Challenge Accepted: Chris Isaacson, Bats Global Markets

Chris Isaacson was in his first semester at Nebraska Wesleyan University when he decided a change needed to be made. Isaacson had come to the school—a small liberal arts college in Lincoln, Neb.—as a business major, but it didn’t take long before he felt the need to challenge himself. 

It’s not that Isaacson didn’t enjoy business. In fact, it was something he was well attuned to. Isaacson had learned the fundamentals of business just under 170 miles west of campus in the small town of Loomis, Neb. His father ran a pig and grain farm, which, sans pigs, his father and brother still run today, and his mother started and ran a business manufacturing country apparel that she headed for over a decade, employing almost 100 people at one point. Business was a topic of conversation at the dinner table every night in the Isaacson home. 

And while Isaacson always had an appreciation for the business world, there was something that interested him even more: How do various pieces fit together to make a business successful?

“I wanted to learn about how these systems work. I think I’m an engineer at heart. I liked to really understand how things work. I don’t like mysteries; I want to get to the bottom of it,” Isaacson says. “The business courses I enjoyed—they came very naturally to me—but I wanted to learn something new that wasn’t just part of the way that I thought already.”

And so, despite having never written a line of code in his life, Isaacson changed his major to information systems, enrolling in what he called the “hard” classes, such as high-level mathematics and computer science. 

“Part of the reason I’ve stayed at Bats from the beginning—and I’m excited about staying on with CBOE and the combined company—is that things are continuing to grow. We’re doing big, new, exciting things, and we’re building. So, therefore, I didn’t feel a need to go elsewhere to find exciting things to do.”

That philosophy is evident throughout all of Isaacson’s endeavors. Despite being a three-time state champion in the high jump in high school, Isaacson instead competed in the decathlon while at Nebraska Wesleyan, even though several of the events were new to him.

The switch ended up being a success. He twice earned academic All-American honors while in college. For Isaacson, the challenge of teaching himself the new events was one of the best parts. 

“I enjoyed getting to learn all 10 events. The technical aspects of throwing the javelin and the discus. How do you run a good 1,500 meters?” Isaacson says. “How do you become a good long jumper? You’ve got to learn the pole vault, but I’d never pole vaulted in my life. I almost killed myself doing that. It was just a lot of fun.” 

And it’s good that he likes new challenges, because he’s about to oversee a massive integration between two of the largest exchanges in the US.

Up for a Challenge

Nearly two decades later, Isaacson, 38, who currently serves as Bats Global Markets’ global CIO, still has a passion for constantly challenging himself. Since 2005, he’s helped grow Bats, where he was one of the initial 13 employees and first five developers at the firm, into one of the largest equity exchange operators in the world. Every day $112 billion of value is traded on Bats markets in US and European equities, US options and global foreign exchange (FX), according to Isaacson.  

The opportunities won’t stop anytime soon either. On Sept. 26, CBOE Holdings announced it was acquiring Bats for approximately $3.2 billion. And while the deal isn’t expected to close until the first half of 2017, one thing was made very clear in the announcement: The newly combined entity will be running its markets on Bats’ proprietary trading technology. 

The massive task of bringing together two large exchange operators will be led by Isaacson, who will take over as CBOE Holdings’ CIO following the retirement of the firm’s current CIO, Gerald O’Connell, after the closing of the deal. 

It’s a complementary deal, as there is little crossover between the strengths of both individual firms. CBOE Holdings operates the Chicago Board Options Exchange, the largest US options exchange, and is known for its proprietary products. Bats, which has made a name for itself on the strength of its technology, is the second-largest stock exchange operator in the US and runs the largest pan-European equities exchange. The combined company will have a market cap range of $8 billion to $9 billion. 

Isaacson has done his fair share of migrations while at Bats—Chi-X Europe, Direct Edge, BZX Options—but nothing of this magnitude. Not that something like that worries him. That’s all part of the thrill for Isaacson.

“I guess you can say I’m easily bored,” he says. “I want to be doing new, exciting, difficult, challenging things all the time. It’s not just because we need to keep ourselves busy; it’s because we want to be on the forefront of the securities market globally and providing great value to investors and our customers, as well as our shareholders. Part of the reason I’ve stayed at Bats from the beginning—and I’m excited about staying on with CBOE and the combined company—is that things are continuing to grow. We’re doing big, new, exciting things, and we’re building. So, therefore, I didn’t feel a need to go elsewhere to find exciting things to do.”

Tradebot Times

What makes Isaacson the right person to lead the integration of Bats into CBOE? For one, there might not be anyone else in the world who knows Bats technology like Isaacson. After all, he’s been there from the beginning. 

His path to the firm can be traced all the way back to a meeting at his local church during the fall of 2003. Isaacson, a devout Christian, was introduced to a fellow member of the congregation who informed him that Tradebot—the high-frequency trading (HFT) firm Dave Cummings ran prior to founding Bats, and where he currently serves as CEO and chairman—was hiring software developers. 

At the time, Isaacson was working at Cerner Corporation, a global healthcare company, and looking to make a move into the financial markets. He jumped at the opportunity, and after interviewing with Cummings, among others, the firm decided to take a chance on Isaacson, who was only 25 at the time. It was fitting for Isaacson, a strong believer in his faith, to have been given such a great opportunity.

“I think it was serendipitous or a divine appointment that I ended up at Tradebot, honestly,” Isaacson says. “I’m very grateful for it. I don’t believe in chance. I believe in providence. I think the Lord has me where he wants me.”

Isaacson dove headfirst into his new career. He quickly recognized the importance of being a subject-matter expert in both business and technology. He attempted to get as many licenses as he could, passing his Series 4, 7, 24, 27, 55, 63 and 65 exams.

Bats Beginnings

After nearly two years at Tradebot, Isaacson was one of 12 people, along with Cummings, to leave the HFT shop in the summer of 2005 to create a market aimed at competing with what the group believed was a duopoly being created by NYSE and Nasdaq. 

Isaacson was one of five developers that spent six months building Bats’ platform from the ground up, until its go-live date in January 2006 as an alternative trading system (ATS). Once trading began, Isaacson became the trade desk manager, building operational support while dealing with customers on a daily basis. 

He continued to climb the ladder. In October 2006, he was promoted to vice president of operations, where he was responsible for network engineering, system engineering and systems involving infrastructure and datacenters. Less than a year later in July 2007, before he had even turned 30 years old, he was named the firm’s COO. Isaacson reached his current position shortly following the completion of the acquisition of fellow equity exchange operator Direct Edge in February 2014.

While the firm continued to break personal records in terms of daily volumes, industry-wide recognition of the success that Isaacson had helped foster came with the US Securities and Exchange Commission’s (SEC’s) approval of Bats’ first US equities exchange in August 2008. 

“When you start from scratch, exchanges seem like simple things from the outside. You match buyers and sellers. How hard can it be? But the number of different feature functionalities that we offer and protections and risk controls—there is a lot there,” Isaacson says. “A highlight was when we became an exchange in 2008. I mean that was kind of a great validation of, OK, the model works; we’ve earned our seat at the table as an exchange. Many people thought we would never do it; people thought that, at that time, the SEC would not grant another exchange license. So running that project to make sure that all the systems worked while we were going through the legal project of writing down all our rules and getting them approved by the SEC was a lot of fun.”

Dark Day

Every peak has a valley, and the same can be said for Bats and its successes. Unfortunately, one of the firm’s low points was very public, as it came in the form of a failure of its own initial public offering (IPO) in March 2012.

Isaacson cuts straight to the point when remembering the day.

“It was just a bad day. Everybody who has had a bad day at the office can relate. This just happened to be everyone in our industry and some outside of it got to see the bad day,” Isaacson says. “We expected things to go off at a certain time. We knew immediately there was a problem, and we honestly had it fixed within a few minutes. We had a patch ready to go and had it released. But by then the damage had been done, given the spotlight.”

Isaacson remembers sending an email to his team that weekend telling them the firm would rise from the proverbial ashes, and that this would be the “lone blemish on a phenomenal team that’s delivered and executed in every way possible.” 

Years later, Isaacson calls it a blessing in disguise. And while that might seem like a canned statement, the failed IPO did cause Bats to double down on its engineering culture. Matching engine resiliency was added so that if the primary matching engine failed, it would do so in less than a minute over to a secondary matching engine. Bats also created a dedicated software quality team to do continuous integration and independent testing, Isaacson says. A permutation tester was also built. The system randomizes the inputs into Bats’ systems in as many combinations as computers can come up with, simulating different types of orders that the firm’s systems would receive.

All of that work led to the firm’s second IPO, which came in April of this year and was a success. Isaacson says his team actually developed what they called an “IPO Playbook” that was made up of 15 to 16 different plays that mapped out how the team would react if something went wrong. When Isaacson finally saw the print on the tape, he remembers the immediate feeling of relief washing over him, followed by plenty of hugs amongst the team.

“The pressure was high, there is no doubt,” Isaacson says. “You don’t get three shots at this. I was blessed to get two.”

New Frontier

Now Isaacson has arguably his biggest challenge, as he is responsible for leading the migration of all trading of the combined entity onto Bats’ proprietary trading technology. 

Because the deal has yet to receive regulatory approval, Isaacson declined to get into specifics about his plans regarding the migration. He did say it will be a multi-year project, and that all technology will be run from Bats’ technology hub in Kansas City. 

The logic of the deal lies in what both sides bring to the table. “There are the tremendous proprietary products and brand that the CBOE has built over 40-plus years, and then obviously our incredibly lean, efficient and proprietary technology that we’ve built,” he says. “Also, if you look at the overlap of our trading assets, there is very little. There is a small overlap with multi-listed options in the US, and the rest of it is really completely complementary. So we think there is great potential when you put the two together and combine the strengths of the two firms. The uniform technology across all of the combined companies, exchanges and platforms will provide efficiency for our customers. That’s undeniable and should be clear to everyone.” 

What’s also clear is Isaacson’s passion for the next stage of his career. There is no hiding the enthusiasm in his voice when talking about the deal. 

“I’m very excited because it is a huge team effort. We don’t do anything here alone. I can’t wait to get to know the entire CBOE team and work together to form this amazing combined firm,” Isaacson says. “The merits of the deal are undeniable. It’s a huge project with clear upside for our shareholders and all constituents. So yeah, I’m very excited.” 

Fundamental Data

Name: Chris Isaacson

Age: 38

Title: Global CIO, Bats Global Markets; CIO, CBOE Holdings (following close of transaction)

Hometown: Loomis, Nebraska

Education: BS in information systems from Nebraska Wesleyan University; MBA in computer science and management from University of Nebraska–Lincoln 

Hobbies: Helping with youth sports programs in the area, Church leadership group, running, reading