Ex-Goldman derivatives head on why he left shrinking investment banks for an expansionary fintech firm
John Macpherson's final job in investment banking, as head of European head of listed derivatives at Citigroup in London, lasted around two months. He is, he says, the "guy you bring into grow a business" and Citi's ambitions to expand did not match his own. He's now landed in the most obvious place for someone looking for quick growth - fintech.
“I left Citi after a short period, for a number of reasons, primarily became it became quickly apparent that it was not the right atmosphere for my particular skills," he said. "I became frustrated, and was carrying some emotional baggage from my time at Nomura. I thought ‘life’s too short’ and took some time to clear my mind and re-focus my career in a direction where my skills could be put to their maximum use."
Macpherson had spent the previous two years as head of Nomura's listed derivatives business globally and helped to build the team and grow revenues. But when Nomura closed its OTC clearing business in 2015, which supported the listed derivatives division, he decided to it was time move on to a firm that was expanding. Citi wooed him with the promise of building a listed derivatives business, but this never happened. After a year consulting and various non-executive director roles, he's now CEO of fintech start-up BMLL, which he joined in November last year.
Macpherson isn't exactly a take-it-easy type. He flies into business trips two days early over the weekend to make sure he's prepared. His way of 'unwinding' is to train for and run ultra-marathons and he's completed the Marathon Des Sables previously. The bulk of his career was spent as head of fixed income futures and options sales at Goldman Sachs in London. Macpherson says that he built Goldman's London derivatives business from a $10m a year business in 2004 to a $100m business by 2009 and that it went from a bit player to the top listed derivatives house in the City. He says that his management style is to get stuck in as much as possible.
“I’m not a person to sit in the corner in a glass office and let the business chug along," he says. "I helped build the futures business at Goldman into the biggest in EMEA and we replicated this across the U.S. and Asia. It was a trying period and everyone in the team had to stand up and be counted. This meant pulling a lot of 18-hour days to keep the business growing.”
To backtrack a little, Macpherson says that he never really expected to work at Goldman Sachs in the first place. After leaving the army, he ended up in the City in various sales and broking jobs before landing a big job at J.P. Morgan heading up its futures and options sales and execution team in Europe. When Goldman called him out of the blue, his first thought was that he wanted to see what was going on inside its Peterborough Court offices.
“When Goldman Sachs called me, I was flattered, as the bank was a mystery to me and many others. Unless you were part of the bank, you never knew what went on behind those doors,” he says.
He's not a typical Goldman recruit. "I don’t have a degree, I went from school to the army and then into a financial sales job," he says. "Most people at Goldman are recruited via the graduate training programme and then retained. Fewer people arrive with extensive experience from other firms.”
Macpherson spent over nine years at Goldman, but when the bank started making cutbacks rather than building the business, he got itchy feet.
“I ended up reporting to people who didn’t understand the secret sauce, which had to that point helped the listed derivative business grow," he says. "They were trying to downsize the most successful team of its kind in London and, although I was appreciative of my time at Goldman, I equally realised that I wanted to build upon the best parts of what I had learned in a new endeavour with an aspirational firm.”
The new "aspirational firm" he's looking to build is BMLL. It is using machine learning to tackle the vast amounts of data coming out of stock exchanges. It takes historical order book data from over 30 different trading and parse that into a common format that is more easily analysed by its clients. Then it uses Amazon Web Server to host that data and allows clients to rent it and analyse it in the manner appropriate to them.
Macpherson became CEO of BMLL, taking over from Johannes Sulzberger in November last year . He's overseeing a period of expansion for the firm, which has been around since 2014 and been through various periods of fundraising. Earlier this year, it ran a proof of concept with the Bank of England's fintech accelerator programme.
“At the exchange level, there’s petabytes of data being generated, but there’s no common format and indeed these formats regularly change over time," says Macpherson. "With new legislation such as MiFID II and regAT an ever growing number of customer types are required to access this data, but they also need to parse it and convert it into a format they can actively use.”
BMLL is one of a growing number of fintech firms using AI to crunch data for hedge fund clients, but Macpherson says that the types of customers who use its service is broad. "There are different client types the product can appeal to – compliance departments, regulators, quant hedge funds, brokerages, investment banks, high frequency trading firms and long-only asset managers," he says. "BMLL provides a cloud based platform to provision API access to full depth limit order book data coupled with distributed machine learning. Our APIs enable end users to quickly and efficiently address research problems in this data, such as anomaly detection.”
BMLL is targeting financial services organisations. However, it has not tapped industry expertise to build the product.“We currently have 27 scientists based next to Google’s headquarters in central London, many of which has been poached from the research labs of world-leading universities," he says. "In addition to that we have a number of smaller teams based overseas. Due to the scale of the demand we are seeing we are aggressively hiring – conditional on funding by the end of the year we expect to hit 50 staff.”
Photo: Getty Images