Hull Trading Company
| Company type | Limited Partnership |
|---|---|
| Industry | Financial Services |
| Founded | 1985 |
| Fate | Acquired by Goldman Sachs in 1999 |
| Headquarters | Chicago, IL |
Hull Trading Company was an independent algorithmic trading firm and electronic market maker. Known for its quantitative and technology-based trading strategy, it was acquired by Goldman Sachs in 1999.
History
In the late 1970's, Blair Hull developed an empirical options pricing model independent of Black-Scholes. Realizing that computers would lead to automated exchanges and mathematical securities pricing, he founded Hull Trading Company in 1985. The firm grew to over 180 employees including dozens of engineers and physicists, and at its peak under Director of Financial Engineering R. Scott Morris traded over 7% of the index options traded in the United States and 1% of the shares traded on the New York Stock Exchange. In 1999, Blair Hull sold the company to Goldman Sachs for $531 million.[1]
Investment strategy
Hull Trading was primarily an equity options market maker. The firm employed complex mathematical models to analyze short-term options and equity pricing discrepancies while hedging against overall risk exposure. It employed mathematicians and physicists to design algorithms and computer-based trading platforms, allowing it to execute tens of thousands of transactions daily.[2]
Pay structure
The company was also known for its emphasis on teamwork and democratic pay structure, in which employees awarded each other bonuses. Since pay was based on nominations received, the system has been described as highly meritocratic.[2]