Ronan Ryan, president and founder of IEX, joins Tyler Neville to talk about how his career in technology intersected with the financial world. Despite not trading a day in his life, Ryan’s influence on how the financial markets behave today is evident. This clip is excerpted from a video published on Real Vision on July 5, 2019 entitled “Phantom Liquidity and the Monopoly on Data Feeds.” Watch more Real Vision™ videos:
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Building the Modern Market Infrastructure (w/Ronan Ryan)
Transcript:
For the full transcript visit:
RONAN RYAN: So there's an entire industry, an industry in which I guess, I grew up in-- was I making every facet of the trading cycle faster and faster and faster? The ironic thing is I've never traded a day in my life. It's kind of a funny story. But I actually met Brad and worked for Brad at RBC before we formed IEX. I had worked in the telecom sector for years. Had originally wanted to work on Wall Street--it's in the book-- but I could not get a job on Wall Street. So I took a job and learned technology on the telecom side. And then it was around 2004 trading and technology started banging into each other. And by that, I mean people started to care how fast they traded. And I happened to be in the right place at the right time. You make your luck, but you got to be lucky. I was at a company called Radiance. And I got a call one day from a black box trader not knowing what the hell a black box trader was. And had said, look, you know infrastructure. If I move my strategy from Kansas to New Jersey, can you colocate me, meaning put me in a data center near the exchanges? And I'm, like, yeah, of course we can do that. And it was kind of a funny story in that he was complaining over the phone how it takes him 43 milliseconds to send a trade from Kansas and to receive acknowledgment of the trade. And I had no idea what a millisecond was, but I told the guy, I'm like, yeah, that sounds terrible. And when we moved him, we lowered it to 3.9 milliseconds, which sounds Fisher Price slow now 15 years later. But at the time, this guy was thrilled. He was so happy with the move. He was introduced to me by a prime broker at a bulge bracket. And I went back to the prime broker at the bulge bracket and said, do you have any more of these black box traders? And I guess black box traders became high frequency traders. And I started building out a lot of environments for all these guys to move to New Jersey, connect to the exchanges. Then the exchanges themselves got into the business of selling space, and selling technology, and even selling circuits to connect their own clients to their competitors, which is bananas. But that's where it morphed to. And I wanted to move to the business side and was meeting with a lot of brokers. And then one day, a broker called me and said, would you talk to the Royal Bank of Canada? And went in there met with about 17 people, which is how brokers interview, apparently. And just started working. And a few weeks later, we were working on the trading floor. I was working with Brad when we came up with the THOR smart order router. It was famous for arriving at all venues near simultaneous to get the best fill rate. That took off. RBC did remarkably well. But then a lot of clients said to us, we can only use your technology when we trade with RBC. If you think of something bigger, we'll support you. And that really was it. So we kind of looked at it and said, well, the center of the ecosystem are the stock exchanges. So why don't we launch a stock exchange, as nuts as that sounds. None of us had ever even worked at a stock exchange. And then we set out to build one.
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