July 11, 2025 • 54 mins
What does it take to keep global financial markets stable during extreme volatility and AI-driven trading? Chris Isaacson, Chief Operating Officer of Cboe Global Markets, the world's largest options market exchange, reveals the high-stakes playbook for building resilient systems, people, and processes that handle over a trillion messages a day without failure.
In CXOTalk episode 885, we go behind the scenes of one of the world's largest exchange operators to learn how they prepare for and manage market crises. Chris shares concrete strategies and the leadership mindset required to operate in an environment where nanoseconds and trillions of dollars are on the line.
Topics Discussed:
Building Holistic Resilience: The framework of "resilient people, processes, and platforms."
Preparing for Volatility: The "2X rule" for engineering systems to handle extreme scenarios.
Managing AI Risk: How to control AI-driven trading by focusing on effects, not intent.
Leadership Under Fire: The critical importance of composure and a codified cultural framework.
The Future of Trading: The operational realities of moving toward a 24/7 market.
Chris Isaacson is the Executive Vice President and Chief Operating Officer of Cboe Global Markets, one of the world's leading derivatives and securities exchange networks. He oversees all of Cboe's technology, operations, and risk management.
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🔷 Episode notes: https://www.cxotalk.com/episode/inside-the-worlds-largest-options-exchange-where-milliseconds-mean-millions
Video Chapters:
[00:00] Introduction to Cboe Global Markets and the Importance of Resilience
[01:04] Building Resilient Systems, Teams, and Processes
[10:01] Handling Market Volatility and Preparing for Extreme Scenarios
[13:15] Role of a COO in Maintaining Market Stability
[14:14] Lessons from Market Crises and Risk Management
[16:41] Generative AI and Risk Controls in Financial Markets
[19:33] Managing Risks in AI-Driven Trading
[23:53] The Evolution and Limits of Trading Speeds
[27:52] Leadership During Market Turbulence
[29:53] Exploring 24/5 and 24/7 Trading in Financial Markets
[35:35] Leadership and Building a Global Team Culture
[37:42] Navigating Market Volatility and Personal Reflections
[40:25] Efficiency and the Role of Data in Financial Markets
[43:02] Managing Risk and Educating Investors in Derivatives Trading
[49:00] Future of Markets: Cross-Asset Trading, Digital Assets, and AI
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Today on CXO Talk Episode 885, we explore the world of global
financial exchanges with Chris Isaacson, Chief Operating
Officer and Executive Vice President of SIBO Global
Markets. We'll discuss real world
examples of market resilience, the strategic balance between
(00:22):
institutional and retail investors, the role of
technology such as generative AIand ultra low latency systems,
and much more. SIBO Global Markets is one of
the leading derivatives and securities exchanges in the
world. We operate 27 markets around the
world, including the largest options exchange in the world.
(00:45):
We have bell bellwether productslike the SPX and the VIX Index
that you've likely heard of before.
And I'm the Chief Operating Officer, as Michael mentioned,
overseeing all of technology operations and risk for SIBO as
well As for business lines that we run.
You talk about resilience. Explain that to us.
(01:08):
Tell us why that's so important for you.
Our purpose is building trusted markets and resilience and
trust. Go, go directly together.
Most people don't understand theexchanges because they're kind
of behind, behind the front door.
Investors usually interact with the market through an
application on their phone or application on the desktop, but
(01:30):
don't really think about how theexchange operates.
And we, we match buyers and sellers in a fully electronic
way. And they expect that that's just
going to work 100% of the time. So resilience is, is part and
parcel with how we operate our exchanges every day.
It just has to work all the time, every time.
(01:52):
And therefore we design and engineer our systems so that
when things do fail, which any system that's ever been created
there, there are failure scenarios.
You first assume that something can go wrong and you plan for
those so that you can fail over very, very quickly and make it
seamless to the users so they don't even recognize if a
(02:15):
failure has occurred in the system.
So when we think about our systems, they need to be fault
tolerant in order for them to beresilient for the investors, for
the markets, especially during the most volatile times.
This issue of resilience, and let's face it, you have to be
up, obviously, right? If you go down, that's very
(02:36):
expensive for a lot of people. So when you talk about
resilience, is it primarily technology?
Are there cultural dimensions behind the scenes?
Like I've like, you know, every time a pager goes off, do does
everybody in the company sort ofjump and say, Oh my God, we have
to respond instantly? Like how does that work?
(02:57):
So it's not just the platforms or the systems, it's it's the
people, it's the processes we have in place.
It's even the places where we work.
We're always thinking about how to build and and run resilient
teams. And those resilient platforms
come from resilient people. So in the process we put in
(03:17):
place demand that we we operate in a resilient way.
So as we think about it, yeah, fail safe systems, we need to
have automatic failures. Of course, that is engineered
from the start. But also people, we have very
rigorous incident management protocols and we have very
rigorous change management protocols.
We run through and we run a consistent testing of all of the
(03:40):
backup systems both in our primary, primary sites and our
secondary sites. And on weekends, there's really
consistent testing through many,many, many different layers that
are really engineered and run bypeople and then bolstered by
processes that serve the people and the platforms to make us
(04:01):
resilient. So resilient people build
resilient platforms using resilient processes.
So that's, that's the way we think about it holistically.
And it's it's a mindset as much as it is a technology platform.
And you're chief operating Officer, which means that you
are ultimately responsible for these operations.
(04:26):
Can you describe the kind of behind the scenes demands that
this places both on the technology as as well as on the
people and, and again, how you, how you kind of think about
this, how you manage this and isit the same or is it different
from managing a business where there's less real time pressure?
(04:49):
It is different than than managing maybe a, a business
where there's not mission critical systems.
We consider these mission critical, you know,
systematically important infrastructure that we're
operating around the world in different, different countries.
So it does require a different level of intensity and
intentionality. And it, it forces you to have
(05:09):
very, very good communication both electronically and you
know, person to person to make sure that everyone is in the
loop immediately when any issue comes up because things will,
things will go wrong. And when they go wrong to ensure
that you have very rigorous playbooks that you can follow
and you can systematically and consistently follow them to
(05:32):
solve whatever problem might come up.
It's a very fast-paced environment because in the
markets seconds and nanoseconds count.
And so whenever anything comes up, we want to address it
immediately in a way that's as seamless to customers as
possible. So there's that's actually part
of the fun of running markets ismarkets of technology are very,
(05:54):
very dynamic. And over the last 20 to 30
years, you've seen the electronification of markets
from from trading pit. Trading pits to really fully
electronic, we still have one trading pit that's quite active,
but. The rest of our 26 markets are
fully electronic and therefore they're, you know, operating at
the speed of light. And when something goes wrong,
(06:15):
it can go wrong very quickly. And therefore we're we are very
quick in our response in the communications.
It also requires a level of monitoring around the system and
observability around each one ofour exchanges, each one of our
platforms. That we have it instrumented in
a way that we can see not just the front door, but every aspect
(06:37):
of that system. And the alerting is is.
So dynamic and so pointed that it can highlight the exact issue
that might be going on that we need to address in a very
precise way at the point at the point of issue.
Tell us about the the training that you do of these folks
because the folks that are doingthis monitoring, I have to
(07:00):
assume are very, very experienced and have that
intuition of how to respond in case of whatever type of blip
issue would that that may arise.We operate 27 markets around the
globe and the way in which we train our associates is is based
(07:22):
on a globally consistent platform.
So we operate a platform called SIBO Titanium.
Which runs all of our equities options in futures and markets
around the world. And I, I mentioned that because
when you're training great associates, great colleagues, it
increases the ability to train. Them in a.
Consistent way on a consistent platform so that somebody
(07:45):
sitting in Sydney, Australia or Chicago or New York or London,
they're looking at similar a very, very similar platform that
is globally consistent, but locally optimized to the nuances
of that country or region or market.
So we can train them on the common aspects of a global
platform and then they can learnthe nuances of their specific
(08:06):
market. And that allows us to have a, a
follow the sun model where somebody out of region, but when
the sun is up for them but not for us in the US, they can know
the market, know the technology and respond very quickly in an
appropriate way. We've invested a lot over the
last three to four years in making sure that we just don't
(08:27):
have somebody at the end of the line, but somebody who really
knows what they what they're doing in an immediate way if
something were to come up. And I assume that all of this
falls under into that category of resilience that you were
talking about earlier? Absolutely.
It's all part of resilient people building resilient
platforms using resilient processes.
(08:48):
We, you know, I think I, Michael, I grew up on a farm in
Nebraska. In a little personal anecdote
here, I was thinking about wheredid the resilience come from?
And, you know, I saw my parents go through ups and downs and,
you know, it's a very cyclical business that they're in.
And invariably on the farm, things would go wrong, things
(09:10):
would break. And then I also thought about, I
was a decathlete in college and you run 10 events over 2 days
and you have to think about, OK,did the last event go well?
It doesn't really matter. I have to have to get to the
next event and I have to be resilient through that next
event and be focused and keep calm and, you know, carry on in
(09:34):
the, in the moment. So I just we try to hire people
that are really humble, hungry and smart and are willing to
really stay cool and calm duringduring crazy times in the
market. I want to make sure everybody
knows that you can ask questions.
If you're watching on Twitter X,use the hashtag CXO talk.
(09:56):
If you're watching on LinkedIn, just pop your question into the
chat. And we have some questions that
are coming in. But Chris, just tell us about
volatility and how you respond to market volatility.
It's a very broad and expansive topic.
You know, SIBO, we actually created the VIX index decades
(10:20):
ago. So if you look on, you know, if
you're watching financial news, you'll see the VIX and you'll
see it across Bloomberg and other tickers you might see.
So we've we've measured. Volatility created an index for
it and trade trade futures products on the VIX index.
So there's a whole volatility ecosystem of product and trading
around it. But your question is around how
(10:42):
do we handle volatility and volatile times in the market.
And I just want to mention even,you know, recent history.
So of course in April there was,there was a lot of terror for
talk, there was Liberation Day, there was an incredible amount
of volatility that occurred at the beginning of April and.
You. Don't prepare for volatility
(11:02):
during volatility. You.
Prepare for market volatility and the stresses that will come
to your exchanges and platforms in the quiet times well before
it arrives. So that goes into the
engineering discipline we have. We're always building our
systems to handle at least 2X what we've ever seen on the
largest day. And then, you know, on more
(11:24):
micro level, you know, we handlemuch multiples of that on a
second time frame or a minute time frame so that you're ready
when the market bursts. Very episodically, the way the
markets work is that it's there's a lot of times where
it's low volatility in the, the messaging is roughly directly
(11:44):
related. The messages we must handle
orders and quotes and trades, they're roughly directly related
to how volatile the market is. So times of extreme volatility
when the VIX goes above 50 or 60or 70 or even 80 during, during
COVID, you would see extreme messaging traffic as as firms,
(12:06):
customers, investors are trying to manage their risk.
And so you must be prepared before.
And that's where we're testing on a very regular basis at
multiples of what we've ever seen.
And I'm extremely grateful to the team that that I get to
lead. Everything we do here is a team.
There's there's no single personwho does it all.
(12:29):
And because of all their great preparation in April, we're able
to handle things with without issue because we'd prepared for
months and really years of engineering discipline in
advance to handle on a single day in April, for instance, we
handled more than a trillion messages without issue.
And that's, you know, it's very rare to be in a business where
(12:51):
you can talk in trillions of messages managed in a day.
And yeah, very grateful for the team that we we made it through
as did frankly the the market ecosystem, other exchanges,
clearing houses. While there was great
volatility, the market infrastructure handled it well.
Subscribe to the CXO Talk newsletter.
Go to cxotalk.com. You're part of our community and
(13:14):
we want you back. To what extent do you see your
role as being at least partiallyresponsible for maintaining
market stability during periods of extreme volatility?
I view my role as CEO of an exchange operator and really
overseeing exchanges to, to be asteward of the markets, to
(13:39):
operate fair and orderly markets.
As much as it depends on us now,we don't, you know, we don't
trade our customers who are broker dealers, they trade,
they're the ones who put in the orders, the bids and offers, and
so they determine the price. Our job is to steward the
markets, to create fair and equal access, and then to
(13:59):
operate fair and orderly marketsand to put trading mechanisms in
place and safeguards in place sothat if prices get dislocated,
they don't get dislocated for very long or too far.
So, you know, in my history in the markets, which is now 20
years, 20 plus years long, I've been through a lot of different
(14:21):
points of crisis and volatility,from the great financial crisis
to the flash crash to COVID to, you know, recent tariff wars.
And each time the market, the collective market and not just
SIBO, we learn lessons and then we apply those.
So for instance, the flash crash, which occurred in in 2010
in the US really had to do with how electronic tronified the
(14:45):
markets had become. But there weren't quite enough
safeguards in place to avoid runaway prices going too high or
too high or too low. And so after that limit up limit
down was implemented in the US equities market and that has
that has been incredibly effective since then in avoiding
(15:06):
stock prices in the US going going awry beyond certain
trading limits. And it was an idea frankly that
was borrowed and copied from thefutures market.
This limit up, limit down. That's just one example of good
trading risk management measurements that have been
taken in improvements. Also market wide circuit
Breakers have been put in place.So if the S&P 500 goes down a
(15:29):
certain amount, believe it's 713or 20%, the markets will take a
pause overall and not not keep trading to give people a chance
to catch their breath and then come back with with with a more
cool head and then the market can decide what the right price
is. So it's been rewarding to be
part of those changes in the market because I view our role
(15:51):
as a steward of the market to create fair and orderly markets
for the good of investors. So you are creating the context
or the the container if you will, within which the markets
can operate. And your job, as you're
describing it, is to make sure that that context, that
(16:12):
environment, is fair, balanced, and works no matter what.
Is that our accurate way to put it?
I think you're spot on, Michael.That's exactly right.
We need to create a fair and equal playing field for for all
investors and trading participants to operate and to
come and trade. So, you know, the rules need to
(16:33):
be very fair and open and transparent and the playing
field needs to be level. And so we we take that with
incredible seriousness. We've got 2 questions.
The 1st 2 questions are very similar relating to generative
AI with a little bit of a, A twist in each case.
(16:54):
So let me let me take the first one.
This is from Anthony Scrifignano, who is the former
chief data scientist of Dun and Bradstreet.
He's been a guest on CXO Talk and now does all kinds of
interesting things that he's notallowed to talk about.
And so I know not, I know well enough not to even ask.
And Anthony says this. In particularly in times of
(17:19):
disruption and geopolitical volatility, small perturbations
can cause significant short termmarket effects.
Please share your thoughts on the need to detect Gen.
AI introducing disinformation allowing malefactors to capture
(17:39):
short term gains. The use of generative AI in
financial markets is not new. And I think in our customers we
don't have full visibility into how they're using generative AI
to to then inform and to inform their trading decisions or
investment decisions. We're using generative AI to
(18:01):
help as a productivity multiplier.
Primarily. We've formed an AI center of
excellence and have, you know, 1200 of our associates that have
been trained as I think about answering your, your direct
question, how do we, how do we avoid, you know, small changes
coming from Gen. AI having an outsized impact on
(18:22):
the market? I think it goes back actually to
those maybe less, less interesting, but very important
risk controls that we have in place.
Regardless of how the order was generated or how the order was
informed. The risk controls are really
important to make sure that if, if an algorithm goes amuck
(18:45):
because of because of generativeAI, the risk controls are going
to stop it from going too far awry.
And we've seen those risk controls that have been added
over and over and over that havehave stopped bad things from
happening where you might have an algorithm or whatever cause,
cause an issue in the market. So that that's not maybe as as
(19:08):
sexy or whatever as you would expect to hear from an answer.
But I, I think it's, it's the truth is that good risk controls
like limit up, limit down, like drill through protection, like
market wide circuit Breakers, etcetera, help prevent runaway
algorithms from from having an outsized impact on the market.
Let's go to LinkedIn now. And this question is, is very
(19:32):
similar and it's from Preeti Narayan.
And she says, given the rapid rise of generative AI and
trading strategies, how is SIBO preparing to manage the risk of
herd behavior where multiple market participants may act on
similar AI generated signals? Preventing that is probably
(19:56):
impossible. We we can see the effect of it
if there is herd of behavior andthe effect of it would be that
price movements are outsized forwhatever the triggers in the
market might be. And that goes back to where how
are the risk controls within thetrading firms set, which really
all trading firms have chief risk officers that this is this
(20:19):
is their day-to-day work thinking about what orders go
out the door to the exchange. So there's multiple layers of
controls and then that within the exchange, there's risk
controls as well to say how muchof A price movement is allowed
before, before the order is rejected that might be generated
by AI. And then if for some reason
(20:40):
orders get get out there that that become clearly erroneous or
are obvious errors. There's, there's actually rules
in securities law in the US and elsewhere that define what is an
erroneous trade and it's called obvious air and options are
clearly erroneous in US equities.
And those are very well defined criteria.
(21:02):
And so that those trades or are adjusted or they're, they're
actually taken down as air trades in unique situations.
So multiple layers of controls in order to preserve fair and
orderly markets. So essentially, as you said, you
are focused on the activity, youdon't worry about the
(21:27):
intentionality, what's in the mind of the trader, but you are
looking at the actual trade that's made and then you have
systems to evaluate those, thosetrades, the risk and so forth as
he was just describing. That's right.
We look at the effect rather than we, you know, understanding
the exact intent or the origination of the order is
(21:48):
sometimes not clear to us. I will mention as as an exchange
operator we also have an obligation and to take it very
seriously to do regulation on our exchanges.
So we do market surveillance of all of our markets looking for
any manipulative behavior or behavior that might be out of
out of order. And there are well, well worn
(22:11):
patterns of what manipulative trading behavior looks like.
And then, you know, our independent regulatory
department with with their separate staff look at that and
they follow up with trading participants if they see
anything that does not look likeit's fair, orderly or with with
wrong intent. So that's a key part of the way
(22:31):
that the exchange industry has been created.
That's that was part of, you know, securities law put in
place at least in the US in the 1930s.
And I think it's good, it's goodregulation that that exchanges
have market supervision or market regulatory departments
that look after the fair only markets from a manipulation
(22:53):
perspective to ensure there is none going on.
And that again that's independent of our trading
platforms and systems. The the data flows into the
regulatory system, but that's done by separate people that are
really focused on making sure that there's no manipulation
whatsoever. How do you divide the regulatory
(23:15):
or the, the evaluation function between the exchange versus
external regulators and and really quickly please, because I
there's so many questions stacking up now.
We take that responsibility on in different jurisdictions as
there's different stories and some some countries the the
prudential regulator will do a lot of the surveillance.
(23:37):
In other countries do we do a lot of surveillance on each
market and then there's shared surveillance sometimes depending
on the market. So it's varies by country and by
region, but one way or another it's covered either by us, the
exchange, or by the prudential regulator.
On Twitter X, we have a questionfrom Chris Peterson.
This is more on the technology side.
(23:59):
He's wondering if, number one, you've seen an evolution in
trading speeds over time or it'sbeen big step changes and #2 do
you see any floor where trades just can't get faster with
current technology? There have been a constant
evolution of trading performanceand speeds, you know, going
(24:23):
latencies going down, throughputs going up, etcetera,
with data rates going, you know,very, very large and always
increasing. But then there's been a few
times where there's been step functions in performance.
So 20 plus years ago when I started in the industry, you
know, it was a few 10s of milliseconds mattered and that
(24:43):
was, that was kind of state-of-the-art.
And now it's single digit or 10sof nanoseconds is really what,
what matters to people. So that's been a constant
evolution. But there's been times when
technology has, has had a step function forward with, you know,
the introduction of field programmable gate arrays.
So Fpgas that most trading, you know, highly sophisticated
(25:06):
trading firms use. I think that that really had a
step function of how fast our customers can respond to our
market data to enter orders. And also I think the different
well I know the the different vendors we use, you know,
network equipment vendors, server vendors, switch vendors,
etcetera. They've made step functions at
(25:27):
certain times that allow for much more deterministic and fast
delivery of market data or or inbound messaging.
So it's been a constant evolution and been it's been
actually really fun to be part of.
And your second question I thinkwas how is there is there a
limit to how fast things can go?And, and I the real answer is
(25:49):
yes, of course, because the speed of light is the speed of
light and are we approaching that?
I would say yes, but there will always be an incentive to get
faster. It will just be the the marginal
in the marginal improvement or reward from being faster, I
(26:11):
think will decrease over time. But we've seen it's just, you
know, as I said, the time scaleshave gone from milliseconds or
seconds down to nanoseconds. But those nanoseconds matter
enough that trading participantswill continue to invest very
heavily to ensure they can respond.
And, you know, and I think otherpeople might have the different
(26:35):
opinions about whether or not fast markets are good or not,
but the fact of the matter is fast, efficient markets create
good competitive prices for investors.
So on the whole, I think this evolution has been been great
for investors. Elizabeth Shaw has an add on
question to this and she says when is speed not your friend?
(26:55):
Speed can not be your friend when, if the market is moving
super fast and and if if you're not trading, if you're
investing, and I think speed doesn't necessarily matter that
much to you. If you're, if your time horizon
is days or weeks or years, whichfrankly, I'll tell you I'm, I'm
an investor, not a trader, then speed doesn't really matter as
(27:19):
long as I can log into whatever app I might have and with
whatever broker and I can, you know, get a fill whenever I need
it within a few seconds. So I'd say that in that way,
it's that it doesn't really matter.
It may not be my friend, but it isn't doesn't matter as much.
If I'm a training participant ofa timescale is very, very tight,
(27:41):
then then I think it can be yourfriend or your enemy, depending
on whether or not the training participant has has invested
enough in their technology infrastructure to be
competitive. Let's grab another question
here, and this is from Twitter from Tishiana Johnson, who says
you talked a lot about resilientpeople.
(28:03):
What is something you have foundhelpful when leading during
turbulent times? And I'm going to add not just
turbulent times, but what have you found helpful in leading
when the market is melting down?For people that are not familiar
with the markets to kind of be overcome by the moment when it's
(28:26):
very volatile and things can be moving very fast.
But I've had the great pleasure of working with incredible
people for 20 plus years in the market.
Many of the people I work with today, I've worked with for, for
more than a decade and they've learned to keep their calm and
think very clearly during times of stress when the market is is
going, going quite crazy. And, and that, that calmness to
(28:53):
keep calm and carry on, I think is absolutely vital.
And I think it's vital. And if you're investing, if
you're trading, but also if you're running exchange
platforms, you need to keep yourhead, keep composure, keep
poised to make clear, quick, concise decisions that are in
(29:14):
the best interests of the markets and investors.
And I've seen the team that I get to work with do that
consistently, always thinking about what's the best for the
market and on what time frame dowe need to make this.
And you need to prioritize the things that have to be done
immediately and do it with excellence.
Sounds like the airline pilot model.
(29:35):
Have you ever heard airline pilots that their talk during
times where there's some problemgoing on?
It's traffic, air traffic controllers.
It's extraordinary the level of calm rationality that they have
as literally their world is potentially ending.
Yes, I think that's a great analogy, a great example.
(29:57):
Clearly the stakes are higher there 'cause people's lives are
at risk here. You know, people's lives are
thankfully not at risk in the markets, but it's very important
'cause people's livelihoods and their financial well-being is.
And so we take that seriously and we need to make great
decisions with a clear minds andand not be ruled by emotions or
hysteria. On Twitter, X again, Craig
(30:20):
Dorchester says speaking on market volatility, he's heard a
lot about 24 by 5 trading. How does SIBO view the
practicality of moving to it? And are there any hurdles you'd
anticipate with this shift? And I'm also curious about not
(30:41):
just 24 by 5, but 24 by 7 because we've all been in
situations where we see trading happening outside of normal
hours and us investors are like,you know, twiddling our thumbs
as either the market is shootingup or the market is tanking and
(31:05):
we can't do anything about it. 24 by 5 and 24 by 5.
Trading is is here and is and the markets that don't already
offer it is going to come even more so SIBO, we already offer
24 by 5 trading or nearly 24 by 5 trading in our futures market.
So VIX futures and other futuresproducts as well as SPX and VIX
(31:26):
options as well as our FX markets all trade 24 by 5 today
are nearly 24 by 5. Now I think your question maybe
more specifically about the equity markets or more
specifically about the US equities markets that today on
exchange we're really open. We are open from 4:00 AM to 8:00
(31:46):
PM Eastern. And there's a lot of industry
chatter and good discussion about making that 24 by 5.
And we at SIBO will be ready for24 by 5 trading as soon as I'll
say the industry plumbing is ready, which is includes the
consolidated tapes as well as the DTCC, which is where all
clear, which where all trades are cleared in US equities.
(32:09):
So as soon as the industry infrastructure's ready, we will
be ready to offer that. I think it's good you can trade
off exchange 24 by 5 today. But you know, I think investors
really want a more stable transparent way to trade between
those hours that aren't covered today, which would just be 8 M
Eastern to 4:00 AM Eastern that that 8 hour window which we
(32:32):
lanned to close. We have the technical capability
to do it, but the industry needsto be ready because there's a
lot of industry processes that depend upon some sort of change
window, the trading day, rollover, you know, cash
movements, margin movements. There's a lot of stuff that goes
on overnight, for instance, in the US or whatever overnight
(32:53):
might mean in that in that country that need to be
reengineered to make sure that trading can be seamless.
Because we want the investor experience to be good when, when
they when they sell, we want them to get their cash when,
when that trade settles. And when they buy, we want to
make sure they get the security in their account.
And all that back office stuff needs to needs to be worked
(33:18):
through very clearly. Now 24 by 7, Michael, I want to
answer that question. Yeah, clearly digital assets
have been trading 24 by 7 for years now and we we actually
have a clearing system Cibo clear US that that can clear
transactions 24 by 7. And so that's where I eventually
think a lot of asset classes will go.
(33:41):
But what doesn't happen on the weekend is right now at least, I
mean, you have Fed wire windows and banks, the banking system,
traditional finance, a lot of that is closed on the weekend.
So are you going to have a huge margin call on Friday to make
sure there's enough capital in aclearing house to trade over the
weekend and handle any volatility that might happen
(34:03):
over the weekend? I think there's probably a place
for stable coins or things like or tokenized assets to play in
truly getting to an efficient 24by 7 market.
But in this way, I think digitalassets are probably leading and
we'll probably get there over time with more standard
equities. Very interesting.
(34:23):
The influence of digital assets,digital crypto currencies on
existing markets. That's a it's a kind of a
fascinating connection, I think.Yeah, it is.
I think there's a lot to be learned both ways.
And you see now the kind of whatis the, what is the proper and
good connection of traditional finance with digital assets or
(34:47):
decentralized finance and a bit more clarity coming to what is a
digital asset and how should be,how should it be regulated.
So we welcome the greater clarity so that under proper
regulation, you know all assets that customers really want to
trade and invest in can be done in a seamless and consistent
(35:07):
way. Folks, now would be a very good
time to subscribe to the CXO Talk newsletter so we can keep
you up to date on shows that we have coming up.
You're part of our community. You guys are awesome and we love
your questions. So go to cxotalk.com right now
and sign up for our newsletter and that way you can join us
(35:30):
every time we do this. It's really fun.
OK, let's go to another question.
I'm just taking these in order. And on Twitter, ex Tishiana
Johnson comes back and she says,how do you manage and build
culture among teams that are spread out across multiple
countries and time zones? Cause for me, I don't want my
(35:53):
passions is leadership development.
I help. I help executive sponsor the
SIBO, lead the way with our headof HR here at SIBO.
And I'm just really passionate about building leaders because
as leaders get better, then everybody gets better and then
the culture gets better. From the very beginning of my
career, you know, I've, I've read a bunch of leadership books
(36:14):
and, and whatnot. It's, I think it's a discipline.
Leadership is a discipline that people can get better AT.
And so leaders set culture. And here at SIBO and across my
career, really wanted to work with people that are humble,
hungry and smart. That comes from a book.
You know, Patrick Lincione wrotea book called The Ideal Team
(36:35):
Player. And I just really enjoy reading
his books amongst others and tried to live those values here
at SIBO amongst other values about being Better Together.
And so if you find people that are humble, hungry and smart,
that live our values and are competent, then they can connect
in a distributed fashion around the world in person.
(36:58):
Collaboration's also very important.
So we, you know, we fly around the world a fair amount in order
to have those really critical inperson connections, especially
to do intensive training in different regions so they can
learn that common platform, but then be able to execute when the
time comes. So it's it's a continual
(37:19):
investment to build culture. I think culture is as are more
important than strategy. And even though this is a highly
technology driven business, I believe it starts and ends with
people. I care deeply for people and I
want people to to be led by great leaders doing great things
(37:40):
that are that are humble, hungryand smart.
This is from Anthony Scrifignanocomes back and he says your
decathlete background is perfectfor your role.
It's definitely not a Sprint. Crisis and volatility also
demand the ability to pivot immediately.
What skills do you rely on to get others to move with you
(38:02):
quickly but thoughtfully during uncertainty that demands action?
I think this is built with experience, so you have folks
that we work with, folks that have worked, have been in the
markets for decades, that have learned.
You have to be agile in the way you think 'cause the market is
new every day. No market is the same as it was,
(38:23):
you know, an hour ago or a day ago or a year ago.
So they need to be agile in their thinking.
And then as as we hire young people out of school, out of
college, they learn how to deal with the dynamism of the market
and to respect humbly that this is going to be a different
situation. We're not never going to see two
situations that are exactly the same.
(38:43):
And with that humility, you say,OK, we're just going to learn.
We're going to apply what we've learned from past experience and
then we're going to modify it asneed be to deal with whatever
might come in, in, in new marketconditions.
So that's that's what I'd say from a how to handle new dynamic
situations. Andy on Twitter X says it sounds
(39:07):
like you have a tough job as there's been so much volatility
in the markets lately, putting additional stress on financial
market systems. What do you enjoy most about
your role and what do you enjoy the least?
Most dealing with really, reallysmart, humble, hungry, smart
people that are dead they're just super dedicated and
(39:29):
committed to building trusted markets.
They, they believe in our purpose and they believe in what
we're doing that it helps building trusted markets, helps
people eventually and ultimatelyinvest their capital and it's
about their financial well well-being.
So that's, I think that's by farthe best part is working with
great, great people. You know, it can be stressful,
(39:51):
but you know, being a former athlete, I kind of like the
intensity that comes with the market.
So at times it can be a bit muchin the, in the most stressful of
times, but I do really like an intense work environment.
I think it's very competitive work environment.
And one of our guiding principles is competitive team
spirit. So we can match the intensity of
(40:14):
the markets together. I love the questions that come
in, and I always try to prioritize questions from the
audience over my questions. And this is now from Arsalan
Khan, who has an interesting question.
He said what processes should beabolished to make things more
(40:35):
efficient, and he also wants to know the role of data in all of
this. The markets need to continue to
evolve to make things more efficient.
And you've seen in the last couple years we've, you know,
there's been a settlement cycle in, in the US and other
countries. It's taken 2, maybe 3 days and
that's been been the standard practice for decades, many,
(40:58):
many, many decades for trading for settlement of trades to
happen. That's now gone to T + 1.
So on AT plus one basis, I just think there's a lot of
disruption and and reengineeringto be done on the post trade
side to ensure that there's evenmore timely settlement clearing
and settlement of transactions that will allow for easier
(41:19):
movement and access to capital in a very capital efficient way
around the world. So I'd look for more kind of
disruption and reengineering there.
And Michael, can you remind me of the second question of this
caller? Arsalan is asking about the role
of data, and I'm sure that's a big important topic, obviously.
(41:39):
Yeah. You can imagine our salon with a
trillion, at least a trillion messages in a day.
We have an enormous amount of data that's growing within our
enterprise and it's highly sensitive confidential data, but
from our trading participants. But we've built a a unified data
platform that where we put the all the data that comes from our
(42:00):
exchanges around the world into this platform.
It happens to be running Snowflake on AWS in the cloud.
And then we're giving access to our data analysts or data data
engineering team and creating insights from that that we can
use to inform our discussions with trading participants about
how they might trade Better to inform them maybe to educate
(42:22):
them of what we're seeing that they may not see yet.
And also when we're using that data to then provide insights to
them and saleable products like time stamping services and other
market data products, they give them insights into how they
might trade better on our exchanges.
So yeah, data is incredibly important to us and to our
(42:44):
customers. In many ways.
Data is the fuel of the markets and the sale of data or the use
of data is a precursor to peopletrading on our markets and in
our products. So we are we definitely want to
get our data closer to customersin the formats they can use.
Derivatives like options and futures can lead to tremendous
(43:07):
gains and losses very quickly. How do you, and you kind of
touched on this, but how do you manage risks to SIBO, your
platforms, partners and customers from derivatives
trading that goes wrong, that goes awry?
I might actually disagree with you on this point in that I
think derivatives while they anyasset can be misused, but
(43:30):
derivatives really were created to manage risk and reduce risk
if used correctly. So we're very intent on
education of investors, both retail and institutional in the
proper use of of options. For instance, I mean SIBO
created the the listed options of industry in 197352 years ago
(43:52):
and the Options Institute was created about 40 years ago by
SIBO because we're passionate about education, because
derivatives, especially options,they're actually there to reduce
risk, enhance income and cap your risk while giving you
changing your return profile. The goal is that you can
(44:12):
actually increase your risk adjusted returns without
increasing your risk. So give an example of that is,
you know, one of the things that's been talked about in the
news is 0 days to expiry optionsthat have really taken off in
the last few years and retail investors have used heavily.
The level of sophistication of those retail investors has come
(44:34):
along. And what we found is that 90% of
those trades have capped risk either through simply capped at
the cost of the premium or they're complex trades that are
multi legged. So they've capped their offset.
So we think that's a really healthy indication of the
(44:54):
ecosystem that if derivatives used correctly, they reduce
risk. And then for those, you know,
very rare situations where people are misusing, we have all
sorts of controls in place, riskcontrols in place to, to cap
them or to, to reject their orders, as do the brokerages
themselves and the trading systems that they offer their
(45:17):
customers. You use the phrase used
properly, and I think we all know examples of retail
investors who were told by theirbroker, you know, by these
options and they didn't, the, the investor relied on the
broker didn't have an understanding of these complex
(45:39):
trades and therefore lost very significant amounts of money.
To to what extent is, or what role does SIBO play in helping
ensure that that kind of thing doesn't happen?
That's where the Options Institute comes in.
You know, our customers are the broker dealers or the retail
(46:00):
brokerage platforms broker dealers around the world that
connect directly to our exchanges and they themselves
have pretty substantial education programs that then we
seek to help augment with the Options Institute and investor
education. And education is never done and
it's it's never uniform across every single last investor.
(46:23):
And we'll say there's, you know,there's good regulation and
controls in place too around know your customer and the level
of education or sophistication you must have before you can get
an options account. For instance, when you sign up
for a brokerage account, usuallywhat happens is you, you can
only trade equities or stocks before you would get anything on
margin. Then you'd before you would be
(46:46):
able to trade options, before you'd be able to trade futures.
And you have to progress in yourmaturity and sophistication.
I think that's that's good, goodpractice.
And so again, education, sophistication, it's not
uniform. But there are a lot of controls
in place. And this is again from Andy, who
says she's she or he is a retailtrader and Sibo's SPX options.
(47:13):
What are your views on the growth of retail trading in
general, Anything SIBO is doing to expand market access and
products? And I'll just ask more broadly
of how do you balance the needs of institutional versus retail
investors, including maintainingthe fairness that you've spoken
(47:36):
about? It's actually leans directly
into some multi decade trends, secular trends we've seen.
So the growth of the retail investor is one of those those
major trends. The retail investor at least in
the US has been growing in importance in number since the
late 90s, at least with the electronification of markets and
(47:57):
the enablement of technology. So growth of retail investors is
1 something that's very connected to that.
Interconnected with that is the growth of options.
And then finally the, the, the desire to have access to the US
markets, which are still the leading, you know, financial
markets in the world as far as size and access to liquidity.
(48:17):
So those 3 all, all speak to theretail investor and that we view
that as a very positive development in that.
Look back 20 or 30 years ago, a lot of the products, services,
systems that were available to institutional investors,
sophisticated tooling, sophisticated risk controls,
they, they were only available to institutions.
(48:38):
Now they're really at the fingertips of the retail
investor. As I mentioned previously, that
retail investor's much more sophisticated because of those
tools, because of that education.
So we're very excited about thatand we're here to serve the
needs of all types of investors.They have different needs, they
have different profiles and we want to offer them products and
(48:58):
markets that that can satisfy them all.
And we have a question from Chris Peterson.
SIBO runs many markets. Are there any moves towards
mixing asset classes, for example, Chris, crypto plus
legacy within markets or marketsmerging slash breaking national
(49:19):
or regional boundaries and more or fewer markets over time and
obviously the your view towards the future of where this is all
headed? There are examples where we have
cross asset order types, for instance, where you have an
options trade with a futures legor an options trade with an
(49:41):
equity leg and a cash equity leg.
Today certain order types. I think I will see more of that
within each country or region over time to the extent it
doesn't already exist connectingmarkets globally.
Cross jurisdiction I think is more difficult potentially
outside of digital assets that'smore difficult because of the
(50:05):
regulatory structures and jurisdictions that are in place.
So more cross asset may be more cross geography, but that will
take coordination amongst, you know, government authorities or
regulators within those countries.
Any thoughts on where digital assets cryptocurrencies are
going? They become more mainstream as
(50:26):
you've seen in the last year or two.
Assets under management will continue to grow.
I would mention a couple things.The introduction of crypto ETFs,
of which SIBO listed six of the 1st 11 in January of 2024, I
think was a milestone moment in digital assets where people that
(50:48):
normally just invest in equitiesthen would have access to
digital assets through the ETF wrapper.
I think that's open up a whole new level of users.
We have indices on digital assets.
I think there'll be more and more indices, more and more
access to digital assets, at least for the top, the top few
names or digital assets out there.
Any final thoughts on what we, investors and technologists and
(51:14):
people listening really need to know about exchanges like SIBO
that we probably don't know because it's hidden behind the
scenes? Building trusted markets is a
passion for us and as an investor, retail investors, I
would mention that because it's,it's a passion for us, which I
(51:34):
think ends in a good result for investors.
Institutional retail. Like if I look back to when I
started in this industry in the early 2000s and the access that
investors had to different tradable products and how long
it took for them to trade, that was that took quite a while and
(51:56):
it would be measured in seconds,sometimes minutes.
And the commissions were very, very high.
If you look at how things have changed over time, you have near
immediate access to almost any asset you want to trade or
invest in at an incredibly low cost with very low friction,
which I think is is incredible in in this industry that that
(52:18):
retail investors have the tools and sophistication at their
fingertips like I can institutional investors do from
20 to 25 years ago. On that topic, Arsalan Khan has
jumped in with a a last question.
That's a really interesting one,he says.
Do we need humans when AI can dooptions?
(52:41):
But let me turn that question around and say, should we people
be relying on our judgement whenwe can use machines, data and AI
to make trading decisions that can analyze more data faster
than we ever possibly could? Humans will always be needed and
(53:04):
humans will need to be in the loop at least during different
time frames, at least in the developing of those strategies
over time. Of course, markets will continue
to evolve and strategies will involve and the level of human
involvement will vary based on the strategy, but.
I. Think humans will always be
needed, but humans will need to embrace AI in order to harness
it and use it for our benefit. Fair enough.
(53:27):
And with that, we're out of time.
A huge thank you to Chris Isaakson, Chief Operating
Officer and Executive Vice President of SIBO Global
Markets. Chris, thank you so much for
being here with us. I'm very grateful to you.
Well, thank you, Michael, and thank you all of your followers
for for all the great questions.It's been my pleasure.
Folks, before you go, subscribe to the CXO Talk newsletter.
(53:50):
Go to cxotalk.com. You're part of our community and
we want you back. Thank you guys are you guys are
awesome. Such great questions.
There's no show next week, but the following week we're back
into it. We have amazing shows coming up.
So check it out and we'll see you again next time.
Take care, everybody.
Today on CXO Talk Episode 885, we explore the world of global
financial exchanges with Chris Isaacson, Chief Operating
Officer and Executive Vice President of SIBO Global
Markets. We'll discuss real world
examples of market resilience, the strategic balance between
(00:22):
institutional and retail investors, the role of
technology such as generative AIand ultra low latency systems,
and much more. SIBO Global Markets is one of
the leading derivatives and securities exchanges in the
world. We operate 27 markets around the
world, including the largest options exchange in the world.
(00:45):
We have bell bellwether productslike the SPX and the VIX Index
that you've likely heard of before.
And I'm the Chief Operating Officer, as Michael mentioned,
overseeing all of technology operations and risk for SIBO as
well As for business lines that we run.
You talk about resilience. Explain that to us.
(01:08):
Tell us why that's so important for you.
Our purpose is building trusted markets and resilience and
trust. Go, go directly together.
Most people don't understand theexchanges because they're kind
of behind, behind the front door.
Investors usually interact with the market through an
application on their phone or application on the desktop, but
(01:30):
don't really think about how theexchange operates.
And we, we match buyers and sellers in a fully electronic
way. And they expect that that's just
going to work 100% of the time. So resilience is, is part and
parcel with how we operate our exchanges every day.
It just has to work all the time, every time.
(01:52):
And therefore we design and engineer our systems so that
when things do fail, which any system that's ever been created
there, there are failure scenarios.
You first assume that something can go wrong and you plan for
those so that you can fail over very, very quickly and make it
seamless to the users so they don't even recognize if a
(02:15):
failure has occurred in the system.
So when we think about our systems, they need to be fault
tolerant in order for them to beresilient for the investors, for
the markets, especially during the most volatile times.
This issue of resilience, and let's face it, you have to be
up, obviously, right? If you go down, that's very
(02:36):
expensive for a lot of people. So when you talk about
resilience, is it primarily technology?
Are there cultural dimensions behind the scenes?
Like I've like, you know, every time a pager goes off, do does
everybody in the company sort ofjump and say, Oh my God, we have
to respond instantly? Like how does that work?
(02:57):
So it's not just the platforms or the systems, it's it's the
people, it's the processes we have in place.
It's even the places where we work.
We're always thinking about how to build and and run resilient
teams. And those resilient platforms
come from resilient people. So in the process we put in
(03:17):
place demand that we we operate in a resilient way.
So as we think about it, yeah, fail safe systems, we need to
have automatic failures. Of course, that is engineered
from the start. But also people, we have very
rigorous incident management protocols and we have very
rigorous change management protocols.
We run through and we run a consistent testing of all of the
(03:40):
backup systems both in our primary, primary sites and our
secondary sites. And on weekends, there's really
consistent testing through many,many, many different layers that
are really engineered and run bypeople and then bolstered by
processes that serve the people and the platforms to make us
(04:01):
resilient. So resilient people build
resilient platforms using resilient processes.
So that's, that's the way we think about it holistically.
And it's it's a mindset as much as it is a technology platform.
And you're chief operating Officer, which means that you
are ultimately responsible for these operations.
(04:26):
Can you describe the kind of behind the scenes demands that
this places both on the technology as as well as on the
people and, and again, how you, how you kind of think about
this, how you manage this and isit the same or is it different
from managing a business where there's less real time pressure?
(04:49):
It is different than than managing maybe a, a business
where there's not mission critical systems.
We consider these mission critical, you know,
systematically important infrastructure that we're
operating around the world in different, different countries.
So it does require a different level of intensity and
intentionality. And it, it forces you to have
(05:09):
very, very good communication both electronically and you
know, person to person to make sure that everyone is in the
loop immediately when any issue comes up because things will,
things will go wrong. And when they go wrong to ensure
that you have very rigorous playbooks that you can follow
and you can systematically and consistently follow them to
(05:32):
solve whatever problem might come up.
It's a very fast-paced environment because in the
markets seconds and nanoseconds count.
And so whenever anything comes up, we want to address it
immediately in a way that's as seamless to customers as
possible. So there's that's actually part
of the fun of running markets ismarkets of technology are very,
(05:54):
very dynamic. And over the last 20 to 30
years, you've seen the electronification of markets
from from trading pit. Trading pits to really fully
electronic, we still have one trading pit that's quite active,
but. The rest of our 26 markets are
fully electronic and therefore they're, you know, operating at
the speed of light. And when something goes wrong,
(06:15):
it can go wrong very quickly. And therefore we're we are very
quick in our response in the communications.
It also requires a level of monitoring around the system and
observability around each one ofour exchanges, each one of our
platforms. That we have it instrumented in
a way that we can see not just the front door, but every aspect
(06:37):
of that system. And the alerting is is.
So dynamic and so pointed that it can highlight the exact issue
that might be going on that we need to address in a very
precise way at the point at the point of issue.
Tell us about the the training that you do of these folks
because the folks that are doingthis monitoring, I have to
(07:00):
assume are very, very experienced and have that
intuition of how to respond in case of whatever type of blip
issue would that that may arise.We operate 27 markets around the
globe and the way in which we train our associates is is based
(07:22):
on a globally consistent platform.
So we operate a platform called SIBO Titanium.
Which runs all of our equities options in futures and markets
around the world. And I, I mentioned that because
when you're training great associates, great colleagues, it
increases the ability to train. Them in a.
Consistent way on a consistent platform so that somebody
(07:45):
sitting in Sydney, Australia or Chicago or New York or London,
they're looking at similar a very, very similar platform that
is globally consistent, but locally optimized to the nuances
of that country or region or market.
So we can train them on the common aspects of a global
platform and then they can learnthe nuances of their specific
(08:06):
market. And that allows us to have a, a
follow the sun model where somebody out of region, but when
the sun is up for them but not for us in the US, they can know
the market, know the technology and respond very quickly in an
appropriate way. We've invested a lot over the
last three to four years in making sure that we just don't
(08:27):
have somebody at the end of the line, but somebody who really
knows what they what they're doing in an immediate way if
something were to come up. And I assume that all of this
falls under into that category of resilience that you were
talking about earlier? Absolutely.
It's all part of resilient people building resilient
platforms using resilient processes.
(08:48):
We, you know, I think I, Michael, I grew up on a farm in
Nebraska. In a little personal anecdote
here, I was thinking about wheredid the resilience come from?
And, you know, I saw my parents go through ups and downs and,
you know, it's a very cyclical business that they're in.
And invariably on the farm, things would go wrong, things
(09:10):
would break. And then I also thought about, I
was a decathlete in college and you run 10 events over 2 days
and you have to think about, OK,did the last event go well?
It doesn't really matter. I have to have to get to the
next event and I have to be resilient through that next
event and be focused and keep calm and, you know, carry on in
(09:34):
the, in the moment. So I just we try to hire people
that are really humble, hungry and smart and are willing to
really stay cool and calm duringduring crazy times in the
market. I want to make sure everybody
knows that you can ask questions.
If you're watching on Twitter X,use the hashtag CXO talk.
(09:56):
If you're watching on LinkedIn, just pop your question into the
chat. And we have some questions that
are coming in. But Chris, just tell us about
volatility and how you respond to market volatility.
It's a very broad and expansive topic.
You know, SIBO, we actually created the VIX index decades
(10:20):
ago. So if you look on, you know, if
you're watching financial news, you'll see the VIX and you'll
see it across Bloomberg and other tickers you might see.
So we've we've measured. Volatility created an index for
it and trade trade futures products on the VIX index.
So there's a whole volatility ecosystem of product and trading
around it. But your question is around how
(10:42):
do we handle volatility and volatile times in the market.
And I just want to mention even,you know, recent history.
So of course in April there was,there was a lot of terror for
talk, there was Liberation Day, there was an incredible amount
of volatility that occurred at the beginning of April and.
You. Don't prepare for volatility
(11:02):
during volatility. You.
Prepare for market volatility and the stresses that will come
to your exchanges and platforms in the quiet times well before
it arrives. So that goes into the
engineering discipline we have. We're always building our
systems to handle at least 2X what we've ever seen on the
largest day. And then, you know, on more
(11:24):
micro level, you know, we handlemuch multiples of that on a
second time frame or a minute time frame so that you're ready
when the market bursts. Very episodically, the way the
markets work is that it's there's a lot of times where
it's low volatility in the, the messaging is roughly directly
(11:44):
related. The messages we must handle
orders and quotes and trades, they're roughly directly related
to how volatile the market is. So times of extreme volatility
when the VIX goes above 50 or 60or 70 or even 80 during, during
COVID, you would see extreme messaging traffic as as firms,
(12:06):
customers, investors are trying to manage their risk.
And so you must be prepared before.
And that's where we're testing on a very regular basis at
multiples of what we've ever seen.
And I'm extremely grateful to the team that that I get to
lead. Everything we do here is a team.
There's there's no single personwho does it all.
(12:29):
And because of all their great preparation in April, we're able
to handle things with without issue because we'd prepared for
months and really years of engineering discipline in
advance to handle on a single day in April, for instance, we
handled more than a trillion messages without issue.
And that's, you know, it's very rare to be in a business where
(12:51):
you can talk in trillions of messages managed in a day.
And yeah, very grateful for the team that we we made it through
as did frankly the the market ecosystem, other exchanges,
clearing houses. While there was great
volatility, the market infrastructure handled it well.
Subscribe to the CXO Talk newsletter.
Go to cxotalk.com. You're part of our community and
(13:14):
we want you back. To what extent do you see your
role as being at least partiallyresponsible for maintaining
market stability during periods of extreme volatility?
I view my role as CEO of an exchange operator and really
overseeing exchanges to, to be asteward of the markets, to
(13:39):
operate fair and orderly markets.
As much as it depends on us now,we don't, you know, we don't
trade our customers who are broker dealers, they trade,
they're the ones who put in the orders, the bids and offers, and
so they determine the price. Our job is to steward the
markets, to create fair and equal access, and then to
(13:59):
operate fair and orderly marketsand to put trading mechanisms in
place and safeguards in place sothat if prices get dislocated,
they don't get dislocated for very long or too far.
So, you know, in my history in the markets, which is now 20
years, 20 plus years long, I've been through a lot of different
(14:21):
points of crisis and volatility,from the great financial crisis
to the flash crash to COVID to, you know, recent tariff wars.
And each time the market, the collective market and not just
SIBO, we learn lessons and then we apply those.
So for instance, the flash crash, which occurred in in 2010
in the US really had to do with how electronic tronified the
(14:45):
markets had become. But there weren't quite enough
safeguards in place to avoid runaway prices going too high or
too high or too low. And so after that limit up limit
down was implemented in the US equities market and that has
that has been incredibly effective since then in avoiding
(15:06):
stock prices in the US going going awry beyond certain
trading limits. And it was an idea frankly that
was borrowed and copied from thefutures market.
This limit up, limit down. That's just one example of good
trading risk management measurements that have been
taken in improvements. Also market wide circuit
Breakers have been put in place.So if the S&P 500 goes down a
(15:29):
certain amount, believe it's 713or 20%, the markets will take a
pause overall and not not keep trading to give people a chance
to catch their breath and then come back with with with a more
cool head and then the market can decide what the right price
is. So it's been rewarding to be
part of those changes in the market because I view our role
(15:51):
as a steward of the market to create fair and orderly markets
for the good of investors. So you are creating the context
or the the container if you will, within which the markets
can operate. And your job, as you're
describing it, is to make sure that that context, that
(16:12):
environment, is fair, balanced, and works no matter what.
Is that our accurate way to put it?
I think you're spot on, Michael.That's exactly right.
We need to create a fair and equal playing field for for all
investors and trading participants to operate and to
come and trade. So, you know, the rules need to
(16:33):
be very fair and open and transparent and the playing
field needs to be level. And so we we take that with
incredible seriousness. We've got 2 questions.
The 1st 2 questions are very similar relating to generative
AI with a little bit of a, A twist in each case.
(16:54):
So let me let me take the first one.
This is from Anthony Scrifignano, who is the former
chief data scientist of Dun and Bradstreet.
He's been a guest on CXO Talk and now does all kinds of
interesting things that he's notallowed to talk about.
And so I know not, I know well enough not to even ask.
And Anthony says this. In particularly in times of
(17:19):
disruption and geopolitical volatility, small perturbations
can cause significant short termmarket effects.
Please share your thoughts on the need to detect Gen.
AI introducing disinformation allowing malefactors to capture
(17:39):
short term gains. The use of generative AI in
financial markets is not new. And I think in our customers we
don't have full visibility into how they're using generative AI
to to then inform and to inform their trading decisions or
investment decisions. We're using generative AI to
(18:01):
help as a productivity multiplier.
Primarily. We've formed an AI center of
excellence and have, you know, 1200 of our associates that have
been trained as I think about answering your, your direct
question, how do we, how do we avoid, you know, small changes
coming from Gen. AI having an outsized impact on
(18:22):
the market? I think it goes back actually to
those maybe less, less interesting, but very important
risk controls that we have in place.
Regardless of how the order was generated or how the order was
informed. The risk controls are really
important to make sure that if, if an algorithm goes amuck
(18:45):
because of because of generativeAI, the risk controls are going
to stop it from going too far awry.
And we've seen those risk controls that have been added
over and over and over that havehave stopped bad things from
happening where you might have an algorithm or whatever cause,
cause an issue in the market. So that that's not maybe as as
(19:08):
sexy or whatever as you would expect to hear from an answer.
But I, I think it's, it's the truth is that good risk controls
like limit up, limit down, like drill through protection, like
market wide circuit Breakers, etcetera, help prevent runaway
algorithms from from having an outsized impact on the market.
Let's go to LinkedIn now. And this question is, is very
(19:32):
similar and it's from Preeti Narayan.
And she says, given the rapid rise of generative AI and
trading strategies, how is SIBO preparing to manage the risk of
herd behavior where multiple market participants may act on
similar AI generated signals? Preventing that is probably
(19:56):
impossible. We we can see the effect of it
if there is herd of behavior andthe effect of it would be that
price movements are outsized forwhatever the triggers in the
market might be. And that goes back to where how
are the risk controls within thetrading firms set, which really
all trading firms have chief risk officers that this is this
(20:19):
is their day-to-day work thinking about what orders go
out the door to the exchange. So there's multiple layers of
controls and then that within the exchange, there's risk
controls as well to say how muchof A price movement is allowed
before, before the order is rejected that might be generated
by AI. And then if for some reason
(20:40):
orders get get out there that that become clearly erroneous or
are obvious errors. There's, there's actually rules
in securities law in the US and elsewhere that define what is an
erroneous trade and it's called obvious air and options are
clearly erroneous in US equities.
And those are very well defined criteria.
(21:02):
And so that those trades or are adjusted or they're, they're
actually taken down as air trades in unique situations.
So multiple layers of controls in order to preserve fair and
orderly markets. So essentially, as you said, you
are focused on the activity, youdon't worry about the
(21:27):
intentionality, what's in the mind of the trader, but you are
looking at the actual trade that's made and then you have
systems to evaluate those, thosetrades, the risk and so forth as
he was just describing. That's right.
We look at the effect rather than we, you know, understanding
the exact intent or the origination of the order is
(21:48):
sometimes not clear to us. I will mention as as an exchange
operator we also have an obligation and to take it very
seriously to do regulation on our exchanges.
So we do market surveillance of all of our markets looking for
any manipulative behavior or behavior that might be out of
out of order. And there are well, well worn
(22:11):
patterns of what manipulative trading behavior looks like.
And then, you know, our independent regulatory
department with with their separate staff look at that and
they follow up with trading participants if they see
anything that does not look likeit's fair, orderly or with with
wrong intent. So that's a key part of the way
(22:31):
that the exchange industry has been created.
That's that was part of, you know, securities law put in
place at least in the US in the 1930s.
And I think it's good, it's goodregulation that that exchanges
have market supervision or market regulatory departments
that look after the fair only markets from a manipulation
(22:53):
perspective to ensure there is none going on.
And that again that's independent of our trading
platforms and systems. The the data flows into the
regulatory system, but that's done by separate people that are
really focused on making sure that there's no manipulation
whatsoever. How do you divide the regulatory
(23:15):
or the, the evaluation function between the exchange versus
external regulators and and really quickly please, because I
there's so many questions stacking up now.
We take that responsibility on in different jurisdictions as
there's different stories and some some countries the the
prudential regulator will do a lot of the surveillance.
(23:37):
In other countries do we do a lot of surveillance on each
market and then there's shared surveillance sometimes depending
on the market. So it's varies by country and by
region, but one way or another it's covered either by us, the
exchange, or by the prudential regulator.
On Twitter X, we have a questionfrom Chris Peterson.
This is more on the technology side.
(23:59):
He's wondering if, number one, you've seen an evolution in
trading speeds over time or it'sbeen big step changes and #2 do
you see any floor where trades just can't get faster with
current technology? There have been a constant
evolution of trading performanceand speeds, you know, going
(24:23):
latencies going down, throughputs going up, etcetera,
with data rates going, you know,very, very large and always
increasing. But then there's been a few
times where there's been step functions in performance.
So 20 plus years ago when I started in the industry, you
know, it was a few 10s of milliseconds mattered and that
(24:43):
was, that was kind of state-of-the-art.
And now it's single digit or 10sof nanoseconds is really what,
what matters to people. So that's been a constant
evolution. But there's been times when
technology has, has had a step function forward with, you know,
the introduction of field programmable gate arrays.
So Fpgas that most trading, you know, highly sophisticated
(25:06):
trading firms use. I think that that really had a
step function of how fast our customers can respond to our
market data to enter orders. And also I think the different
well I know the the different vendors we use, you know,
network equipment vendors, server vendors, switch vendors,
etcetera. They've made step functions at
(25:27):
certain times that allow for much more deterministic and fast
delivery of market data or or inbound messaging.
So it's been a constant evolution and been it's been
actually really fun to be part of.
And your second question I thinkwas how is there is there a
limit to how fast things can go?And, and I the real answer is
(25:49):
yes, of course, because the speed of light is the speed of
light and are we approaching that?
I would say yes, but there will always be an incentive to get
faster. It will just be the the marginal
in the marginal improvement or reward from being faster, I
(26:11):
think will decrease over time. But we've seen it's just, you
know, as I said, the time scaleshave gone from milliseconds or
seconds down to nanoseconds. But those nanoseconds matter
enough that trading participantswill continue to invest very
heavily to ensure they can respond.
And, you know, and I think otherpeople might have the different
(26:35):
opinions about whether or not fast markets are good or not,
but the fact of the matter is fast, efficient markets create
good competitive prices for investors.
So on the whole, I think this evolution has been been great
for investors. Elizabeth Shaw has an add on
question to this and she says when is speed not your friend?
(26:55):
Speed can not be your friend when, if the market is moving
super fast and and if if you're not trading, if you're
investing, and I think speed doesn't necessarily matter that
much to you. If you're, if your time horizon
is days or weeks or years, whichfrankly, I'll tell you I'm, I'm
an investor, not a trader, then speed doesn't really matter as
(27:19):
long as I can log into whatever app I might have and with
whatever broker and I can, you know, get a fill whenever I need
it within a few seconds. So I'd say that in that way,
it's that it doesn't really matter.
It may not be my friend, but it isn't doesn't matter as much.
If I'm a training participant ofa timescale is very, very tight,
(27:41):
then then I think it can be yourfriend or your enemy, depending
on whether or not the training participant has has invested
enough in their technology infrastructure to be
competitive. Let's grab another question
here, and this is from Twitter from Tishiana Johnson, who says
you talked a lot about resilientpeople.
(28:03):
What is something you have foundhelpful when leading during
turbulent times? And I'm going to add not just
turbulent times, but what have you found helpful in leading
when the market is melting down?For people that are not familiar
with the markets to kind of be overcome by the moment when it's
(28:26):
very volatile and things can be moving very fast.
But I've had the great pleasure of working with incredible
people for 20 plus years in the market.
Many of the people I work with today, I've worked with for, for
more than a decade and they've learned to keep their calm and
think very clearly during times of stress when the market is is
going, going quite crazy. And, and that, that calmness to
(28:53):
keep calm and carry on, I think is absolutely vital.
And I think it's vital. And if you're investing, if
you're trading, but also if you're running exchange
platforms, you need to keep yourhead, keep composure, keep
poised to make clear, quick, concise decisions that are in
(29:14):
the best interests of the markets and investors.
And I've seen the team that I get to work with do that
consistently, always thinking about what's the best for the
market and on what time frame dowe need to make this.
And you need to prioritize the things that have to be done
immediately and do it with excellence.
Sounds like the airline pilot model.
(29:35):
Have you ever heard airline pilots that their talk during
times where there's some problemgoing on?
It's traffic, air traffic controllers.
It's extraordinary the level of calm rationality that they have
as literally their world is potentially ending.
Yes, I think that's a great analogy, a great example.
(29:57):
Clearly the stakes are higher there 'cause people's lives are
at risk here. You know, people's lives are
thankfully not at risk in the markets, but it's very important
'cause people's livelihoods and their financial well-being is.
And so we take that seriously and we need to make great
decisions with a clear minds andand not be ruled by emotions or
hysteria. On Twitter, X again, Craig
(30:20):
Dorchester says speaking on market volatility, he's heard a
lot about 24 by 5 trading. How does SIBO view the
practicality of moving to it? And are there any hurdles you'd
anticipate with this shift? And I'm also curious about not
(30:41):
just 24 by 5, but 24 by 7 because we've all been in
situations where we see trading happening outside of normal
hours and us investors are like,you know, twiddling our thumbs
as either the market is shootingup or the market is tanking and
(31:05):
we can't do anything about it. 24 by 5 and 24 by 5.
Trading is is here and is and the markets that don't already
offer it is going to come even more so SIBO, we already offer
24 by 5 trading or nearly 24 by 5 trading in our futures market.
So VIX futures and other futuresproducts as well as SPX and VIX
(31:26):
options as well as our FX markets all trade 24 by 5 today
are nearly 24 by 5. Now I think your question maybe
more specifically about the equity markets or more
specifically about the US equities markets that today on
exchange we're really open. We are open from 4:00 AM to 8:00
(31:46):
PM Eastern. And there's a lot of industry
chatter and good discussion about making that 24 by 5.
And we at SIBO will be ready for24 by 5 trading as soon as I'll
say the industry plumbing is ready, which is includes the
consolidated tapes as well as the DTCC, which is where all
clear, which where all trades are cleared in US equities.
(32:09):
So as soon as the industry infrastructure's ready, we will
be ready to offer that. I think it's good you can trade
off exchange 24 by 5 today. But you know, I think investors
really want a more stable transparent way to trade between
those hours that aren't covered today, which would just be 8 M
Eastern to 4:00 AM Eastern that that 8 hour window which we
(32:32):
lanned to close. We have the technical capability
to do it, but the industry needsto be ready because there's a
lot of industry processes that depend upon some sort of change
window, the trading day, rollover, you know, cash
movements, margin movements. There's a lot of stuff that goes
on overnight, for instance, in the US or whatever overnight
(32:53):
might mean in that in that country that need to be
reengineered to make sure that trading can be seamless.
Because we want the investor experience to be good when, when
they when they sell, we want them to get their cash when,
when that trade settles. And when they buy, we want to
make sure they get the security in their account.
And all that back office stuff needs to needs to be worked
(33:18):
through very clearly. Now 24 by 7, Michael, I want to
answer that question. Yeah, clearly digital assets
have been trading 24 by 7 for years now and we we actually
have a clearing system Cibo clear US that that can clear
transactions 24 by 7. And so that's where I eventually
think a lot of asset classes will go.
(33:41):
But what doesn't happen on the weekend is right now at least, I
mean, you have Fed wire windows and banks, the banking system,
traditional finance, a lot of that is closed on the weekend.
So are you going to have a huge margin call on Friday to make
sure there's enough capital in aclearing house to trade over the
weekend and handle any volatility that might happen
(34:03):
over the weekend? I think there's probably a place
for stable coins or things like or tokenized assets to play in
truly getting to an efficient 24by 7 market.
But in this way, I think digitalassets are probably leading and
we'll probably get there over time with more standard
equities. Very interesting.
(34:23):
The influence of digital assets,digital crypto currencies on
existing markets. That's a it's a kind of a
fascinating connection, I think.Yeah, it is.
I think there's a lot to be learned both ways.
And you see now the kind of whatis the, what is the proper and
good connection of traditional finance with digital assets or
(34:47):
decentralized finance and a bit more clarity coming to what is a
digital asset and how should be,how should it be regulated.
So we welcome the greater clarity so that under proper
regulation, you know all assets that customers really want to
trade and invest in can be done in a seamless and consistent
(35:07):
way. Folks, now would be a very good
time to subscribe to the CXO Talk newsletter so we can keep
you up to date on shows that we have coming up.
You're part of our community. You guys are awesome and we love
your questions. So go to cxotalk.com right now
and sign up for our newsletter and that way you can join us
(35:30):
every time we do this. It's really fun.
OK, let's go to another question.
I'm just taking these in order. And on Twitter, ex Tishiana
Johnson comes back and she says,how do you manage and build
culture among teams that are spread out across multiple
countries and time zones? Cause for me, I don't want my
(35:53):
passions is leadership development.
I help. I help executive sponsor the
SIBO, lead the way with our headof HR here at SIBO.
And I'm just really passionate about building leaders because
as leaders get better, then everybody gets better and then
the culture gets better. From the very beginning of my
career, you know, I've, I've read a bunch of leadership books
(36:14):
and, and whatnot. It's, I think it's a discipline.
Leadership is a discipline that people can get better AT.
And so leaders set culture. And here at SIBO and across my
career, really wanted to work with people that are humble,
hungry and smart. That comes from a book.
You know, Patrick Lincione wrotea book called The Ideal Team
(36:35):
Player. And I just really enjoy reading
his books amongst others and tried to live those values here
at SIBO amongst other values about being Better Together.
And so if you find people that are humble, hungry and smart,
that live our values and are competent, then they can connect
in a distributed fashion around the world in person.
(36:58):
Collaboration's also very important.
So we, you know, we fly around the world a fair amount in order
to have those really critical inperson connections, especially
to do intensive training in different regions so they can
learn that common platform, but then be able to execute when the
time comes. So it's it's a continual
(37:19):
investment to build culture. I think culture is as are more
important than strategy. And even though this is a highly
technology driven business, I believe it starts and ends with
people. I care deeply for people and I
want people to to be led by great leaders doing great things
(37:40):
that are that are humble, hungryand smart.
This is from Anthony Scrifignanocomes back and he says your
decathlete background is perfectfor your role.
It's definitely not a Sprint. Crisis and volatility also
demand the ability to pivot immediately.
What skills do you rely on to get others to move with you
(38:02):
quickly but thoughtfully during uncertainty that demands action?
I think this is built with experience, so you have folks
that we work with, folks that have worked, have been in the
markets for decades, that have learned.
You have to be agile in the way you think 'cause the market is
new every day. No market is the same as it was,
(38:23):
you know, an hour ago or a day ago or a year ago.
So they need to be agile in their thinking.
And then as as we hire young people out of school, out of
college, they learn how to deal with the dynamism of the market
and to respect humbly that this is going to be a different
situation. We're not never going to see two
situations that are exactly the same.
(38:43):
And with that humility, you say,OK, we're just going to learn.
We're going to apply what we've learned from past experience and
then we're going to modify it asneed be to deal with whatever
might come in, in, in new marketconditions.
So that's that's what I'd say from a how to handle new dynamic
situations. Andy on Twitter X says it sounds
(39:07):
like you have a tough job as there's been so much volatility
in the markets lately, putting additional stress on financial
market systems. What do you enjoy most about
your role and what do you enjoy the least?
Most dealing with really, reallysmart, humble, hungry, smart
people that are dead they're just super dedicated and
(39:29):
committed to building trusted markets.
They, they believe in our purpose and they believe in what
we're doing that it helps building trusted markets, helps
people eventually and ultimatelyinvest their capital and it's
about their financial well well-being.
So that's, I think that's by farthe best part is working with
great, great people. You know, it can be stressful,
(39:51):
but you know, being a former athlete, I kind of like the
intensity that comes with the market.
So at times it can be a bit muchin the, in the most stressful of
times, but I do really like an intense work environment.
I think it's very competitive work environment.
And one of our guiding principles is competitive team
spirit. So we can match the intensity of
(40:14):
the markets together. I love the questions that come
in, and I always try to prioritize questions from the
audience over my questions. And this is now from Arsalan
Khan, who has an interesting question.
He said what processes should beabolished to make things more
(40:35):
efficient, and he also wants to know the role of data in all of
this. The markets need to continue to
evolve to make things more efficient.
And you've seen in the last couple years we've, you know,
there's been a settlement cycle in, in the US and other
countries. It's taken 2, maybe 3 days and
that's been been the standard practice for decades, many,
(40:58):
many, many decades for trading for settlement of trades to
happen. That's now gone to T + 1.
So on AT plus one basis, I just think there's a lot of
disruption and and reengineeringto be done on the post trade
side to ensure that there's evenmore timely settlement clearing
and settlement of transactions that will allow for easier
(41:19):
movement and access to capital in a very capital efficient way
around the world. So I'd look for more kind of
disruption and reengineering there.
And Michael, can you remind me of the second question of this
caller? Arsalan is asking about the role
of data, and I'm sure that's a big important topic, obviously.
(41:39):
Yeah. You can imagine our salon with a
trillion, at least a trillion messages in a day.
We have an enormous amount of data that's growing within our
enterprise and it's highly sensitive confidential data, but
from our trading participants. But we've built a a unified data
platform that where we put the all the data that comes from our
(42:00):
exchanges around the world into this platform.
It happens to be running Snowflake on AWS in the cloud.
And then we're giving access to our data analysts or data data
engineering team and creating insights from that that we can
use to inform our discussions with trading participants about
how they might trade Better to inform them maybe to educate
(42:22):
them of what we're seeing that they may not see yet.
And also when we're using that data to then provide insights to
them and saleable products like time stamping services and other
market data products, they give them insights into how they
might trade better on our exchanges.
So yeah, data is incredibly important to us and to our
(42:44):
customers. In many ways.
Data is the fuel of the markets and the sale of data or the use
of data is a precursor to peopletrading on our markets and in
our products. So we are we definitely want to
get our data closer to customersin the formats they can use.
Derivatives like options and futures can lead to tremendous
(43:07):
gains and losses very quickly. How do you, and you kind of
touched on this, but how do you manage risks to SIBO, your
platforms, partners and customers from derivatives
trading that goes wrong, that goes awry?
I might actually disagree with you on this point in that I
think derivatives while they anyasset can be misused, but
(43:30):
derivatives really were created to manage risk and reduce risk
if used correctly. So we're very intent on
education of investors, both retail and institutional in the
proper use of of options. For instance, I mean SIBO
created the the listed options of industry in 197352 years ago
(43:52):
and the Options Institute was created about 40 years ago by
SIBO because we're passionate about education, because
derivatives, especially options,they're actually there to reduce
risk, enhance income and cap your risk while giving you
changing your return profile. The goal is that you can
(44:12):
actually increase your risk adjusted returns without
increasing your risk. So give an example of that is,
you know, one of the things that's been talked about in the
news is 0 days to expiry optionsthat have really taken off in
the last few years and retail investors have used heavily.
The level of sophistication of those retail investors has come
(44:34):
along. And what we found is that 90% of
those trades have capped risk either through simply capped at
the cost of the premium or they're complex trades that are
multi legged. So they've capped their offset.
So we think that's a really healthy indication of the
(44:54):
ecosystem that if derivatives used correctly, they reduce
risk. And then for those, you know,
very rare situations where people are misusing, we have all
sorts of controls in place, riskcontrols in place to, to cap
them or to, to reject their orders, as do the brokerages
themselves and the trading systems that they offer their
(45:17):
customers. You use the phrase used
properly, and I think we all know examples of retail
investors who were told by theirbroker, you know, by these
options and they didn't, the, the investor relied on the
broker didn't have an understanding of these complex
(45:39):
trades and therefore lost very significant amounts of money.
To to what extent is, or what role does SIBO play in helping
ensure that that kind of thing doesn't happen?
That's where the Options Institute comes in.
You know, our customers are the broker dealers or the retail
(46:00):
brokerage platforms broker dealers around the world that
connect directly to our exchanges and they themselves
have pretty substantial education programs that then we
seek to help augment with the Options Institute and investor
education. And education is never done and
it's it's never uniform across every single last investor.
(46:23):
And we'll say there's, you know,there's good regulation and
controls in place too around know your customer and the level
of education or sophistication you must have before you can get
an options account. For instance, when you sign up
for a brokerage account, usuallywhat happens is you, you can
only trade equities or stocks before you would get anything on
margin. Then you'd before you would be
(46:46):
able to trade options, before you'd be able to trade futures.
And you have to progress in yourmaturity and sophistication.
I think that's that's good, goodpractice.
And so again, education, sophistication, it's not
uniform. But there are a lot of controls
in place. And this is again from Andy, who
says she's she or he is a retailtrader and Sibo's SPX options.
(47:13):
What are your views on the growth of retail trading in
general, Anything SIBO is doing to expand market access and
products? And I'll just ask more broadly
of how do you balance the needs of institutional versus retail
investors, including maintainingthe fairness that you've spoken
(47:36):
about? It's actually leans directly
into some multi decade trends, secular trends we've seen.
So the growth of the retail investor is one of those those
major trends. The retail investor at least in
the US has been growing in importance in number since the
late 90s, at least with the electronification of markets and
(47:57):
the enablement of technology. So growth of retail investors is
1 something that's very connected to that.
Interconnected with that is the growth of options.
And then finally the, the, the desire to have access to the US
markets, which are still the leading, you know, financial
markets in the world as far as size and access to liquidity.
(48:17):
So those 3 all, all speak to theretail investor and that we view
that as a very positive development in that.
Look back 20 or 30 years ago, a lot of the products, services,
systems that were available to institutional investors,
sophisticated tooling, sophisticated risk controls,
they, they were only available to institutions.
(48:38):
Now they're really at the fingertips of the retail
investor. As I mentioned previously, that
retail investor's much more sophisticated because of those
tools, because of that education.
So we're very excited about thatand we're here to serve the
needs of all types of investors.They have different needs, they
have different profiles and we want to offer them products and
(48:58):
markets that that can satisfy them all.
And we have a question from Chris Peterson.
SIBO runs many markets. Are there any moves towards
mixing asset classes, for example, Chris, crypto plus
legacy within markets or marketsmerging slash breaking national
(49:19):
or regional boundaries and more or fewer markets over time and
obviously the your view towards the future of where this is all
headed? There are examples where we have
cross asset order types, for instance, where you have an
options trade with a futures legor an options trade with an
(49:41):
equity leg and a cash equity leg.
Today certain order types. I think I will see more of that
within each country or region over time to the extent it
doesn't already exist connectingmarkets globally.
Cross jurisdiction I think is more difficult potentially
outside of digital assets that'smore difficult because of the
(50:05):
regulatory structures and jurisdictions that are in place.
So more cross asset may be more cross geography, but that will
take coordination amongst, you know, government authorities or
regulators within those countries.
Any thoughts on where digital assets cryptocurrencies are
going? They become more mainstream as
(50:26):
you've seen in the last year or two.
Assets under management will continue to grow.
I would mention a couple things.The introduction of crypto ETFs,
of which SIBO listed six of the 1st 11 in January of 2024, I
think was a milestone moment in digital assets where people that
(50:48):
normally just invest in equitiesthen would have access to
digital assets through the ETF wrapper.
I think that's open up a whole new level of users.
We have indices on digital assets.
I think there'll be more and more indices, more and more
access to digital assets, at least for the top, the top few
names or digital assets out there.
Any final thoughts on what we, investors and technologists and
(51:14):
people listening really need to know about exchanges like SIBO
that we probably don't know because it's hidden behind the
scenes? Building trusted markets is a
passion for us and as an investor, retail investors, I
would mention that because it's,it's a passion for us, which I
(51:34):
think ends in a good result for investors.
Institutional retail. Like if I look back to when I
started in this industry in the early 2000s and the access that
investors had to different tradable products and how long
it took for them to trade, that was that took quite a while and
(51:56):
it would be measured in seconds,sometimes minutes.
And the commissions were very, very high.
If you look at how things have changed over time, you have near
immediate access to almost any asset you want to trade or
invest in at an incredibly low cost with very low friction,
which I think is is incredible in in this industry that that
(52:18):
retail investors have the tools and sophistication at their
fingertips like I can institutional investors do from
20 to 25 years ago. On that topic, Arsalan Khan has
jumped in with a a last question.
That's a really interesting one,he says.
Do we need humans when AI can dooptions?
(52:41):
But let me turn that question around and say, should we people
be relying on our judgement whenwe can use machines, data and AI
to make trading decisions that can analyze more data faster
than we ever possibly could? Humans will always be needed and
(53:04):
humans will need to be in the loop at least during different
time frames, at least in the developing of those strategies
over time. Of course, markets will continue
to evolve and strategies will involve and the level of human
involvement will vary based on the strategy, but.
I. Think humans will always be
needed, but humans will need to embrace AI in order to harness
it and use it for our benefit. Fair enough.
(53:27):
And with that, we're out of time.
A huge thank you to Chris Isaakson, Chief Operating
Officer and Executive Vice President of SIBO Global
Markets. Chris, thank you so much for
being here with us. I'm very grateful to you.
Well, thank you, Michael, and thank you all of your followers
for for all the great questions.It's been my pleasure.
Folks, before you go, subscribe to the CXO Talk newsletter.
(53:50):
Go to cxotalk.com. You're part of our community and
we want you back. Thank you guys are you guys are
awesome. Such great questions.
There's no show next week, but the following week we're back
into it. We have amazing shows coming up.
So check it out and we'll see you again next time.
Take care, everybody.
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