James McNulty is preparing to storm the futures empire he helped build.
As Chicago Mercantile Exchange CEO, Mr. McNulty engineered the company's initial public offering in 2002 and oversaw a doubling of its share price. But one year after the IPO, he was shown the door amid friction with CME's member-controlled board over his pay and management style.
Now the guitar-strumming futures guru is working on a plan to break CME's hold on the U.S. Treasury futures market as chairman of NYSE Liffe LLC, a new market owned by New York Stock Exchange parent NYSE Euronext Inc. CME gets about 20% of its revenue from fixed-income derivatives.
Earlier this month, NYSE Liffe struck a deal with Depository Trust & Clearing Corp. to form a joint venture designed to radically reduce the cost of Treasury-bond trading. And over the next few weeks, Mr. McNulty, NYSE Liffe CEO Tom Callahan and DTCC executive Murray Pozmanter will be calling on dozens of hedge funds and other “buy-side” players, asking for data on holdings to quantify their promise of “very substantial” savings for traders.
Mr. McNulty, 58, dismisses the suggestion of a grudge against his former employer, but he does relish the chance to create a rival. “It's fun for me to be a part of it,” he said. Asked about the potential threat, a CME spokesman said, “We remain focused on providing the most efficient markets for our global customer base who rely on our ability to provide liquidity backed by our proven central counterparty clearing model.”
Mr. McNulty knows the futures business — and CME in particular — like few others, although it didn't start out that way. A fourth-generation Chicagoan who played folk guitar semi-professionally in the 1970s, Mr. McNulty got a bachelor's degree in liberal arts and sciences at the University of Illinois at Chicago in 1973, then traveled overseas to write a master's thesis on Samuel Beckett at University College Dublin.
But Mr. McNulty found a career in finance, leading CME to hire him in 2000 to whip the 102-year-old, member-owned club into a for-profit operation in advance of a public offering. He did that, slashing committees, streamlining management and forcing efficiencies into what had been a mostly political institution.