Cunningham:
Thanks, Josh.
Josh King:
That's our conversation for this week. Our guest was Stacey Cunningham, president of the New York Stock Exchange. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or question you'd like one of our experts to tackle on a future show, email us at icehouseattheice.com or tweet at us at NYSE.
Josh King:
Our show is produced this week by Kristin Cost and Lizette Quang, with production assistance from Ken Abel and Steve Portner. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
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