R.J. O'Brien & Associates (RJO)| NIBA Member Spotlight

Firm Name: R.J. O’Brien & Associates (RJO)

Founded: 1914 – Celebrating firm’s Centennial this year

Number of Brokers: Approximately 400 IBs in the RJO network – the largest IB network in the industry

NIBA Member Since: 2013 

Web: www.rjobrien.com 

How did you get started? Do you provide additional services besides brokerage?

RJO had humble beginnings as a butter and egg merchant. Founded as John V. McCarthy & Company on Oct. 17, 1914, John McCarthy started the company pushing butter on a cart.  An immigrant of Ireland, he was the first in his family to attend high school.  In 1919, the firm became a founding member of the Chicago Mercantile Exchange.  John’s son-in-law, Robert J. O’Brien, Sr., joined the firm in 1952.  Like his father-in-law, he became active in leadership of the Exchange and took over as Chairman of CME for two terms in 1967 and 1968. Through perseverance, hard work and a profound commitment to integrity and client service, RJO has grown to become the oldest and largest independent FCM in the business and stands today as the last surviving founding member of CME.

IBs are an incredibly important client base of RJO. Bob O’Brien, Sr. set the standard for the company when he began traveling around the country to visit farmers and hatcheries. When John O’Brien, Sr. led the firm many years later, he decided that the firm should “do this on steroids” – devoting countless hours to visiting IBs and learning more about their business. That effort and consistent philosophy over the years has led to a culture of loyalty, trust and mutual respect between the firm and its valued IBs.  

In addition to the IB network, RJO serves a broad range of institutional and commercial clients, and our RJO Futures business is the largest self-directed futures arm in the nation. We’ve always bent over backwards to ensure that this business is complementary to – and not competing with – our IBs.

What do you believe to be the keys to your success? 

Our value proposition for our IB clients includes world-class research, state-of-the-art technology and a very high level of client support around the clock.

Our annual IB Exchange of Ideas Conference is a must-attend for most of the professionals in our network. We bring in great speakers, update our network on important developments in the industry and regulatory environment, and have a lot of fun. This year’s conference in March was especially gratifying as we chose to celebrate our Centennial in our home town.

While 2014 is a year of reflection as we’ve reached this milestone of 100 years, RJO has enjoyed much of its success by looking forward. We are always anticipating industry change and its impact on our clients, and we are ever mindful of developing technology that works specifically for our IBs and other clients. Feedback from IBs has played a critical role in the products and services we offer. 

One of the unique aspects of your firm is that you are family-owned. Tell us more about your unique structure.  

Several O’Brien family members today are majority shareholders of RJO, and four generations of the family have been involved with the business. While management runs the business day-to-day, the firm has never lost sight of our family culture or the extraordinarily high standards established by the O’Briens. Because we are not publicly traded, we have a longer time horizon to achieve our goals, and we have the capital structure to continue to invest wisely in the business.

What do you believe producers/brokers are most concerned about today?

We know that the ever-changing regulatory environment can be stressful for our IBs. So we ensure that we’re on top of any changes that might affect them, and we communicate regularly to ensure that our clients are up to speed. In the wake of the MF Global and PFG disasters, RJO was a vocal advocate of changes that would greatly enhance customer protection, and we were gratified that many of our ideas were adopted.

Something about their research department

RJO research specializes in forward-thinking analysis focused on upcoming market-moving events and the dominant factors driving price discovery. RJO’s thoughtful and precise research content, filled with trade recommendations, is distributed in both text and audio formats. Combining respected syndicated research from acclaimed analyst David Hightower with the experienced commentary of RJO’s own Richard Feltes, Randy Mittelstaedt and David Toth, RJO research is multidimensional, insightful and timely.

What do you believe producers are most concerned about today? 

The lifeblood of this industry, AUM. Without capital, the program manager simply does not have the opportunity to make a living. CTAs and CPOs need the ability to raise capital, to have AUM to manage. Most CTAs like the idea of networking with IBs, and the potential to be that much closer to capital. The challenge is multi-faceted though. CTAs are not keen on switching their clearing to a different FCM because the IB requests it. Most traders/managers are pretty independent by nature, and are uninterested in having their business commandeered just to appease an IB.

CTA and CPO managers also wrestle with the vetting of IBs. Frankly stated, many of us started our businesses from scratch, proved our model, progressed to selling it, and we all be damned if we want to align ourselves with a morally inept IB. Thankfully, there are organizations like NIBA and the NFA to assist in the vetting. This also holds true for those who are traders, who would like to become fund managers, or money managers. These individuals are seeking a working environment where they can implement their strategy, make a living, and not be concerned with morally inept owners. These firms do exist, it takes some work to seek out the good ones. For all of the above, it is about due diligence. Be sure to do it!