YouSaid · the spoken record

Brad Katsuyama

lines on the record: 113
first: 2015-03-15
most recent: 2015-03-15
sittings or episodes: 1
sources: podcast

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“Yeah, we had a lot of theories, and Ronan Ryan is the guy you're describing, who's a partner of mine at IEX. And Ronan Ryan, you know, kind of just by a stroke of another stroke of luck, we ended up meeting and he explained a lot of the missing pieces. He turned it into physical geography. He turned it into architecture and networking and the things that he had built for high frequency trading clients at the different exchanges. And everyone came to the, you know, we hired a lot of people at RBC and everyone came with a little bit of information. No one knew the whole picture. And we kind of put the jigsaw together. Speaking of which,”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the interesting part is we didn't actually end up losing hardly any money because we would buy stock on the offer. It would disappear and stock would move higher. And then I'd turn around and sell on the bid and the stock would tank again. So you're actually buying and selling at kind of the same price and you get two data points for almost nothing, right? So we did that. We traded hundreds of millions of shares testing out various theories. Yeah, absolutely. And really, it almost ended up a wash.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which means that we're going to have to spend a bit of our own money, but it's not going to get egregious. My limit is $10,000. And that limit might sound large, but in my prior job, we were managing millions of dollars of capital. So it wasn't really a lot. What's $10,000?”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think once we started to learn more about the exchanges and how they were set up and the things that they were selling to certain participants, high-speed traders, we started to realize that the exchanges had a lot to do with the experience that we were having in order to test these theories out, we had to set up a series of experiments interacting with different exchanges in different ways. And when I brought this proposal to RBC, I think it was very fortunate that I had run risk trading before because they knew I could be responsible with capital. But I said, we need data points. We're running an experiment and we can't use client orders to do it.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“At this point, we're called or classified an alternative trading system. Hopefully, we'll be an official exchange by the end of this year. Okay, oh, that'd be great.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would get a fraction. Most of it would disappear. Some of it would trade. And then I would be forced with two choices, right? You either wait and the stock might never come back to your price, or you have to chase it higher. And every time I chased, I've got a smaller fraction and I'd be left with the same decision the next time. So it became incredibly frustrating. And at the time in 07, I was running all of U.S. trading for RBC. It was happening to every single person on my team. So that kind of is obviously a very frustrating time. And it was the financial crisis. So not only are we dealing with this market that's kind of an illusion of what we thought the market was, the world was melting down around us. It was a pretty unbelievable time, actually.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it was incredibly frustrating. 2006, if I saw 100,000 shares of Intel on the offer, I'd buy 100,000 shares of Intel if I wanted to. In 2007, I could buy 80,000 in 2008. I could buy 70,000 in 2009. I could buy 52,000. The number kept going down. And when I would try to buy the next level of stock, 2102, I would get a smaller percentage than I got the time before. It drove me crazy. And the funny part is I would call up my tech team and I'd say, hey, guys, what is happening? Like, watch the screens. Look at what I'm looking at. The most common answer I would get is it's a coincidence. You know, many people want to buy Intel at the same time you do. And I'd say, okay, I'll prove you wrong. I'll count to five. And nothing's going to happen until I press this button and I count to three or five or seven, whatever. Nothing would happen until I press the button. I'd blow the stock up.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Electronic trading has always been More efficient way to trade than to trade through middlemen per se. I think the evolution of that technology has gotten a little bit perverse, but I was always of the inclination that technology was a good thing for the markets it has been.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And over the counter stock. So I was trading technology. They promoted me to run technology trading, and I traded Nasdaq and I traded New York. And I could never understand why anyone would want to trade. The floor because it was so much more efficient to trade electronically over the NASDAQ terminal. Careful you will.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. I mean, it was funny because I went from trading in Toronto. Where the market was entirely electronic. My first job in the US was I was trading listed energy stocks, which meant I was dealing with the New York Stock Exchange floor. So I was calling in an order down to a floor broker. And I remember being informed of the three-minute rule, which meant if I give an order to the floor and I saw print hit the tape, I saw trade hit the tape, if it happened within three minutes, it might not be my trade. And that was completely mind-boggling to me. I said, well, why doesn't the guy just get up to the post faster? I was the first trader at RBC to trade both listed.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mentality. My mentor in the business was this guy Bobby Grubert, who was my boss for 11 and a half years in the US. And he's just a great role model, just kind of kept me on the straight and narrow. I was a 23-year-old kid and I could have gone a lot of different ways probably. And I owe a lot to him to kind of keep me on the right path.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think I got really lucky. When I worked at RBC in Toronto, in Canada, they're the number one bank there. And when I moved down, when I got offered the job to come to New York, RBC, I just bought a bank Dane Rusher, and they were ranked 23rd in the United States. I jumped at it just simply because, you know, there's nowhere to go but up. And I felt like it was kind of a very underdog.”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So, I mean, it was a bit of a culture shock, I'll be honest. I remember driving through the first time through New York and looking at all the buildings, and it seemed like every single building was as tall as the tallest building in Toronto. Outside of the CN Tower, the downtown core of Toronto was very, pretty small. New York just seemed massive on every scale. So it was pretty overwhelming. But, you know, again, adjusted Got used to it”
2015-03-15 · Masters in Business · IEX Group Brad Katsuyama: Masters of Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source