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Citadel's James Gildersleeve Builds A Winning Program

James Gildersleeve, head of global front office and risk technology, ensured that technology platforms bolstered resilience at Citadel during and after the financial crisis.

As many technology organizations grapple with the shift from IT as order-taker to business partner, rising star James Gildersleeve already operates from the next philosophical level.

"We don't have IT projects here," says Gildersleeve, the head of global front office and risk technology at Chicago-based Citadel LLC. "We only have business projects, where IT is just a means to an end."

Gildersleeve began leading this business-centric approach to Citadel when he joined the firm in 2004. Ultimately, his partnership philosophy would be tested during the financial crisis when the systems he and his team engineered would play a big role in the firm's resilience.

Yet according to Gildersleeve, it all began fairly modestly. "I was hired by Citadel to facilitate and build out our self-clearing and self-funding platform," he recalls. "It was fairly new territory for me."

That's an understatement for someone who studied economics as an undergrad and became involved with technology at his first post-college job at Pershing. Later, Gildersleeve moved on to Lehman Brothers, where his focus was equity sales and trading software modules.

Then came Citadel, which charged Gildersleeve with managing the IT build-out around creating "more systematic diversification and execution around clearing and financing flows," he says.

For this effort Gildersleeve's business experience proved golden. "It helped enable our team to leverage front-office technologies as a means for solving what were more typical middle- and back-office problems," he says. This meant harnessing Citadel's algorithmic and quantitative tools and applying them to funding and clearing workflows.

Weathering The Storm

According to Dan Dufresne, head of global treasury for Citadel, Gildersleeve's work proved invaluable during the downturn. The "platform provided a significant component of our operational strength," he says. "This has been critical to our ability to navigate market dislocations."

Indeed, after a 55% loss in 2008, Citadel's two flagship funds -- Kensington and Wellington -- posted a 62% gain in 2009, cleared their high-water marks in 2011 and achieved a 25% gain in 2012. By contrast, the average hedge fund posted just over a 6% gain last year.

As if that weren't enough, Gildersleeve also worked on creating an integrated research, portfolio construction and trading software suite flexible enough to extend across the firm's fundamental investing teams. Not bad for a guy whose 40th birthday is still a couple years off.

He's also leading efforts to improve fundamental trading systems to put more visual tools in the hands of the traders. "We're working on coupling systematic routines with real-time measurement of algo performance," Gildersleeve says. "We want to go beyond a traditional trading blotter to show more analytics in what's happening with the flows."

Beyond technology, Gildersleeve's management style has also contributed to creating the IT-infused business Citadel is today. It starts with how he structures his 100-person team. "Within my overall team is a series of smaller teams," he says. "This includes horizontal teams across the different investment cycle disciplines serving various business lines. All are expected to intimately know the products, the role players and the flows across the integrated stack."

Regardless of the project, Gildersleeve keeps his teams laser-focused on engineering each system to span Citadel's business lines. "We make sure the software we build is asset-agnostic, broker-agnostic and region-agnostic in order to truly leverage it across the franchise," he says.

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio

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IvySchmerken
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IvySchmerken,
User Rank: Author
10/2/2013 | 2:26:51 PM
re: Citadel's James Gildersleeve Builds A Winning Program
And by sticking with standard hardware, procedures, processes, and a consistent software development methodology, across asset classes and divisions, I avoiding technical glitches, at least internally, could be the desired outcome.
Anne R. Gabriel
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Anne R. Gabriel,
User Rank: Apprentice
10/1/2013 | 10:17:46 PM
re: Citadel's James Gildersleeve Builds A Winning Program
I agree that the hurdles in big organizations are fairly insurmountable. On the other hand, by applying the Citadel/Gildersleeve lessons, other smaller firms could use front-office tech for back-office challenges to stay competitive with - or even gain advantage over - larger players.
Anne R. Gabriel
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Anne R. Gabriel,
User Rank: Apprentice
10/1/2013 | 10:05:16 PM
re: Citadel's James Gildersleeve Builds A Winning Program
Yes, standardization is exactly where Gildersleeve's going. Among other things, standardization enables making changes more quickly and easily - whether upgrades, updates, fixes or new integrations. The faster you can do any of these things, the more resilient your systems.
IvySchmerken
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IvySchmerken,
User Rank: Author
10/1/2013 | 7:33:53 PM
re: Citadel's James Gildersleeve Builds A Winning Program
Another engineering tip from Citadel's Gildersleeve is to build software that is asset-agnostic, broker-agnostic and region-agnostic. It seems like this could help with market resiliency because it suggests there is more standardization of core platforms across the board. Make sense?
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/1/2013 | 6:02:23 PM
re: Citadel's James Gildersleeve Builds A Winning Program
Very true. The use of front-office tech for back-office challenges does seem to be unique. It takes a lot of integration and, more importantly, the authority to use technology that way. In organizations where there are layers of management and different stakeholders involved in the decision making process, it might be very difficult to even start to use front-office IT for other problems.
Anne R. Gabriel
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Anne R. Gabriel,
User Rank: Apprentice
10/1/2013 | 5:48:07 PM
re: Citadel's James Gildersleeve Builds A Winning Program
Excellent points, Ivy. Resiliency initiatives suffer from being less sexy than other techs, until there's an outage. It's a credit to Gildersleeve and Citadel that resiliency was a priority well before 2008, much less recent tech glitches. As for the use of front-office technologies for middle and back office challenges, it'll be intriguing to see whether and how quickly others in the industry follow suit.
IvySchmerken
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IvySchmerken,
User Rank: Author
9/27/2013 | 8:27:12 PM
re: Citadel's James Gildersleeve Builds A Winning Program
Market resiliency is a hot topic now with the recent technical glitches and trading outages. In this profile can see how Citadel's CIO has strengthened many areas of the firm's internal infrastructure. Interesting how Gildersleeve is using front-office technologies to solve middle and back office problems. (i.e.,"Gildersleeve was harnessing Citadel's algorithmic and quantitative tools and applying them to funding and clearing workflows.")
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