At the beginning of February, Cboe acquired real-time analytics firm Hanweck to further build out our Information Solutions offering. Hanweck delivers real-time, high performance risk management analytics for banks, broker-dealers, hedge funds, clearing houses and exchanges. Hanweck’s offering ranges in services, from real-time options analytics to risk-based portfolio margin calculations, and across asset classes and regions. We talked to the company’s founder Jerry Hanweck about his experience in the industry, founding Hanweck and why he’s excited to be join the Cboe team.
When Jerry Hanweck was a PhD student studying managerial economics and decision science at Northwestern University’s Kellogg School of Management, he worked part time at a financial firm in Chicago. Jerry and his colleague were giving a client presentation to a bank’s trading desk in the World Trade Center when a message appeared across the Telerate screen, stating Jerry’s firm was shutting down.
“We thought it was a joke. We said to the traders, ‘Very funny, you guys figured out how to put your own messages on the Telerate,’” says Jerry, Cboe’s newest Vice President of Technology, based in New York. “But they had nothing to do with it.”
Jerry says the experience taught him a lot about risk and set him on a path to a career in successfully navigating crises. And part of that is knowing the risks.
After finishing his PhD, Jerry spent time working in banking and financial services (and a stint in real-estate development in Las Vegas) before starting a consulting business in 2006. Jerry, along with Mike Hollingsworth, Senior Director, Financial Risk Analytics at Cboe, founded Hanweck as a consulting firm for banks. As their business grew, they realized that a new technology being released -- Graphics Processing Units (GPUs) -- would allow them to deliver options calculations much faster than before. And there was need for it.
That realization shifted Hanweck’s business model from consulting to product development. The company, as it’s known today, delivers real-time, high performance risk management analytics for banks, broker-dealers, hedge funds, clearing houses and exchanges. Hanweck’s offering ranges in services, from real-time options analytics to risk-based portfolio margin calculations, and across asset classes and regions.
With a bit of fortuitous timing, Hanweck made the switch to product development and got its feet off the ground just before the 2008 financial crisis.
“That was definitely an interesting time to start a business,” Jerry says. “We were just getting going and had a few clients, so watching clients go out of business and dealing with the volatility was a challenge. But, at the same time, the heightened volatility also accentuated why real-time analytics were so crucial.”
About 12 years later, as the economy reels from a global shutdown, the markets are proving Hanweck’s necessity once again. Even if it looks a little different this time.
“This crisis is different than any I’ve lived through. When I think back to 9/11, or Long Term Capital or even 2008, nothing really compares,” Jerry says. “At least during the financial crisis everyone was still working in offices, where they could communicate. I think risk management takes on a new importance now that people aren’t together and may not be able to share information as easily or have access to all of the tools they had in the office.”
That’s where Hanweck can help. Hanweck’s real-time analytics may not recreate the experience of being in the same room as a colleague, but they ensure you’re both getting the same information at the same time. For instance the Hanweck Borrow Intensity Indicators (BII), provide constant maturity synthetic lending rates derived from real-time option analytics. These proprietary calculations can enhance equity trading strategies and securities lending price discovery, in real-time, no matter where you are.
“The end-of-day or once-a-day calculations won’t cut it right now because everything is moving so much intraday,” Jerry says. “Factor in the information flow between people isn’t what it was just two months ago and you realize people really need better tools and better insight into what’s going on in their portfolios or their customers’ portfolios to navigate this.”
Jerry has weathered quite a few storms through his career, and found a way to help other people weather the storm too, growing his business from a shared desk space with another investment firm in the World Financial Center to a global company that spans continents. Now, the Hanweck team will continue to grow as it fills out Cboe’s Information Solutions offering.
“When this opportunity came up I truly thought, ‘I cannot think of a better company for Hanweck to become a part of,’” Jerry says. “Our business interests aligned but didn’t overlap, we seemed to have common industry goals and the people are great. It just seemed like the perfect fit.”
Going forward, Jerry says he’s excited to help expand Cboe’s Information Solutions team and add to the company’s analytics offering. Jerry’s also happy to call associates from FT Options -- a previous Hanweck customer, “teammate.”
“Obviously, we knew the team at FT Options from our prior work together so blending the two groups together has been fun. So far, joining Cboe has been a great experience."