View from the Top: Tony McCormick


Five Questions for Tony McCormick, CEO of BOX

June 2011


With close to 40 years in the derivatives business you might say Tony McCormick has done it all. Starting on the floor of the Mercantile Exchange, he joined Harris Futures and rose to CEO while also serving as managing director of Capital Markets for the Bank of Montreal. In 1997 he moved to Charles Schwab & Co as a vice president where he was responsible for managing its trade execution quality group and extensive business relationships. While there he chaired Schwab's Order Routing Committee and was a member of the Options Steering Committee.

In the year and half since stepping in as CEO of BOX, volume has increased significantly. At least part of the growth has been due to the exchange's focus on retail investing, including financial advisors "I think the learning curve on options is less steep for the younger advisors," he said. "They're more mathematically oriented, more quantitative and easily understand the analytics."

Another reason for the exchange's growth is the success of its Price Improvement Process or PIP. PIP insures that customers get the best price possible by enabling any participant in the market to compete for the trade. This happens almost instantaneously after the order has been placed. "While other exchanges now have some version of this technology" Tony pointed out, "BOX had the first, and still has the best."

While Tony is not a guy to rest on his laurels (see question 2) we did ask him to think about the past:

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

"Definitely, it's the technological advances. I remember when every order had to go through a printer; you'd tear if off and run it out to an actual physical pit where the order holder would put it in the pit broker's hand. With the backlog of orders it could sometimes be two hours before we could get trade reports out to customers."

"Now there's instantaneous reporting on trade information and open access to seven markets. It's a fantastic environment for customers, they just point and click. The customer may not know where the order actually went; they just know they saw a price and were able to transact on it. This really exploded the growth in our business."

What has been your greatest challenge?

"I think the major challenge in my career has been to keep moving, to stay abreast of what's happening and reinvent myself along the way so that I can add value to the overall process."

"I've gone through a lot of different pieces of the business beginning as a floor trader at the MERC and then understanding how to run a floor operation. From there I started an operation overseas and learned how to manage an entire subsidiary of a large multi-national corporation. At that point I completely shifted gears into another part of the derivatives industry and there have been many changes since."

"Once you stop and the world is still moving, you become pretty vulnerable. I've had friends that didn't evolve and the options world passed them by. They're out of the business now and doing other things because they weren't able to adapt."

What has been your personal proudest moment?

"I was very proud of what we accomplished as a committee when I was active in the Securities Industry Association (SIA, now SIFMA). We resurrected the options committee and I was the chair for three years. It was a good thing for the options industry to have a process to deal with industry issues. The committee provided the opportunity for exchanges to have input with the member firms, and together have dialogue with the SEC. I am proud of playing a role to get the process back on track and revitalize our industry in this area."

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

"It's going to add a great deal of liquidity to the marketplace. While there are active investors who feel comfortable managing their money, there's a large group that does not. They prefer to seek the guidance of an advisor and deal with an individual or group of people that know them and their financial goals."

"When that advisor uses derivatives like options it's good for the investor, and it's also good for the overall investment community because it adds liquidity to the market place. At the same time using options creates a certain amount of stability, because they are primarily using risk management tools when they use options."

Where do you see the industry in 2015?

"I anticipate very rapid accelerated growth in the industry. That's why we are seeing entry at the exchange level. As participants we see the industry is getting larger. Looking to 2015 part of the growth will come from the advisor world and part of it will be demographically driven. There's going to be a major transfer of wealth between generations in the near future. The receivers of the wealth are going to be much more conversant with derivative products and comfortable employing them compared to the previous generation. This is going to result in explosive growth for our industry."


Name Tony McCormick
Position CEO, BOX Options Exchange
Education BA University of Virginia, MBA Northwestern University
First Job Training Program, LaSalle Bank
Other Employment Harris Futures Corporation, Charles Schwab & Co
Achievements Board Member Chicago Mercantile Exchange (CME), Chicago Stock Exchange (CHX) and the Chicago Board Options Exchange (CBOE)
Organized and Chaired Options Committee for SIA (now SIFMA)
Little League Coach
4 Ratings
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