Voice of Experience: Kim Taylor, President, CME Clearing

This week The Glass Hammer is profiling successful women in the derivatives industry.

By Jessica Titlebaum

Kim Taylor, President of CME Clearing, said that the automobile industry is to Detroit what the futures industry is to Chicago. Taylor moved to Chicago from the Detroit area to work for Sprint, managing 25 telemarketers. One year later when the firm moved her function to Kansas City, Taylor started looking at job ads in the Chicago Tribune.

Taylor received two offers: one was for a newspaper called The Hammond Times, and the other was for a senior analyst position at the Chicago Mercantile Exchange (CME Group). The Hammond Times position was a better opportunity, she said.

“The other job was a management position and had a better salary. However, I liked the people that I met at the CME and felt like I would be a better fit there,” Taylor said.

She also got positive feedback from her roommate at the time.

“My roommate had heard good things about the CME and felt like the derivatives industry was going to take off,” Taylor said. “This was before people had the Internet and it was harder to research a firm. I had to go on what my friend was telling me and she said this was a growing, local business.”

Leader in Training
Taylor joined the CME Group in 1989 as a senior analyst in the Business Development Group (BDG), an internal consulting group within the Exchange. Working under one of her mentors, former BDG vice president John McPartland, Taylor’s team vetted new technology and services at the Exchange’s clearinghouse.

Under McPartland, Taylor co-authored a white paper for the U.S. Congressional Office of Technology Assessment that correctly predicted the impact 24-hour trading would have on clearing and settlement systems. This alerted Central Banks to modify their respective payment systems to better accommodate a global 24-hour trading environment.

Taylor also worked on another project related to 24-hour trading called the Theoretical Intraday Pricing System, also known as TIPS. The system enabled meaningful risk management assessment decisions to be made after trading hours. While the BDG team designed and built the system, Taylor was the one to test it. The Exchange still uses a predecessor version of TIPS to determine settlement prices every afternoon.

Taylor stayed in McPartland’s group for three-years before a position opened up on the financial services side. She moved into a banking role looking at transactions, collateral, and risk management.

“I am fortunate to have worked for a company that promoted from within,” Taylor said. “It also helped that clearing is such a specialized function, not many people even knew about it until the financial crisis.”

In 1992, Taylor moved into an operational and risk management position at the CME, working for former CME Clearing president Phupinder Gill.

“If given the opportunity, all women should move into operational roles to broaden their experience set and thereby advance their careers,” she said.

The move proved beneficial for Taylor. She soon became Gill’s right-hand woman. In January 2004, when Gill was promoted to President and Chief Operating Officer of the CME Group, Taylor took over as head of CME Clearing.

A Sustainable Culture
The function of the CME’s clearinghouse is to provide financial regulatory surveillance, enforce rules, and evaluate a member firm’s performance to manage risk. The clearinghouse acts as market police, ensuring that all member firms meet financial regulatory requirements.

“CME Clearing has been very successful in the OTC market and I am very proud of the progress we have made,” she said. “We launched a start-up within an established company and we had to strategically go in a different direction than what the CME was used to.”

One of the things Taylor is most proud of is expanding the CME’s reach without losing the firm’s culture.

“I am glad we were able to keep the ‘homegrown talent’ part of the CME’s culture because by bringing in outside experts, it was a change in the way the CME operated,” she said. “We expanded our team and now we are at a place where we are growing our own talent again.”

Working Under Her Mentors
Taylor learned many lessons from the men she worked for, men she came to see as mentors. She stresses the importance of a mentor, but doesn’t believe it is necessary for women to find female mentors.

“I learned a lot about the business side of the industry from McPartland,” she said. “MBA programs around here offer courses in futures trading, but I received my Masters from Eastern Michigan University and the program had a very different focus. I learned a lot on the job.”

Taylor emphasizes just how much she learned from Gill.

“I learned a lot of the human element of business from Gill,” she said. “One thing I learned is that you should always look through the customer’s eyes. You might have an idea with merit, but you need to see how your service will benefit the customer.”

Problem Solvers & Passion
“Before 2008, clearing was post-trade and focused on how everything worked.”

Since the financial crisis, clearing has been at the forefront of many industry discussions. Among other things, Dodd Frank legislation required all OTC trades to be cleared at Exchanges.

“One of the things that has been interesting in this process is the new regulation and how it presents a challenge for us,” she said. “Regulators are giving us all new problems to solve.”

The derivatives industry is about taking risk and managing risk. There are high stakes and things operate in real time.

“People operating in such an environment tend to be passionate and very direct – being comfortable with that, tolerant of very direct communication styles, able to communicate directly and assertively yourself is a helpful quality,” she said

Taylor doesn’t see gender as a distinguishing factor. She believes that women should not focus on being a woman, but rather on their work, as should men.

“Be a colleague, not a female or male colleague,” she said. “Women bring a different skill set to the table but don’t make it a big deal that you are bringing a different view point. Just bring it.”

Taylor believes that it is more important to be competent in what you do, than it is to be a woman in a male dominated field.

“Maybe my point of view is skewed because I’ve worked at the CME Group for so long. We have five women out of 15 on the CME Management team. We’ve had other women run the clearinghouse, including Kate Meyer and Kathy Munn. We also had a woman, Beverly Splane run the CME for about 10 years before I joined the Exchange,” Taylor said.

While Taylor may play down her accomplishments as a woman in a male-dominated industry, no one can deny the impact she has made in derivatives. She has successfully helped steer the CME Group through the electronic trading transition and OTC markets in a way that enabled the Exchange to expand and still keep their deeply rooted culture. Taylor is known for having the most recognizable laugh in derivatives, and her intelligence speaks louder than the image of her as the only woman in the room.