Five Minutes with Dax Rodriguez

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Five Minutes with Dax Rodriguez

Dax Rodriguez is an industry veteran involved in a new venture with Livevol, an options analytics platform. After acing an AP Economics report on options in high school, he went on to work with market data at the Chicago Board of Trade, re-launched the futures business at E*Trade and opened a Chicago office for Ballista Securities. He sat down with MarketsWiki’s Jessica Titlebaum to discuss how he got his start in the capital markets, who his mentors were and how networking got him to where he is today.

Q. Where are you from?

A. I was born in the Philippines and we immigrated to America when I was four. I went to Carmel High School and the University of Illinois in Chicago.

When I graduated it wasn’t the best time because of the Internet bubble. My cousin, who is at Credit Suisse, is also a member of the Metropolitan Club and told me that I needed to start networking. He is one of my mentors; my older cousins were so successful I wanted to be just like them. When I got out of school it was networking, and networking, although I found the CBOT job at Monster.com.

I was very aggressive. I applied to a lot of positions. I didn’t know what market data licensing was, let alone what futures trading was. All the work no one wanted to do, I did. All the conferences no one wanted to go to, I went to. I went to the Farm progress show when I was at the CBOT in Des Moines, Iowa and had the best time. I got to meet farmers marketing their products. It was a great way to learn about corn yield.

Tom Cargie and Mark Haraburda at CBOT market data and analytics hired me on as the vendor liaison. I managed the administration and customer support for over 150 vendors. In this role, I became the go-between for the technology side and the business side.

Q. Who were some of your mentors?

A. My first real mentor was Paul Finnegan [currently at] NYSE Arca. He was the managing director of marketing at the CBOT. I asked him a lot of questions and he showed me how things worked in the futures industry. He said I should go to E*Trade because I knew futures and I knew the people. Getting into E*Trade’s equity options, I would get to learn about the securities side.

I got Paul a job at E*Trade leading the derivatives trading. I got to help them re-launch their futures business. We did a white label partnership with Trading Technologies and re-launched the business and it grew very fast. Although I wasn’t the lead product manager, I started the whole process and then passed it off. I actually did more equity options projects after that, which was surprising.

I got to high-level positions when I was very young because I had people like Paul showing me how to think strategically.

After about four years at the CBOT I realized I needed some real street experience. I found an associate product position at E*Trade. I thought I was going to develop their futures business, but their priorities changed and I developed their equity options business instead.

I knew what options were but I had never traded them – I had never traded at all. So I invested in myself and funded myself with $5,000. I lost most of it but traded equity options and learned how to manage risk and how to trade smarter.

I added complex spread trading to E*Trade. They gave me the flexibility to be creative and the latitude to make decisions. They taught me how to think like a product manager, which helped me throughout my career.

Q. What did you do after E*Trade?

After E*Trade, I wanted to go to Deutsche Borse Group to fill in holes in my resume. I didn’t know about international trading securities and derivatives, and being in market data you get exposed to everything. When I interviewed at DB group, they asked me what I thought of them and I said you guys are growing and you should probably buy some more exchanges. They asked me which ones I thought and I said ISE [International Securities Exchange]. I didn’t know at the time that this acquisition was already in the works.

One of my biggest clients at DB Group was our sister company, U.S. Futures Exchange, and I was managing that account. I thought, I am young, this is going to be a great learning experience -- even if we don’t succeed, I am going to be learning a lot about what not to do.

I took a chance on them and it worked out. We closed down in December 2008, but it was a great learning experience. I would do it again.

Q. What did you learn from the experience?

A. I learned how to manage relationships and how to make really important decisions. In all my other roles, I was more middle management and someone else made the big decisions.

We had a great sales team and everyone landed on their feet. They all went their own way but I am very impressed. I would not be surprised if you see [USFE] products back again.

At Deutsche Borse Group, I got to meet some private equity guys, Deb Bardham and Vincenzo La Ruffa at Susquehanna Investment Group. They asked me to come in after their investment with Ballista Securities.

I met Rob Newhouse and we just clicked. When we met, I agreed with everything he said. I looked forward to implementing his vision. He ultimately saw my strength in developing relationships with clients. I did that for about year and opened an office for them in the Sears Tower.

I left Ballista very recently. The guys at Livevol are very aggressive. Ron Horwath (CEO and Founder) and Stefen Choy (CFO and Founder) were traders and market makers. They have been helping me with institutional options trading.

Q. What were your best business decisions?

A. Getting into the futures business at the CBOT. I was a pre-med major and my parents wanted me to be a doctor but I had a passion for finance and technology. When I was a freshman or sophomore in high school and I was taking an AP economics class, they asked us to do a report on the financial industry and I picked options trading. I went to the CBOT on a field trip and got a lot of pamphlets. I picked up commodities and futures information, which was way over my head but we had experts come in and play the stock market game. So as a little kid I was always interested in this.

My AP economics teacher was very impressed. Joseph Scordino, I still remember him. He gave me an A on my report on options.

A. Do you have something you would consider your biggest business mistake?

Q. I was pretty blunt and would tell you how it was. I wasn’t diplomatic and needed to learn how to keep my mouth shut. I think that is something that comes with age and experience but it was something I didn’t have. I needed to learn how to listen more.

I don’t think it was a mistake because I learned something and will never do it again. I look forward to making mistakes because if I don’t make mistakes I will never learn. I actually encourage all my peers and colleagues not to worry about making mistakes.

Q. Do you have a personal motto?

A. My motto is to be honest with people. This industry is all about relationships. My mentor taught me that the same people you see climbing up will be the same people you see climbing down. I don’t care who you are; I will treat you the same way I treat everyone else. Learning from others is very important. You learn something new every day.

Q. What do you think about all exchanges moving into the volatility space? You know with CBOE trading options on the VIX, the CME launching volatility commodity products and Eurex with VSTOXX.

A. I think the markets are getting more educated on what volatility is and how it impacts pricing and volume. When the volatility is high, volume is high because a lot more traders are in the markets and can make money. It is important for the market and trading community to have a gauge on volatility to help manage risk. As more people get educated on volatility they are going to need the tools such as Livevol to help them trade smarter and manage risk.

Q. What do you think of all this High Frequency Trading regulation?

A. I think regulation is bad right now, especially because high frequency traders provide a lot of liquidity in the marketplace. When you start regulating them they could go to different marketplaces like Europe or Asia. The US is not the only marketplace where they could trade.

Regulation shouldn’t be done by the government, it should be done by the exchanges. They have a better feeling about what is going on in the markets. Look at the idea of bringing OTC to a more transparent market…you need different groups within the market because we have different market dynamics and no one does the same thing, which is what makes the US markets so great. We have screen traders, position traders, retail traders and institutional traders and then you have the high frequency and algorithmic traders.

I was reading an article about Terry Duffy from the CME Group and his response to Congressmen asking if they caused some of this problem and I think that the checks and balances at the CME Group helped. I think I will leave it up to those guys to figure out how to make our markets more efficient. It’s their expertise, not mine. I don’t think it’s a congressman or senator’s expertise either.

Q. Can you tell me about your new position at Livevol?

A. My role as President is to oversee the growth of the company. We have great products and are expanding rapidly already. I have the experience of managing challenging environments to keep the momentum going and get the Livevol brand to be a household name in options. As we go into futures and execution, a Chicago presence for our company will be key to our success.

We are an Internet based platform. We spent eight years in research and development on our tools and analytics. Ron and Stefen are very successful market makers. They are very honest and they try a lot of new things. They funded Livevol with their own money.

It’s a total underdog story. What was so interesting to me about them is that they are poised to compete in so many verticals within the financial technology vertical. It is very exciting to see where they are.

This platform has everything in one place so if someone is looking for block trades, volatility, historical volatility, scanners… everything, you don’t have to search around for different sources.

These guys actually asked me to take five days off between Ballista and starting at Livevol but I couldn’t, I was too excited. I had to start telling people where I was going and I started training myself on the platform. I use it and wanted to know every little detail of the company. That’s the way I am.