Infinium Capital Management, LLC

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Infinium Capital Management
InfiniumLogo.jpg
Founded 2001
Headquarters Chicago and New York
Key People Mark Palchak, President; George Hanley, Co-founder
Employees 225
Products Trading, market-making and arbitrage in global derivatives and equities
Website www.infiniumcm.com

Infinium Capital Management ("ICM") was a Chicago-based proprietary trading firm. Infinium trades mostly derivatives across a wide range of asset classes, electronically, on exchange floors and over-the-counter. Asset classes traded included commodities and softs, energy, fixed income, foreign exchange, precious metals and equity indexes. The firm also operated an asset management arm, Infinium Asset Management, which specialized in multi-asset class arbitrage strategies.

The firm stopped trading and wound down in March of 2014, and the currency broker FXCM Inc acquired five of its trading desks, its physical assets and 48 employees to start a new joint venture.[1]

Infinium is a member of the Principal Traders Group, an affiliate of the Futures Industry Association that represents the interests of proprietary traders.[2]

History

Infinium was founded by CEO Charles Whitman and partner Brian Johnson. Whitman first met Johnson in the mid-1990s while he was coaching Johnson's younger brother. Johnson, who then went on to play basketball for the University of Illinois, earned his master's degree from the school in electrical engineering.

Whitman, a floor trader on the Chicago exchanges, saw that markets were shifting away from the trading pits to computer screens in the late 1990s. He recruited Johnson to help with a trading program and then later worked with Whitman on a start-up firm called Blink Trading.

In August 2001, Whitman was contacted by George Hanley, president of the Hanley Group, who asked him to help direct an electronic index options and equity options operation. Whitman and Johnson worked on the business, which eventually was renamed Infinium Capital Management. The retooled operation was relaunched on September 11, 2001.

The firm started trading and making markets in stock index options and later added grain options in August 2002. It was the first group to offer quotes on E-mini S&P 500 options in 2003 and yield curve options in 2004. A year later Infinium was granted one of six electronic market maker slots on those products at the CME Group. It later traded and made markets in new CME Group products such as FX options, Treasury options and Dow Index options.

The firm also expanded its global reach to include exchanges such as Dubai Gold and Commodity Exchange products, Dubai Mercantile Exchange’s Oman Crude products, and cleared OTC energy products.

In March 2012, Infinium promoted Scott Rose to the post of CEO and shifted founder Charles Whitman to the newly-created position of chairman.[3] But in July 2013, one of Infinium's co-founders, George Hanley, had returned to the firm to replace Whitman as chairman.[4] Hanley then named one of the firm's head traders, Mark Palchak, as president and CEO.

Though the firm grew rapidly through the early 2000s, and was in 2009 named by Crain's Chicago Business as the 4th best place to work in Chicago, lower trading volume across the industry forced the firm to scale back its operations. In August 2013, currency broker FXCM began talks to take an ownership stake in Infinium.[5]

Infinium lost $6.1m in the seven months to July 2013 and $6.6m in the year 2012. In 2013 FXCM began talks to buy the firm.

In January of 2014, a group of 31 former employees of Infinium Capital Management filed a suit against the firm accusing six of its leaders of tricking them into putting their own money into the company while failing to disclose to them Infinium’s true financial condition, including executive redemption obligations that wiped out their investments.[6] The former employees said they collectively lost $4.1m, including the life savings of some, after they were persuaded to convert loans they had made to Infinium into equity which later became worthless. According to the civil complaint, some of the employees were then fired.[7] FXCM issued a statement saying, “We are aware of the lawsuit. It does not have a bearing on our transaction as it does not impact the assets we are proposing to acquire..."

Key People

Advisory Board

The firm has an outside advisory board whose members are: Leo Melamed, Michael H. Moskow, William Floersch, CEO of Fortis Clearing Americas LLC; Donald Clark, a retired senior partner at Reed Smith LLP, and Infinium co-founder George Hanley.[8]

References

  1. High-speed trader Infinium Capital winds down -president. Reuters.
  2. Membership. Futures Industry Association.
  3. Infinium Capital Management Names Scott Rose Chief Executive Officer. Reuters.
  4. High-speed trader Infinium Capital gets new boss -sources. Reuters.
  5. FXCM Eyes Stake in Infinium. WSJ.com.
  6. Infinium Capital Accused in Ex-Workers’ Suit of Fraud. Bloomberg.
  7. Infinium ex-employees sue over $4.1m loss. The Financial Times.
  8. CME's Melamed, Fed's Moskow to advise Infinium on growth. Crain's Chicago Business.