There are pioneers, innovators and leaders in every industry. Ivers Riley is one of the rare individuals to wear all three titles.
Riley, who died February 17, 2015, at the age of 82, is one of those executives who was part of several transformational events in the financial markets’ history, including: the early stages of the options industry; the creation of exchange traded funds, one of the most successful products in the history of financial markets; two critical periods at the Hong Kong exchanges; and a key player at the International Securities Exchange, which ushered in fully-electronic options markets.
Riley’s career was rare in the sense that he worked at several exchanges and across three asset classes: stocks, options and futures. He is first noted for his work in the mid-1970s at the Chicago Board Options Exchange, for his efforts in promoting and educating regulators and the industry on put options. Riley’s work earned him the nickname “Mr. Puts” for his relentless efforts on behalf of the contract.
While the CBOE was established in April 1973 and was growing, it wasn’t until the introduction of puts just over three years later that volumes at the exchange exploded. With puts established at the CBOE, the exchange posted record daily volumes in 1978 and soon afterward topped average daily volumes of 500,000 contracts per day.
“When I think of Ivers, I think of a person who took a backwater product, one that was listed and only traded calls initially,” said Gary Katz, CEO of the International Securities Exchange and a long-time colleague of his at the ISE. “And he convinced the regulator that puts were not boogeymen, that they were not to be afraid of, they were necessary for a portfolio. That, at the most basic level, was the building block of what would ultimately become the listed options market. Can you imagine what the market might look like today if we only traded calls?”
Riley then partnered with the man largely credited for the creation of the first options market, Joe Sullivan, who was the CBOE’s first president. In 1979, the pair formed the industry’s first options consulting firm called The Options Group, where they worked on products for exchanges and other options related clients including Track Data, which was created in 1981 to provide options data for Wall Street firms.
In 1983, he joined the New York Stock Exchange to help them create an options exchange that would compete with the CBOE, which was subsequently purchased by CBOE when NYSE abandoned the product.
“He believed passionately in this business,” Katz said. “He believed passionately in exchanges and the transparency that comes with them.”
That was just chapter one of his career. In 1986, he joined the American Stock Exchange (now NYSE Amex) and served as senior executive vice president for derivatives. There, Riley worked with Nate Most on the creation of the first US exchange-traded fund (ETF). In 1993, Amex launched the Standard & Poor’s Depository Receipt or SPDR, spawning a $2 trillion industry that PwC estimates could top $5 trillion by 2020.
SPDRs, managed by State Street Global Advisors, have assets of more than $337 billion, making it the second largest ETF provider behind iShares. Riley is noted as a key driver of the product as well as of the QQQQ, which tracks the Nasdaq 100 and which he also helped drive investors to accept.
Joe Stefanelli, retired executive vice president of securities at Amex, said Riley had a knack for understanding an idea or concept and encouraging and supporting others to make it happen. Such was the case when Most brought the ETF concept to Riley.
“He went to Ivers and he almost immediately understood the potential of this product,” Stefanelli said. “He just told Nate ‘Start working on it and whatever you need, you let me know and we’ll get this done.'”
Mike Bickford, a former executive at AMEX, said the work Riley and Most did may be one of the most significant product contributions to financial markets in history.
“He wasn’t the kind of guy who would settle for ‘Well, that can’t happen.’ It was always, ‘How do we create more out of this? How do we make the industry better?,’ ” Bickford said. “It wasn’t about him.”
Riley’s next career stop was Hong Kong, where he would serve two stints at the Hong Kong Futures Exchange and its clearing house. He was hired in 1994 as chief executive at the exchange and chairman of the Hong Kong Clearing Corporation, where he helped the exchange weather the Asian currency crisis in 1997. He left in 1997 but was hired back in 1999, during a major overhaul of the Hong Kong financial markets. The government reform program merged its five market entities, which included the stock exchange, futures exchange and their clearing houses, into one holding company, now known as Hong Kong Exchanges and Clearing Ltd (HKEx). Riley left the exchange in 2000, the year it demutualized and went on to become the first publicly traded exchange on June 27, 2000.
Options frontier man
In 2000, Riley returned the US to serve on the board of the International Securities Exchange (ISE), a startup that was attempting to revolutionize the options space with fully electronic options trading. The ISE was launched that year and is credited as the exchange that ushered in a new era of electronic trading. Riley served as chairman of the exchange from 2002 to 2006, and was there for its IPO in 2005 as well as its period of exponential growth.
David Krell, ISE chairman and a co-founder of the exchange, said in a statement that “Ivers was a true rarity in this industry. He was involved in many of the transformative moments that set the course for the robust options markets in existence today.”
Over the course of Riley’s career many colleagues recalled several key qualities that made him so successful and special in the industry. As an executive and mentor, he was considered a hands-off type of manager, giving his team room to do the job but also available anytime. He was also known as a straightforward communicator.
“He taught me not just about how to run an exchange but how to be a manager, how to be a person, and how important your word is,” Katz said. “We are both fierce competitors and I learned from him how to find the right life balance – being competitive but also recognizing you have a family you come back to.”
Riley is one of just two people to receive both the Joe Sullivan Award, the highest achievement award from the Options Industry Council, in 2005, and be named to the Futures Industry Association’s Futures Hall of Fame, also in 2005.
Wayne Luthringshausen, former chairman and CEO of OCC and a Sullivan Award recipient as well, said “I doubt you’ll find a partner or competitor with a bad thing to say about Ivers, and what he achieved and did for the business.”
Beyond his professional accomplishments, Riley was known for his love of golf. Many who golfed with him recalled the razzing he loved to dole out to his golf partners on the course. Katz, who first played against him when Riley joined the ISE board of directors, recalled beating him in the round and being reminded of the gentlemanly tradition of always letting the board member win.
Luthringshausen and others remembered many a golf outing and poker game where a joke and a verbal jab meant something from Riley.
“You know he loved you if he gave you a hard time,” Luthringshausen said.