Crypto Corner: Chris Hehmeyer of Hehmeyer Trading + Investments
Chris Hehmeyer and I first started talking about crypto over a year ago, so I thought it would be a great time to catch up with him and hear more about how his firm has progressed from having new initiatives focused on crypto markets to more mature products and offerings. I also wanted to let Chris explain the why behind the reasoning for his firm, Hehmeyer Trading + Investments (HTI), to “go big” in this space and how they became crypto and blockchain believers!
While the name Chris Hehmeyer is probably familiar to anybody close to futures trading in the U.S., this is the Crypto Corner, so I’ll touch the tip of the iceberg on the background of the guy I have admired mostly from afar during my 20+ years in the business. I’ll also mention that Chris was on a crypto panel at the recent FIA Expo 2018 in Chicago, and had a great Will Rogers-esque quip that got a great laugh in the room. In fact, one of my co-workers said after that panel, “I could listen to Hehmeyer talk all day.”
Chris is currently the the CEO of HTI, which includes a proprietary trading firm, commodity trading advisor, commodity pool operator and introducing broker business. Chris’s career spans over 40 years and includes board member and/or chairman positions at several industry organizations, including the National Futures Association, the Futures Industry Association, the Board of Trade Clearing Corporation and the Chicago Board of Trade. Chris began his career as a floor runner and then became an independent broker and trader. He later was one of the founding members of futures commission merchant Goldenberg Hehmeyer & Co. (GHCO), which was sold to Penson Worldwide in 2007.
How did you first get interested in crypto, Chris?
Chris: One of the traders in our office was trading crypto in his personal account and took the time to explain the fundamentals to me. I then attended a conference in San Francisco about a year and a half ago and was hooked.
How is Hehmeyer Trading + Investments getting into the crypto space?
Chris: We have done a few things: we have created a crypto index that is capitalization weighted. The Hehmeyer Cryptocurrency Index™ has done and continues to do a great job of tracking the value of the cryptocurrency markets. We have also created a commodity pool (managed under our Commodity Pool Operator) to track that index in which investors can invest U.S. dollars and get exposure in a passive fund to the cryptocurrency market. Lastly, we have a crypto trading desk where we stream quotes to exchanges (liquidity provision), capture price discrepancies (arbitrage) and we make markets to OTC customers.
In your opinion, what does the future look like for digital assets?
Chris: The invention is blockchain. All of the cryptocurrencies and other digital assets that are starting to come to market are innovations of the blockchain invention. We believe the crypto asset universe is going to be one that is beyond our current imagination. Cryptocurrencies are early innovations of the blockchain technology and probably will be a small subset of the digital asset or crypto assets universe. The digitization of all assets is hard to envision at this point, but it is headed our way…sort of like self-driving vehicles are heading our way—so to speak! Anything that can go into a ledger (i.e., a debit and credit), will go on to blockchains and digital ledgers.
What do you think about the evolution of derivatives in the crypto space?
Chris: The digitization of assets is going to bring innovative ways of creating, clearing and settling derivative transactions of those assets. It is impossible to predict where all that could lead. This is like the internet in 1995 when people were first using that invention to be able to communicate with each other. The invention of the internet was mostly about communication, including the ability to send a string of numbers from one person to another in the form of an email. People could communicate in a much more efficient manner than they ever had been able to. Digital ledger technologies are going to allow for the decentralization of the exchanging of all assets so that any transaction can be settled on a peer-to-peer basis. This, of course, includes the creation of smart money and smart contracts. You’re going see derivatives of digital assets that we can’t even imagine.
What do you think about the regulatory landscape in the crypto space?
Chris: Our system is designed in a way that ingenuity in private enterprises always comes faster than government. We want government to move slower than private enterprise! This, of course, means that there are going to be frustrations when government is slow to react. That is the phase we are in today: when the industry is very thirsty for regulatory and compliance infrastructure that has not yet been built or created. It is going to take time for the many agencies from many jurisdictions to work out how this is to be done…but it will happen…and in a very big way!