FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.
It’s no mean feat for a company to make it to 50 years. Competitive forces, the evolution (and revolution) in trends, and management needing to stay on the ball for the long haul are just a few of the challenges firms face in surviving to the teen years, let alone adult and middle age.
Add in the quickening pace of technology change and disruption, and it’s no surprise that the average age of an S&P 500 company was under 20 years in 2020, down from 60 in the 1950s, according to Credit Suisse.
So it’s notable that no one, not two, but three major capital markets firms turn 50 this year: Cboe Global Markets, DTCC, and OCC.
The Chicago Board Options Exchange was founded as the first marketplace for trading listed options. On its first day of trading, April 19, 1973, there were only 16 stocks with listed options, and 911 options contracts were traded.
“Cboe’s 50-year legacy is built on trust, relentless innovation and a drive to disrupt the status quo,” Ed Tilly, CEO of Cboe Global Markets, says on the company’s 50-year anniversary page. “As we celebrate this milestone anniversary, we’re doubling down on our bold vision for the future, powered by the exceptional strength of our people.”
On the same day CBOE was founded in the Board of Trade Building in Chicago’s financial district, so was its wholly owned subsidiary, CBOE Clearing Corp. — the predecessor to OCC.
Created in 1973 to solve Wall Street’s paperwork crisis, one of the Depository Trust Company’s first actions was to digitize and create the first electronic security, long before digitization became mainstream. DTCC President, CEO & Director Frank La Salla said: “Achieving a milestone of 50 years in business is important to celebrate, but it raises a natural question: What’s next for us?”
“When I think about the years ahead, I often come back to the same word: stewardship. We’ve earned our reputation as a trusted steward by protecting the safety and stability of the financial markets, but in the years to come, we want to grow our impact,” La Salla continued. “We’re committed to delivering solutions to address challenges the industry can’t solve on its own and drive major initiatives to define how clearance and settlement and the operational side of market structure evolve.”
The Harvard Business Review explored the longevity of companies in a 2016 report, The Biology of Corporate Survival.
“Business environments are more diverse, dynamic, and interconnected than ever—and far less predictable,” the report stated. “Yet many firms still pursue classic approaches to strategy that were designed for more-stable times, emphasizing analysis and planning focused on maximizing short-term performance rather than long-term robustness.”
“Although we may perceive corporations as enduring institutions, they now die, on average, at a younger age than their employees,” the report continued. “And the rise in mortality applies regardless of size, age, or sector. Neither scale nor experience guards against an early demise.”
Cboe, DTCC and OCC join a select group of capital markets companies in the five-oh club, including recently minted members Charles Schwab, Nasdaq and PIMCO (which were established in 1971), and Fidelity, Instinet, Janus and Raymond James (est. 1969).
Cheers to another 50 years for all.
