From Fairfield to Wall Street, Ronan Ryan talks change

Ronan Ryan, CSO of IEX Group

Ronan Ryan is perhaps best known among his fellow graduates of the Fairfield University class of 1996 as Lucas the Stag.  But to the rest of the world, he has become known as one of a small group of business executives trying to make stock trading more honest, thanks to the rush of news coverage since the publication of Michael Lewis’s best-selling “Flash Boys.”

“It’s very humbling to be talked about on Wall Street globally,” said Ryan. “And [the publicity’s] been phenomenal for business.”  Ryan is the Chief Strategy Officer for IEX, an Alternative Trading System that was written about in Flash Boys.

In an interview with 60 Minutes, Michael Lewis stated that the United States stock market is rigged.  High frequency trading, a practice involving rapid stock trading through computer algorithms, has been exploited by big Wall Street banks and hedge funds for an extra advantage over retail investors.  In the same interview, Lewis said it was “legalized front-running.”

IEX was founded on the idea of putting a stop to this malpractice and leveling the playing field by standardizing fairness in the markets with ready access for any broker dealer.

“We call it ‘the mission,’ we really believe it’s a movement,” said Ryan.  Lewis  interviewed hundreds of people for Flash Boys: regulators, broker dealers, high frequency traders, exchange operators, though it all centered back to IEX.

Ryan helped start IEX alongside Brad Katsuyama, IEX President & Chief Executive Officer, Rob Park, Chief Technology Officer and John Schwall, Chief Operating Officer, who all later managed to convince others to join them.  The employees made many sacrifices, mainly in cutting their salaries and possibly paying themselves to work in order to build the business and its success.

“You would think it’d be more difficult to convince people to come aboard,” said Ryan.  “At the outset, there was a bunch of skepticism, but they noticed that the four of us left high-paying jobs, and we’re not idiots.  So they said it’s worth investigating.  If we’re successful in fixing what we think are our inherent structural problems in the market, everyone with us who took that risk will make the money back.”

There is lots of debate over how the trading landscape will change after the impact of Flash Boys, coupled with the FBI conducting investigations into high frequency trading.  It is often said that retail investors end up as patsies for Wall Street.  Ryan says they do not need to be.

“When you graduate Fairfield and get a job, you’ll have most of your money in a 401K and all of this is managed professionally by [investment management] firms like Capital Group and those are the firms we’re helping navigate the market,” said Ryan.  “You come in and out of the market buying and selling shares and that’s where some of those trades are getting clipped needlessly through purposeful and structural inefficiencies in the market that help some counter parties and don’t help others and that’s really what we’re trying to address.”

“People like to push us into this fight that we’re anti-high frequency, we’re anti-this.  We feel that the high-speed traders and low-speed traders can all interact on a level playing field and that’s what’s never been done before.”

In an excerpt by The New York Times, it was stated that Ryan worked with clients in 2007 who had little idea what to do with the high-frequency technology they were using.  “It’s kind of funny, some clients are upset at me over saying that,” said Ryan.  Ryan got involved in the architecture of high frequency trading back around 2004, but it did not begin to appear regularly in business stories until 2009 when it accounted for 60-73% of US equity trading volume.  “I was explaining to them about the technologies being used and people were shocked that this was going on.  Now fast forward four or five years later, everybody’s fully aware of where they should be and the vast majority is caught up to speed.”

People wanting to work on Wall Street scene or at IEX will have to get in line.  IEX alone has received thousands of resumes because of the recent publicity, though it does not just fall on the qualifications in one’s resume. Ryan compared his experience working at the Royal Bank of Canada, which typically hired Ivy League college kids, to where he is now and looking for well-rounded, personable people.

“What I look for in people is a willingness to learn and [that] they’ve shown themselves to be self-starters,” said Ryan.  “What I would say to anybody from college is be very humble.  I’m not breaking any college students’ balls here, but sometimes people will come in right out of college and start talking to me about their investments and what they’ll bring and I’m like, ‘Jesus Christ, did your dad tell you to say that?’”

When asked for advice for aspiring workers and students, he replied, “As corny as it sounds, you got to really keep pushing and don’t give up.  I tried to get on Wall Street several times and lots of times people will turn you down – pick yourself up and go at it again.”

“Persistence, willingness to work and humility when you meet with people – that’s what you need!” Richard Balarkis, CEO of Quendon Counseling, speaks with Ronan Ryan.


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