View from the Top: Michael Cahill


Five Questions for Michael Cahill, President & COO of The Options Clearing Corporation (OCC)

September 2011


When OCC first hired Michael Cahill it was because of his experience as a bank examiner with the Federal Reserve Bank of Chicago. OCC, founded in 1973, is the world's largest equity derivatives clearing organization. At the time OCC thought banks might want to join OCC and was looking for someone who could create membership standards for banks. As it turned out the banks were not interested, but Michael was.

"I saw it as an opportunity to work with people who were really knowledgeable; but the product, the issues, the processes and everything were brand-new. So it allowed somebody fresh, coming off the street who did not know a lot about the business, to very quickly get involved."

During Michael's first year at OCC daily options volume exceeded half a million contracts, today it can exceed 15 million. The key to its success, he says, is staying relevant. "There has to always be a reason why you're here," he explained. "The business needs to keep evolving."

Knowing so much about the option industry's history first hand, Michael is a natural choice for our five questions.

What is the biggest change you have seen in the options industry since you started?

"I've seen two major changes and they are very much intertwined. First, the scope of the business and how widespread and accepted it has become. Listed options are becoming more and more mainstream. And second are the advances in technology that have allowed the business to grow as fast as it has. Technology has removed any cap or limitation to options growth and enhanced the dissemination of education and information to a wider and wider network. Whether it's to enhance yield or protect your portfolio, options are a powerful tool and technology has allowed that message to get out."

What has been your greatest challenge?

"I think the greatest challenge that I've seen over the years relates to the technology issue. While we are operating the business we are also saying, "Okay, things are working wonderfully right now, but we need to plan ahead. What is the organization's role going to look like in three, five or ten years?" At the same time we have to take into consideration our clients who are also in the process of developing, building and implementing their systems. So we need to make decisions today that are going to play out years from now, but also remain flexible so that if things develop differently we can take the steps necessary to adjust."

"I've been at OCC a long time and we've been through two complete overhauls, new generations of our entire clearing system, top to bottom. First, in the '80s we went from flat files to databases. Then in the '90s we moved to near real time trade capture and processing. In the midst of that we realized we had to web-enable the data as well."

"There's some school of thought that in the next generation business will become much more like social media and that we'll just provide content and our users will write whatever apps their businesses need. I'm still trying to get my head around what that really means."

What has been your personal proudest moment?

"Three events came to mind. One was the way everyone here pulled together and slugged through 1987. Those were some difficult moments for all of us who worked in the risk area. We didn't necessarily like where we were standing but we had a handle on what was going on. It was ugly but we were able to respond because we had made the right investments and the right choices of systems."

"In 1993 OCC became the first clearing house to get a 'AAA' credit rating for counter-party risk and I was part of the team that made it happen.*  It was a real feather in our cap."

"In 2002 I was named President. Coming up from a staff analyst in a little cube many years ago and then being only the fourth president in OCC's history; that was a pretty proud moment."

What has been the impact of financial advisors' growing use of options?

"Even though the advisor program is still in its infancy, I think it has been one of OIC's real successes and that is going to continue to grow. And, as we educate advisors, we achieve a couple of things. One, they're including the appropriate use of options into investment portfolios. Two, as a trusted source to the investor, they are spreading the message about options even directing clients to the OIC website."

"Our focus on advisors also coincided with their realizing, 'You know what? I need to keep pace. My clientele wants this and it's my obligation and in my best interest to become better versed in this.' There has been a lot of growth in this area, but I think there is still tremendous potential."

Where do you see the industry in 2015?

"I expect there will continue to be a proliferation of exchanges and what might be called non-exchange entities or business models that will provide more sources of product. There are always people trying to build a better mousetrap and a trend I think will grow is more product-specific markets. Much like other businesses that realize they can't be everything to everyone, they will target one segment—commodity, currency, whatever. New technology will help enable this specialization and also the delivery of the message because they will be better at mining for clients."

"Also, I hope that by 2015 we'll have reached another generation of investors. I've always had a goal that someday employees of companies involved in the options business won't sweat when they get invited to career day at their children's elementary school and have to explain what they do for a living. They still may need to explain what an exchange is but I am hoping that options will be mainstream enough that like stocks or bonds, the fifth graders will have heard of them."


Name Michael Cahill
Position President & COO of The Options Clearing Corporation
Education BBA University of Notre Dame, MBA in Finance DePaul University
First Job The Federal Reserve Bank of Chicago as a bank examiner
Other Employment Chicago Mercantile Exchange, American Stock Exchange
Achievements Rising to President of OCC from analyst cubicle
Being a key contributor to OCC's receiving a 'AAA' rating in 1993*
Serving on Board of Trustees, Saint Mary's College of Notre Dame

* As of August 2011, OCC holds an AA+ rating due to the downgrade of clearing agencies as a result of the U.S. sovereign debt downgrade. For more information, please visit the following link:

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