From the CBOE:
Edmund J. O’Connor, key architect of exchange-listed security options and a founder of the Chicago Board Options Exchange (CBOE) – died on January 17, 2011, at age 85 in Lake Forest, Illinois.
In the late 1960s, Mr. O’Connor, a highly successful grain futures trader, served on the board of directors of the Chicago Board of Trade (CBOT) during a period when grain futures trading was languishing and members were seeking new business avenues for the exchange.
In 1969, Mr. O’Connor, then vice chairman of the CBOT, fleshed out and proposed the idea of an options exchange in raw blueprint form to the CBOT’s Board of Directors, detailing the general mechanism by which puts and calls on stocks could be standardized and traded in an open outcry environment for the first time.
The Chicago Board Options Exchange in 1973 opened for trading in the small “smoking room” adjacent to the main trading floor of the CBOT with just 911 options contracts changing hands on day one.
“Eddie O’Connor represented the kind of raw, indomitable spirit that in the 1960s and 1970s pervaded the Chicago financial community, which had always fought the reputation of being number two,” said CBOE President and Chief Operating Officer Edward Joyce, who knew O’Connor from the formative days of the CBOE. “Looking back, he was a giant, who along with CBOE President Joe Sullivan, thrust Chicago into an arena that others – even the financial chiefs in New York – thought unimaginable.”
“While Ed O’Connor was a trader at heart, he also had both extremely entrepreneurial and practical sides that pushed the derivatives industry in the right direction,” Wayne Luthringshausen, Chairman and CEO of the Options Clearing Corporation (OCC) said. “He knew that options trading, like futures, needed the guarantees of clearing, and as the first chairman of CBOE Clearing that eventually became OCC, he spent a substantial amount of time defining the crucial clearing obligations for the industry.”
Last year, Mr. O’Connor, who sat on the first board of the options exchange, serving as CBOE vice chairman from 1974-1975, saw the CBOE trade an average 4.5 million contracts a day – over one billion contracts in annual volume – and become a publicly-traded company.
Mr. O’Connor’s rise in the international derivatives arena began simply enough with O’Connor Grain Company, which in 1977 provided the capital to fund O’Connor & Associates. By 1988, O’Connor & Associates became the largest options market-making firm in the U.S., with particular emphasis on financial derivatives. In 1989, the firm was acquired by Swiss Bank Corporation, which later merged with Union Bank of Switzerland to form UBS.
At the time of its acquisition by Swiss Bank Corporation, O’Connor had over 600 employees worldwide, 230 of whom were based in Chicago. The remaining 400 employees were involved with O’Connor’s Swiss Bank joint venture.
“Not only was Ed the spiritual ‘godfather’ of the CBOE, but his firm was the first to understand the mathematics of options and apply it to options market-making,” CBOE Chairman and CEO William J. Brodsky said. “After O’Connor & Associates was acquired by Swiss Bank Corporation, a number of former partners and employees formed firms that today have cemented Chicago as the derivatives capital of the world. Ed was a major player in that effort.”