(Bloomberg) — Ivers W. Riley, who helped usher in a new era of securities trading with the introduction of the exchange- traded fund known as Spider, has died. He was 82.
He died on Feb. 17 at his home in Savannah, Georgia, according to his son, Michael G. Riley. He was diagnosed in August with colorectal cancer.
The Futures Industry Association named Riley to its Hall of Fame in 2005, citing his “remarkably varied career in the world of derivatives exchanges and a long track record in creating innovative products and building innovative organizations.”
As senior executive vice president of the American Stock Exchange from 1986 to 1993, Riley oversaw derivatives trading and “was the driving force in the development” of the exchange-traded funds known as SPDRs, according to the Washington-based Futures Industry Association.
Unlike open-end index mutual funds, so-called Spiders are bought and sold as common stock. The first such fund, called Standard & Poor’s Depository Receipts, or SPDR, began trading on the American Stock Exchange in 1993. The security, which tracks the S&P 500 Index, has a market value of $195 billion.
In a 2006 article for Futures magazine, Riley recalled how, in 1989, his hopes for “a destiny-changing product” rested on a member of his two-person derivatives product group, Nathan Most.
‘New Instrument’
“At the time, we described our quest as a search for an instrument which would ‘look, taste, smell, and feel like a share of stock representing the whole market,'” Riley wrote, “an entirely new instrument that could be the basis for many offshoots and iterations over time.”
Their solution, the SPDR, took four years to receive regulatory approval, by which time Most was nearing 80, Riley wrote. Most died in 2004.
From 2002 to 2006, Riley was chairman of the International Securities Exchange, which runs one of the biggest U.S. options markets as a New York-based unit of Deutsche Boerse AG.
David Krell, the exchange’s current chairman, said in a statement that Riley “was involved in many of the transformative moments that set the course for the robust options markets in existence today.”
Ivers Whitman Riley Jr. was born on Sept. 28, 1932, in Los Angeles. His father, Ivers Riley Sr., was a clothier. His mother was the former Lillian Bendig.
He received a bachelor’s degree in finance from the University of California at Los Angeles in 1955.
Career Path
He served four years in active duty as a U.S. Navy pilot, mostly in the South China Sea, his son said today in an interview. He received a bachelor of laws degree from La Salle Extension University in Chicago, then worked as a stock broker at Merrill Lynch & Co. in Pasadena, California, and a vice president in equities product planning at Aetna Life & Casualty in Hartford, Connecticut.
He was a senior vice president at the Chicago Board Options Exchange in the 1970s and an executive vice president in the options division of the New York Stock Exchange in the 1980s.
In 1985, he was among a handful of candidates to succeed Robert J. Birnbaum as NYSE president. The post went to Richard Grasso in 1988.
Following his American Stock Exchange tenure, he was chief executive of the Hong Kong Futures Exchange and chairman of the HKFE Clearing Corporation from 1994 to 1997, and again from 1999 to 2000.
As the popularity of ETFs grew, so did their scope, well beyond equity indices to commodities, currencies and specific industries. Today, there are 146 U.S. SPDR ETFs, according to Andrew Hopkins, a spokesman at State Street Global Advisors in Boston.
Thinner Slices
“We didn’t think it would get down to such a thin segment of the market as some of these have,” he told Futures magazine in 2008. “We really didn’t think we would get some of these very small ETFs where you divide bio-technology” stocks into subsets. “You start slicing things too thin — I don’t know how to determine what too thin is, but some of the stuff I see now sure seems to have reached it.”
ETFs “are here to stay, without a doubt,” he added. “I just think their ranks are going to thin out from where they are right now.”
He married the former Barbara Bensley in 1955. She died in 2010. In addition to his son Michael, a financial adviser and hedge-fund manager with Coastal Management Group LLC and Beach Street Financial Services in Narragansett, Rhode Island, survivors include another son, Steven Riley, and a daughter, Christine Simko.
