Citadel's Sentinel: CIO Tom Miglis Aims to Do the Impossible

“We’re about not being satisfied with where we are today. The person across the street is thinking about tomorrow; we need to be thinking about where we want to be the day after,” Miglis says.

This is reflected in the firm’s current technology projects, like internally sharing systemization strategies as it merges its converts, relative value, and index arbitrage trading into one credit group. “We’re not a special-situations shop running unique, undiversifable trades,” says Grossman. “We focus on gleaning as much information as possible, within the broadest context. That’s why technology is the tool of choice, creating a framework that joins the creative process with a deep bench of capacity to see business vision realized in a more rapid way. Dedicated mathematization can formalize and add rigor to kernels of wisdom. But even then, it’s still just a number, and that’s where you need the application.”

Another project, which Miglis sees as providing mutual benefit, is the firm’s newly formed technology services arm, which, following the successful sale of its Omnium fund administration platform to Northern Trust in 2011, licenses software the firm uses itself—mostly to institutions already invested in Citadel’s funds.

“It’s at a starting stage, but an important business for us, in that it represents a way for us to acquire new knowledge. Every time we talk to a third party, we learn something new, something we never would have learned unless we had that conversation,” Miglis says.

The firm’s most ambitious project, however, is to influence the post-crisis swaps market structure with technology, bringing fairer competition to a space that, like electronic market-making in the past, could use maturation.

“We have a dedicated COO, Randall Costa, who only spends his time pushing Dodd–Frank, because there is a lot of complexity around marching this forward. The initial goal was clearing, and getting depth-of-book trading on top of that. As swaps execution becomes more transparent, with a more level playing field, a firm like ours has opportunities to generate returns for our investors,” he says. “From Ken’s college days, the message here is that if you work harder and smarter, you can take advantage. If you don’t, someone else will.”

As Sanzone points out, Miglis has always had that in him. “There is no conservative mindset about him. When someone is successful in multiple places, it speaks to the person,” he says. “You have to reinvent yourself. Reputation might help, but every time you change a job, you have to redefine yourself and that takes a certain skillset. We both came from a blue collar background, humble beginnings, and in that sense he’s never lost where he’s came from. The success hasn’t changed him.”

Redefinition. A stunningly simple idea for a CIO who has already shown how technology, whether through market-making or software development, can transform what a hedge fund can be. With Miglis to his left, Belluardo wonders in a moment of reflection, “Just what are we?”

Some would say a target. Others would say the future. Having it no other way, Miglis just smiles.