What the NYSE and Nasdaq are doing to attract companies: 500 pounds of bacon and 14,000 hors d'oeuvres a month - and pickleball

By Charles Passy

Sure, they're about buying and selling stocks, but they're also about serving up the breakfast bacon - or hosting a pickleball match

To hear financial professionals tell it, the key difference between the two major equity-trading platforms - the New York Stock Exchange and Nasdaq - has to do with their histories.

In many ways, the NYSE represents the old guard of the investment community, with a legacy that dates back to the 18th century, built around America's industrial giants. Nasdaq, on the other hand, is the newer kid on the block, defined especially by the top tech companies of recent decades.

Some might point to another difference, however. And it has nothing to do with the buying and selling stocks - and everything to do with what's coming out of the exchange kitchens.

Arriving at the NYSE for a special event at its 121-year-old building in Lower Manhattan, guests are served its beloved, baked-in-house chocolate-chip cookies - five inches wide and made with a recipe that includes two types of flour and what an exchange official describes as an "undisclosed" variety of chocolate.

Meanwhile, at Nasdaq's headquarters in Times Square, they're all about the bacon, as in a thick-cut variety, sourced from a gourmet producer, that is served at morning gatherings - say, in connection with the ringing of the opening bell.

Of course, no company will tell you it chose to be on either exchange because of what's on the catering menu per se. But the fact that the exchanges are known for such food items - and, more broadly, for the events they create, for listed companies as well as the financial community in general - speaks volumes about how they run their businesses and attract companies to their platforms.

While trading remains their core concern, the exchanges have evolved a focus on what could be described as full-fledged party planning. They operate a busy calendar of events that range from the customary - yes, the bell ringings and the receptions attached to them - to the wildly unexpected.

The NYSE has hosted a pickleball match and, more recently, an elaborate concert commemorating the World War II era, with both affairs being held in its oversized, artifact-filled boardroom - really, more of a ballroom where hundreds can (and do) gather. Nasdaq has brought its share of boldface names to its modern-styled spaces - perhaps most notably the Village People once entertained the crowd at an event for a listed company.

It's about creating buzz for those listed companies and the exchanges themselves, say financial professionals.

"The whole goal is to get attention," said Christina Qi, chief executive of Databento, a market-data platform.

All this attention getting adds up to lots of events - and lots of food and drink. At the NYSE, some 140,000 catered meals are served annually, according to officials. There's also the exchange's in-house dining space, the 1792 Restaurant, which takes its name from the year the exchange was founded. It offers breakfast - try the avocado toast - and lunch for members of the financial community.

As for Nasdaq, it likes to talk about how much bacon it goes through at breakfast events - some 500 pounds a month, to be exact. And what about the end-of-day receptions, such as those tied to the ringing of the closing bell? Nasdaq officials say they pass out 14,000 hors d'oeuvres each month, and the catering menu lists options ranging from mini crab cakes to potato chips topped with crème fraîche and caviar.

'The whole goal is to get attention.'Christina Qi, Databento

Such partying comes at a price, of course. Officials with the NYSE and Nasdaq note they're not looking to profit from their events, unlike, say, a hotel banquet operator. Instead, listed companies are basically paying a pass-through cost for the goods and services, though that can clearly add up. The exchanges didn't provide MarketWatch with dollar figures for what listed companies spend, though obviously costs can vary depending on the nature of the event.

Listed companies pay fees to the exchanges for being on their platforms, but these are relatively modest amounts, especially in light of the valuations of some companies. At the NYSE, for example, the annual fee starts at $80,000 and tops out at $500,000, with an initial fee of $300,000.

The real money that exchanges make, according to financial professionals, comes in the form of transaction fees - that is, what they charge brokerage houses, trading firms and other financial institutions to buy and sell stocks - as well as data fees paid by those who want and need market information.

So the listed companies are essentially getting the party planning as a perk.

"This is all part of the Nasdaq value proposition," said Joe Brantuk, the exchange's chief client officer.

NYSE Vice Chairman John R. Tuttle emphasized that the service his exchange offers goes beyond major events. Companies can do smaller gatherings, too. And that can be especially valuable for those outside New York when they need to conduct business in the city.

"We want to be their field office in Lower Manhattan," said Tuttle. Nasdaq officials also noted that they can accommodate more intimate events.

Still, the events that typify the exchanges are the ones surrounding IPOs. These are often blowout affairs in which newly listed companies want to make as much fuss as possible and bring many of their employees to the event. Naturally, the exchanges are more than willing to play along.

The occasions can call for plenty of show and tell and some special accommodations. When Levi Strauss & Co. (LEVI), the legendary clothing brand known for its jeans, went public on the NYSE in 2019, it arranged to have employees, as well as traders, come dressed in - what else? - jeans and denim jackets. That required a waiver of sorts from the exchange, since it doesn't normally permit such casual garb on the trading floor.

And when Arm Holdings (ARM), a British-based technology company, went public on Nasdaq last year, it decided to celebrate in proper British fashion. So it worked with the exchange to set up a British pub on site, with fish and chips on the menu.

Arm also held a breakfast reception that day at Nasdaq, replete with the exchange's signature bacon. "The pancakes and waffles were amazing, too," said Phil Hughes, the company's vice president for external communications.

Nevertheless, Hughes echoes what many in the investment world say -that it's not about that IPO bacon when it comes to picking an exchange, but rather a sense of who's the right fit over the long run. "It's really about the partnership," Hughes said.

The exchanges host events beyond just those for the listed companies as a way to spotlight trends and ideas, and to have fun. The NYSE has been particularly active in this regard. It turned its boardroom into a pickleball court in 2022, with an exhibition event that featured some of the sport's top players.

And in early May the NYSE invited hundreds to that same space for "The Eyes of the World: From D-Day to V-E Day," a World War II-themed musical event, created by John Monsky, a private-equity lawyer who created the "American History Unbound" series. The program was a warmup to a performance that Monsky and his team planned for later that month in Boston, but Monsky said it was certainly meaningful to hold it at the exchange, which he said could help him "expand our audience."

Needless to say, presenting a concert event is a long way from the real business of an exchange - namely, the buying and selling of stocks. For that matter, so is serving bacon or cookies.

In the end, financial professionals say another underlying factor behind why the exchanges are so keen to hold events is that trading has largely gone electronic: Nasdaq has no trading floor, and the NYSE, which is owned and operated by Intercontinental Exchange (ICE) (ICE), maintains one, but it's not the hub of activity it once was.

So, the work of an exchange has become mostly invisible, but the events give each exchange a way to show companies and the financial world at large who and what they are. Or so says Justin Hanka, co-founder and chief executive officer of Hardenbrook Group, a company that invests in the technology and life-science sectors.

"Otherwise, it's just an empty office building," Hanka said.

-Charles Passy

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06-08-24 0948ET

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