A Strong Foundation Citadel Has a Long History with Cutting-Edge Technology

ELECTRONICALLY REPRINTED FROM OCTOBER 2014

A Strong Foundation Citadel has a long history with cutting-edge technology. Joseph Squeri, the firm’s CIO, is happy to leverage its technology platform for newer projects.

By Greg MacSweeney @gmacsweeney

RABBING THE IT REINS at one of the most tech- nologically astute hedge funds in the world is a big challenge, especially when the fund’s own CEO has G JOSEPH SQUERI a strong technology background and the previous CIO spent more than a decade building a robust IT foundation. In fact, Chief information officer, Citadel LLC some candidates might be scared away. CAREER BIO: More than 25 years of experience Joseph Squeri, a 28-year financial services technology in financial services. Before Citadel, he was the CIO veteran who took the chief information officer position at of Barclays’ capital markets and asset management Citadel LLC in October 2013, didn’t view Citadel as a daunting businesses. He was also at Goldman Sachs, where he challenge; he viewed it as an opportunity. “I knew this was the was global co-head of the securities division. place to be,” Squeri says. “All of the technology innovation that Tom [Miglis] helped build gave me a chance to go from great EDUCATION: Bachelor’s degree from the City to greater.” University of New York and a master’s in finance from Miglis was the CIO at Citadel from 2001 until late 2013. Pace University. He was credited with building a robust, flexible, and cut- ting-edge IT shop at the $20 billion hedge fund. In addition, WHAT EXPERIENCE HAD THE MOST Citadel’s founder and CEO, Kenneth Griffin, wrote a con- LONG-LASTING IMPRESSION ON vertible bond-trading arbitrage system when he was still in YOUR CAREER? “My nonprofit work as a board college. To this day, Griffin remains well informed about the member of Per Scholas and Creating IT Futures has fund’s technology. certainly made the most lasting impression on me Squeri says that realizing the importance of technology to and my career. My participation with these top-class Citadel could be unnerving. “The fact that technology is such organizations has provided me with the ability an integral part of the firm” is one thing that could keep him to lever my technical expertise and business skills awake at night, he jokes. “There’s a delicate balance to remain- to make a substantial impact across a number of ing nimble, but also maintaining prompt responsiveness to underserved communities.” client requests. You have to have speed to market. While at the same time, can’t be satisfied with previous accomplishments.” WHAT IS ONE THING PEOPLE WOULD Squeri says that Citadel’s history with technology makes BE SURPRISED TO LEARN ABOUT YOU? many aspects of his job easier, while he also acknowledges “I’m a pretty good cook! I truly enjoy the creative it increases expectations. “My biggest challenge is constantly aspect of preparing new dishes and take pleasure in exceeding my clients’ requests — in terms of how we think, sharing what I make with friends and family.” what we deliver, and the pace we execute,” he says. “We need CITADEL

to give the investment professionals the best tools and ects have a practical approach. We start with the data analytical capabilities, period.” that we know has value and we mine it to obtain the When Squeri joined Citadel, the firm had already best information. There is a lot of data out there that moved to a real-time platform for the front, middle, can overwhelm you.” and back offices — something that is rare in the in- Overall, however, the tools that are provided need to dustry. “Our front-, middle-, and back-office platform be easy to use. “I look at our platform like a Formula 1 is truly real time — no batch [processing],” Squeri says. cockpit,” Squeri says. “I want the users to have everything “We are capable of having one position master and one they need at their fingertips. They can use the analytics security master,” which reduces complexity and risk. easily, without having to worry about the back end.” Squeri has approximately 400 technologists on his Risk Management Experts team, which is small when compared with other com- “We provide a technology tool kit to manage our risk panies Citadel’s size. The number of workers seems management platform” so Citadel can measure risk for downright tiny when you consider the fact that Citadel our clients and our firm,” Squeri adds. “We run portfo- builds most of its own technology. “We are not averse to lios through dozens of different scenarios to ensure buying technology, but we are really a firm that focuses that portfolios are shielded from potential shocks.” on building innovative business solutions,” the CIO says. The real-time platform provides Citadel with a So how does Citadel manage all of its technology with unique competitive advantage, Squeri adds. “When only 400 people? Simply put, it doesn’t have the aging clients look at our firm and see that we run the entire “legacy” systems that are found at many financial firms. platform in real time, they know it allows us to have “Citadel has always appropriately scaled our businesses. better risk management and a faster system than most We apply a disciplined process to growing and building others,” he says. our businesses,” Squeri notes. “We really do not have any Having a good technology foundation also allows legacy technology. For our staff, that means we’re con- Citadel Securities, the firm’s execution services busi- stantly developing new ideas ... that will keep us and our ness, to move into new markets more easily. “With clients ahead of the innovation curve.” Citadel Securities, we are moving into markets that are Attracting and retaining IT talent is especially import- becoming more electronic,” such as interest rate swaps ant for Citadel, Squeri notes, since the firm relies heav- and FX trading, Squeri says. “We will build out our tech- ily on cutting-edge tools. “Citadel is very attractive to nology strategies as those asset classes evolve. I feel engineers,” he says. “The value we place on great ideas, fortunate to inherit such a solid technology foundation intelligence, and problem solving is important in every from which to grow.” aspect of the firm. We take a very scientific approach When it comes to analytics, Squeri says Citadel is to everything we do. Our retention rate is very high rolling out big data capabilities to the asset manage- because we provide tremendous opportunities to work ment business. Many of the capabilities are focused on on exciting things.” getting a deeper analysis of research and improving The culture is also part of the reason Squeri, an en- analytics so investment managers can better formulate gineer by training, joined Citadel. In fact, being a tech- strategies and increase returns to clients. He says that nologist — and not just a business person — is vital the first sets of tools can analyze corporate and fun- for success, he says. “You need a mix of both. I have a damental data. Now, his team is adding other types of background as an engineer, with an MBA in finance,” data that can improve the process. Squeri says. “I can dive deep with the subject-matter “When it comes to big data, we give investment experts on the technical team, but I can also debate the professionals a sophisticated technology framework market structure changes that are facing the fixed-in- for success, including compute farms, which help bring come business. A successful CIO needs both the depth investment ideas to life,” Squeri says. “Our big data proj- of expertise in technology and business.” ■

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