BlackRock Inc. (BLK) hired NYSE Liffe U.S. Chief Executive Officer Tom Callahan as deputy head of its cash-management group.
Callahan, who ran NYSE Euronext (NYX)’s U.S. futures exchange, is expected to join BlackRock in September, Lauren Post, a spokeswoman in New York for the world’s largest asset manager, said today in a telephone interview.
NYSE Euronext, the parent company of NYSE Liffe U.S., agreed to be bought by IntercontinentalExchange Inc. (ICE), the second-largest U.S. futures exchange also known as ICE, for $8.2 billion in December. Callahan helped expand interest-rate products offered at NYSE Liffe U.S., including contracts based on Eurodollars, one of the most-frequently traded futures on competitor CME Group Inc.
The NYSE Liffe U.S. contracts have struggled to gain market share after initial trading when the futures were first offered, said Rich Repetto, an analyst with Sandler O’Neill & Partners LP in New York. About 18,000 interest-rate and Treasury futures contracts traded on average per day in the second quarter at NYSE Liffe U.S., compared with 6.8 million at CME Group, he said.
“It’s been very puzzling for NYSE as to why NYSE Liffe U.S. hasn’t been successful,” Repetto said. “They are looking at the skills and experience of ICE in the futures industry to help, if it’s possible, to grow NYSE Liffe U.S.”
Callahan, who couldn’t be reached for comment, also helped create New York Portfolio Clearing LLC, a joint venture between NYSE and the Depository Trust & Clearing Corp. that allows investors to combine cash and derivative positions in one clearinghouse to lower margin costs.
The joint company has been in talks with LCH.Clearnet Group Ltd. since last year to include interest-rate swaps in the mix of contracts to offset margin in a deal known as Project Trinity.
The ICE acquisition of NYSE Euronext threw the future of that arrangement into doubt, Repetto said. ICE is developing its own plan to offer cleared interest-rate swaps with its clearinghouses in the U.S. and Europe. Callahan said in January that Project Trinity was still moving forward.
Callahan’s departure was confirmed in an e-mail by Eric Ryan, an NYSE spokesman. He declined to comment on the future of Project Trinity, as did Brookly McLaughlin, an ICE spokeswoman. Nina Truman, an LCH.Clearnet spokeswoman, wasn’t immediately available for comment.
BlackRock’s cash-management business has more than $250 billion in assets under management, which represents just under 10 percent of the global market share, Richard Hoerner, head of the business, said in a memo.
“Tom’s appointment is a reflection of our commitment to maintaining our strong market standing in this space,” Hoerner wrote.
Callahan graduated from Harvard University in 1991 and was a managing director at Merrill Lynch & Co. prior to joining NYSE, according to data compiled by Bloomberg.
To contact the reporter on this story: Matthew Leising in New York at firstname.lastname@example.org.