The Journey of Daniel Coleman: From English Literature to Financial Markets, Part One

Daniel coleman interview with jnn.
John Lothian

John Lothian

Executive Chairman and CEO

Daniel Coleman’s path to success in the financial markets is a tale of a chance encounter that led him to a career he never anticipated. Born in Alabama, Coleman embarked on a journey that took him from the Ivy League halls of academia to the high-stakes world of trading in Philadelphia, Chicago and New York and back home in academia’s highest level. 

Coleman’s story begins in his hometown of Birmingham, Alabama. As a young man, he had no aspirations of entering the financial world. He enrolled at Columbia University to study English literature; however, his life took an unexpected turn when he transferred to Yale University during his sophomore year.

During his senior year at Yale, Coleman found himself at a crossroads. He was uncertain about his future and contemplated pursuing a graduate degree in English. However, a chance conversation with his college roommate, who worked in the S&P 500 pit at the Chicago Mercantile Exchange for Kidder Peabody, would change the course of his life.

Coleman’s roommate, a six-foot five, two hundred and thirty pound football player, shared with him the allure of trading: the potential for significant earnings, an early finish to the workday, and ample time for leisure activities. Intrigued by the prospect, Coleman made a life-altering decision – he decided to explore a career in trading, despite having no prior knowledge or experience in finance.

Coleman’s leap of faith led him to O’Connor &  Associates, a prominent trading firm. He had applied to some of the traditional Wall Street firms, but faced skepticism and rejection due to his lack of finance-related coursework and experience. However, O’Connor saw potential in him and had a philosophy that it was better to train individuals from scratch. 

Coleman faced the steep learning curve to become a trader. He vividly recalls a moment during his spring break while he was rowing for Yale and was on a bus ride. O’Connor had given him a brochure on options from the Options Clearing Corp. He devoted hours to studying this booklet, reading it 10 times, which ultimately proved beneficial during his second interview at the firm. His determination paid off as he secured his position with O’Connor.

Coleman’s early days at O’Connor were spent in Philadelphia, where he was a nervous wreck as a trading clerk, he said. Then it all started to click. Although he hailed from Alabama, he found the trading environment in Philadelphia both welcoming and challenging. He attributed his successful transition to having mentors and colleagues who provided guidance and support.

His tenure at O’Connor exposed him to a wide range of trading experiences. PHLX’s floor included traders with varying levels of education, from recent college graduates to individuals holding PhDs. Coleman said it was hard to tell who the better traders were. 

After three and a half years in Philadelphia, Coleman convinced O’Connor to let him pursue an MBA at the University of Chicago to enhance his financial knowledge. He moved to Chicago, where he continued to develop his expertise in trading, working a desk that monitored traders in Chicago and Philadelphia. 

Coleman’s transition to Chicago coincided with his shift to trading convertible bonds. This financial instrument, which combined bonds with embedded options, proved to be an exciting and intellectually stimulating challenge. The trading of convertible bonds attracted some of the brightest minds on Wall Street, including a young Ken Griffin. 

While at O’Connor, Coleman witnessed significant changes in the financial industry. O’Connor had formed a joint venture with Swiss Bank, which eventually led to Swiss Bank acquiring O’Connor. Subsequent acquisitions by Swiss Bank of S.G. Warburg and Dillon Reed altered the landscape of investment banking. These mergers and acquisitions brought about new challenges and opportunities for Coleman.

In 1996, Coleman was sent to New York as part of Swiss Bank’s efforts to establish a client trading business. This move marked a significant shift in his career as he transitioned from a trading-focused firm to a client-facing role within a large investment bank. 

Coleman’s role at Swiss Bank evolved into a position at UBS after another merger. He became the head of equities for UBS, overseeing a diverse range of businesses. UBS had a strong traditional business, a robust research department, and a global presence.

The global financial crisis of 2008 had a profound impact on the financial industry and Coleman. UBS faced challenges, including significant losses in its fixed-income department. Coleman witnessed the turmoil and the changes in leadership at UBS that followed. 

Coleman found himself at a crossroads once again. Despite being considered for the role of CEO of the investment bank, he decided it was time to leave UBS. He sought new opportunities and explored potential ventures, eventually leading him to General Atlantic and a trading firm called GETCO that the private equity firm had invested in. He noted that the people at GETCO all seemed to be having fun and the people in investment banking all seemed miserable, including him. He decided it was time to leave. 

He saw potential in the company and its founders, Dan Tierney and Steven Schuler. Tierney and Schuler were not interested in managing GETCO and were looking for someone to take that role, so they hired Coleman as GETCO’s CEO.  However, the day he joined the firm was the first day of operation of Spread Networks, made famous by Michael Lewis’ book “Flash Boys; A Wall Street Revolt.”

When Knight Capital had an algorithmic trading error that cost it $440 million in 30 minutes, GETCO was one of the firms that stepped up to rescue Knight. The new firm, which included GETCO, was called KCG and Coleman was the CEO. 

Under his leadership, KCG grew and prospered. However, in 2017, the firm was acquired by Virtu Financial. While the deal made financial sense, Coleman said he believed that KCG had untapped potential that could have been realized with more time. Nonetheless, the sale benefited shareholders, and it allowed Coleman to move back to Alabama full time. He had been commuting to and from Birmingham for the last eight years. 

After leaving KCG, Coleman decided to shift his focus away from the financial industry. He talked about the aspects of trading that he misses the most. He cherishes the clarity, excitement, and competitiveness of the trading world, the constant pursuit of information and the camaraderie among traders. Those remain vivid memories that he holds dear. 

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