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User:Ɱ/Thomas Peterffy2

< User:Ɱ
Thomas Peterffy
Born (1944-09-30) September 30, 1944 (age 80)
Budapest, Kingdom of Hungary
Occupation(s)Founder, Chairman, and CEO of Interactive Brokers
Known forDeveloping electronic trading of securities
Spouse(s)Divorced, 3 children

Thomas Peterffy (IPA: /ˈpɛtərfi/ [a]; born September 30, 1944[3]) is a Hungarian-born American entrepreneur. He is the founder, Chairman, and CEO of Interactive Brokers Group, Inc. and played a key role in founding the Boston Options Exchange. Peterffy worked as an architectural draftsman after immigrating to the United States and later became a computer programmer. In 1977, Peterffy purchased a seat on the American Stock Exchange and played an important role in developing the electronic trading of securities. He is the largest shareholder of his company, Interactive Brokers.[4] He is the third wealthiest resident of Connecticut.

Early life and career

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Thomas Peterffy was born on September 30, 1944 as Tamás Péterffy to Mária Péchy and Ferenc (Öcsi) Péterffy. His birth took place at a hospital in Budapest in the Kingdom of Hungary. There was a Russian air raid that day (part of the Second World War), and thus Peterffy's birth took place in the hospital's basement.[2][5] In 1949, Hungary became a Soviet state (the Hungarian People's Republic), and Peterffy's father fled the country. Thus Peterffy was raised by his mother and grandparents. He first learned of capitalism in high school, and he sold smuggled sticks of gum to students at 500 percent markup. When he was 13, he organized groups of boys in collecting and selling scrap metal; he later started buying, selling, and trading postage stamps.[6]: 18  Peterffy graduated high school and went on to study advanced geometry in a technical school for surveyors, and he had a long-term goal of attending college and earning a civil engineering degree.[6]: 18–9  In 1965, Peterffy received a short-term visa to visit distant relatives in West Germany. There he took the opportunity to apply for a US immigration permit and fly to New York City.[6]: 19  At the time, Peterffy had no knowledge of English;[7] and the first new language he learned was Fortran.[8] His father was living in an apartment in Queens at the time.[9]

In New York, Peterffy found lodging in a two-room apartment on Manhattan's Upper East Side with a monk who had been excommunicated for drinking and womanizing. Eventually through the city's growing Hungarian immigrant network, Peterffy found a new apartment and a job as a draftsman, creating highway plans at a civil engineering firm. The firm purchased its first computer in 1964, and nobody knew how to program it, so Peterffy volunteered. By 1966 he had built the firm a library of programs, and was collecting $65 ($600 today[10]) a week in salary.[6]: 19  In 1967, he left to work at Aranyi Associates, a business run by Hungarian emigrant Janos Aranyi which helped Wall Street clients set up computer systems. In his first job in finance, he built algorithms to compare different characteristics and values of securites at once, and designed other financial modeling software.[11] After three years there he started work designing commodity trading software for Hungarian expatriate Dr. Henry Jarecki of Mocatta Group.[11] Peterffy started there with a $20,000 salary ($156,900 today[10]) and $4,000 bonus ($31,400 today[10]); he moved up quickly at Mocatta and continued work as a computer programmer until 1977.[6]: 20  Eventually Peterffy earned a bachelor's degree at Clark University.[12] Peterffy built up Mocatta's programming department, eventually to 50 employees in 1975. Peterffy became more interested in trading options, and saw the value of trading them over Mocatta's focus on trading commodities. Peterffy traveled to Chicago to see the CBOE.[6]: 27 

In 1977, Peterffy bought his first home computer, an Olivetti, for $2,000 ($10,100 today[10]).[6]: 28  In the same year, with $200,000 savings ($1,005,600 today[10]), Peterffy bought his own seat on the American Stock Exchange (AMEX) for $36,000 ($181,000 today[10]) to trade equity options.[11] He had $164,000 left to trade, and he worked out of a binder, referring back to sheets listing options values for different prices of the company's stock; he later made up double-sided sheets to consult.[6]: 29  Peterffy had developed a formula to determine best prices to buy and sell options, and used a computer to determine the prices, which he printed and brought to the trading floor, as computers were not allowed on the floor. He was then told he couldn't use his large binder on the floor, so he folded the papers into his jacket for use on the floor.[13]

At the time, Peterffy often wrote code in his head during the trading day and then applied his ideas to computerized models after trading hours.[5] Early on in his trading, he had 200 shares of DuPont. Just after he sold them, the company announced large earnings and a two-for-one split of the stock, whose price soared. Peterffy lost $100,000, more than half his trading capital. Peterffy stopped smoking cigarettes then to conserve his money, after calculating how much he could save in twenty years by not smoking.[6]: 30 

 
Melvin Van Peebles

Early on in his trading, Peterffy decided it would be more profitable to have traders, and he formed T.P. & Co in 1978. In 1982, Peterffy renamed the company to Timber Hill Inc.; he named it after a road to a favorite retreat,[11][6]: 30–1  one of his properties on Hutchin Hill Road in Bearsville, New York. He hired particularly tall and pretty women as traders, due to the fact that other traders did not like communicating with Peterffy, who has a strong accent. Peterffy hired three blond women,[6]: 35  who the traders loved.[6]: 32  Peterffy also hired Melvin Van Peebles, a friend of Dr. Jerecki, who went to work along with the female traders in November 1982 for about a year.[6]: 34  After an accident in 1982, Peterffy began sending orders to the floor from his upstairs AMEX office and used a Quotron machine to get the prices. He devised a system to steal the data by measuring the electric pulses in the wire and decoding them. The data would be then sent through Peterffy’s trading algorithms, and then Peterffy would call down the trades.[6]: 33 

After pressure to become a true market maker and keep constant bids and offers, Peterffy knew that he would need his employees to closely pay attention to market movements, and that handheld computers would help. At the time, the AMEX didn't permit computers on the trading floor; because of this, Peterffy had an assistant deliver market information from his office in the Empire State Building.[6]: 11  In November 1983 he convinced the exchange to allow computer use on the floor.[11] Still the devices weren't invented yet, and it was still 30 years before the iPad was created so Peterffy hired physics PhD candidates from New York University to construct handheld touchscreen computers. Peterffy introduced handheld computers onto the trading floors in the early 1980s, causing a major stir among traders.[5] At this point, Peterffy was making more than $1 million a year ($3.16 million today[10]).[6]: 36–7  One machine "burst into flames on the trading floor".[14]

The CBOE rejected the use of handheld computers, deciding that they were too big for the crowded trading pits. Peterffy redesigned them to be seven inches square and readdressed the CBOE; next the board denied the use of any computers because of the possibility that Peterffy would have an advantage over other traders. Peterffy then turned to the NYSE, which allowed the computers. There Peterffy also built a set of light bars to flash colored bulbs to signal his traders.[6]: 38  In 1986 he moved his headquarters to the World Trade Center to control multiple exchanges. He again hired workers to sprint from the offices to the exchanges with updated handheld devices, which he later superseded with phone lines carrying data to computers at the exchanges. Peterffy later built miniature radio transmitters into the handhelds and exchange computers for data to automatically flow to them.[6]: 39  In 1986, his company started the year with $1 million in capital, and ended it with $5 million in the bank, a 400% return.[6]: 40  Then he proceeded to create the first algorithmic trading operation working from coast to coast - from New York to Chicago and San Francisco exchanges, in order to buy and sell at the cheapest prices.[6]: 41–2  While trading on the Nasdaq in 1987, Peterffy created the first fully automated algorithmic trading system in the world. It consisted of an IBM computer that would fully carry out trades and pull data from a Nasdaq terminal hooked up to it. The machine, which Peterffy wrote the software for, worked faster than a trader would.[6]: 12-4  Upon inspection, the Nasdaq banned direct interface with terminal, and wanted trades typed in manually. Peterffy and his team then designed a system with a camera to read the terminal, a computer to decode the visual data, and mechanical fingers to type in trades, which was this time accepted by the Nasdaq.[6]: 17  Peterffy was pleased with the system, which he said highlighted the absurdity of the situation.[13]

In 1988 Peterffy made $50 million ($129 million today[10]), double that of the previous year. In 1999, Goldman Sachs offered Peterffy $900 million ($1.65 billion today[10]) for the business, although Peterffy wanted $3 billion ($5.49 billion today[10]).[6]: 46  He renamed the company Interactive Brokers (IB) while moving its headquarters to Greenwich. IB had its initial public offering (IPO) on May 4th, 2007, and at the time the market valued IB at $12 billion ($17.6 billion today[10]). The IPO put $1.18 billion directly into his pocket, and it was the second largest IPO that year.[6]: 47–8  He currently owns 85 percent of the company, which takes in annual revenues of US$ 1 billion and books half of that as profit.[11] Peterffy has an 87.6 percent ownership of IBG Holdings and owns all of Interactive Brokers Group's Class B stock. One of Peterffy's most significant accomplishments, according to him, is the Probability Lab, a tool IB released in 2013.[15]

Regulatory influence and political views

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A still of Peterffy's controversial advertisement

In 1999, Peterffy was influential in persuading the Securities and Exchange Commission (SEC) that US options markets could be linked electronically, which would ensure that investors receive the best possible options prices.[11] He has also testified before the United States Senate Banking Subcommittee on Securities, Insurance, and Investment about adding banking regulations.[2]

Although Peterffy has described himself as apolitical,[11] during the 2012 US presidential election Peterffy created advertisements in support of the Republican Party. Peterffy bought millions of dollars of air time on networks such as CNN, CNBC, and Bloomberg. The advertisements consisted of a minute-long spot narrated by Peterffy where he warns against growing socialism in the United States. The ads drew particular attention not only because Peterffy was not a presidential candidate, but also because he paid for the ads himself rather than through a "527 organization".[16][17]

Peterffy's ad received mixed responses. Joshua Green, writing for Bloomberg Businessweek, said "The ad, while slightly ridiculous, is deeply sincere and also quite affecting". Green also asked Peterffy whether the comparison between the United States and Hungary made in the ad was a fair one: "[Peterffy] couldn't really think that the U.S. was turning into socialist Hungary, could he? The government isn't suppressing speech and throwing political opponents in jail. No, he conceded, it wasn't. But it sure feels like that's the path we're on".[18] Politico reported that the ad was "being hailed as one of the best spots this election cycle", and said that it could have been influential in Ohio due to its large Hungarian population.[19]

Voter registration records in Connecticut show that Peterffy is registered as an independent voter.[16] Campaign contribution records show that he donated at least $60,000 to the Republican National Committee in 2011 and that over the past few years has mostly donated to Republican candidates.[17]

Philanthropy

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Thomas Peterffy has little interest in philanthropy, and labels most charitable organizations as inefficient. However, he has donated to educational efforts. Peterffy cited Teach for America, Vanderbilt University, and the Berkshire School as institutions he donated to. In 2003 he gave an undisclosed equity stake in IBG Holdings to Vanderbilt University's Financial Markets Research Center with an equity value at the time of US$ 3 million, according to the university. The university's Financial Markets Research Center is directed by Hans Stoll, a professor of finance at the university and a director and board member of Interactive Brokers Group, Inc.[20][21] Peterffy is also listed as having given more than $20,000 to the Berkshire School, where his children attended high school.[22]

Personal life and family

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Peterffy is an intensely private man; he has long shunned publicity related to his personal life and career. Pacific Exchange CEO Philip DeFeo referred to him as "one of those rare people who doesn't seek fame or wealth for its own sake but focuses on doing what he considers to be right and necessary". Peterffy also has a belief in efficiency in business and society; he is unwilling to put up with those who lack that commitment.[11]

As of September 2013, Peterffy is the 147th wealthiest person in the world, the 50th richest in the United States,[2] and the 3rd richest in Connecticut.[23] He has a net worth of $8.9 billion.[2] He is twice divorced with three children and is an avid equestrian; he keeps four horses at his residence in Greenwich, Connecticut.[2][24] His residence is on an 80-acre (320,000 m2) estate, previously home to Henryk de Kwiatkowski, an airplane magnate and horse breeder. The estate has a main house with two master suites, six additional bedrooms, a swimming pool, sauna, wine cellar and servants' quarters, four guest houses, a caretaker's cottage, two grooms' quarters and a 22-stall horse stable.[12] Kwiatkowski died in 2003; the property was sold in 2004 to Peterffy for US$ 45 million ($72.6 million today[10]).[24] Peterffy also owns a beachfront estate in Antigua.[11]

Peterffy later purchased a property in Palm Beach, Florida, called Blossom Estates.[9]

Awards

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Peterffy received the Joseph W. Sullivan Award at the 24th Annual Options Industry Conference in May 2006,[25] and in 2007 he was inducted into the FIA Futures Hall of Fame.[26] In November 2007, Peterffy received the American Hungarian Foundation's George Washington Award.[27]

Notes

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  1. ^ The Hungarian pronunciation of the surname Peterffy is IPA: /pɛtˈʌrfiː/. His mother's maiden name was "Pechy", which often surfaces as Peterffy's middle name.

References

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  1. ^ "Executive Profile: Thomas Peterffy". Bloomberg Businessweek. Bloomberg L.P. Retrieved July 7, 2014.
  2. ^ a b c d e f "#65 Thomas Peterffy". Forbes Inc. June 26, 2014. Retrieved June 27, 2014.
  3. ^ Schmelás, Linda; Schmelás, Andrew Spark. "Sikeres tőzsdestratéga: Péterffy Tamás". TőzsdeParkett.hu. Retrieved July 7, 2014.
  4. ^ Bunge, Jacob (April 19, 2012). "Interactive Brokers Founder, CEO To 'Gradually' Retire". The Wall Street Journal. Retrieved July 2, 2014.
  5. ^ a b c "Twenty Billionaires Who Started With Nothing - Living the American Dream - Businessweek". Images.businessweek.com. 2010-12-06. Retrieved June 27, 2014.
  6. ^ a b c d e f g h i j k l m n o p q r s t u v w x Steiner, Christopher (2012). Automate This: How Algorithms Came to Rule Our World. New York, New York: The Penguin Group. ISBN 978-1-59184-492-1. OCLC 757470260. Retrieved July 11, 2014.
  7. ^ Story, Louise (November 11, 2005). "See! The Street Was Paved With Gold". The New York Times. Retrieved June 27, 2014.
  8. ^ Peterffy, Thomas (April 25, 2016). "Pro Talks: Billionaire Wall Street pioneer Peterffy" (Interview). Interviewed by Mike Santoli. CNBC. Retrieved June 21, 2016.
  9. ^ a b http://www.magyarnews.org/news.php?viewStory=1446
  10. ^ a b c d e f g h i j k l 1634–1699: McCusker, J. J. (1997). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States: Addenda et Corrigenda (PDF). American Antiquarian Society. 1700–1799: McCusker, J. J. (1992). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States (PDF). American Antiquarian Society. 1800–present: Federal Reserve Bank of Minneapolis. "Consumer Price Index (estimate) 1800–". Retrieved February 29, 2024.
  11. ^ a b c d e f g h i j McGee, Susan (November 10, 2005). "A Breed Apart". Institutional Investor Magazine. No. November 2005. Institutional Investor LLC. Retrieved June 27, 2014.
  12. ^ a b Vigdor, Neil (October 15, 2012). "Greenwich man splurges on his own ads ahead of 'crucial election'". Greenwich Time. Hearst Media Services Connecticut, LLC. Retrieved June 27, 2014.
  13. ^ a b http://www.npr.org/sections/money/2012/08/21/159373388/episode-396-a-father-of-high-speed-trading-thinks-we-should-slow-down
  14. ^ http://www.npr.org/2015/04/23/401781306/we-built-a-robot-that-types-the-man-behind-computerized-stock-trading
  15. ^ Sears, Steven M. (November 16, 2013). "Peterffy's Latest Creation". Barron's. Dow Jones & Company. Retrieved July 7, 2014.
  16. ^ a b Neil Vigdor. "Greenwich man splurging on his own ads - Connecticut Post". Ctpost.com. Retrieved June 27, 2014.
  17. ^ a b "Hungarian-born billionaire makes anti-socialism case in TV ad". Fox News. Retrieved June 27, 2014.
  18. ^ "The Cheerful Billionaire Who Thinks Obama's a Socialist". BloombergBusinessweek. Retrieved June 27, 2014.
  19. ^ Parti, Tarini (November 3, 2012). "Billionaire Thomas Peterffy's 'socialist' ads raise questions". Politico. Retrieved June 27, 2014.
  20. ^ Stoll, Hans (December 2011). "Hans R. Stoll" (PDF). Vanderbilt University. Retrieved July 2, 2014.
  21. ^ Leising, Matthew; Mehta, Nina (November 8, 2011). "Interactive's Chief Bought 8 Million MF Global Shares as Broker Collapsed". Bloomberg News. Retrieved July 2, 2014.
  22. ^ Coffey, Brendan (October 16, 2012). "Billionaire Peterffy Says $1.9 Billion Taxes Support Poor". Bloomberg News. Bloomberg L.P. Retrieved June 27, 2014.
  23. ^ "The Forbes 400 - The Richest People in America". Forbes Inc. 2013. Retrieved June 27, 2014.
  24. ^ a b "Greenwich Estate Sells For $45 Million, Less Than Asking Price". Hartford Courant. Tribune Company. October 10, 2004. Retrieved June 27, 2014.
  25. ^ "Industry Insight - Thomas Peterffy" (PDF). OCC News. The Options Clearing Corporation. Summer 2006. p. 4. Retrieved June 27, 2014.
  26. ^ "Futures Hall of Fame 2007". Futures Industry Association. Retrieved June 27, 2014.
  27. ^ "American Hungarian Foundation George Washington Awards Dinner at New York's Waldorf Astoria". Embassy of Hungary. November 15, 2007. Archived from the original on July 3, 2008. Retrieved June 24, 2014.

Further reading

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Peterffy, Thomas. Interview with Tom Gardner


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Category:Living people Category:1944 births Category:Clark University alumni Category:American money managers Category:Financial analysts Category:Stock and commodity market managers Category:American philanthropists Category:American businesspeople Category:American billionaires Category:Hungarian billionaires Category:Businesspeople from Greenwich, Connecticut Category:Hungarian emigrants to the United States Category:American computer programmers Category:American chief executives Category:American financial company founders Category:American technology company founders Category:20th-century American businesspeople Category:21st-century American businesspeople

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