Richard L. Sandor is an American businessman, economist, and entrepreneur who is a pioneer for financial futures and became known as the father of carbon trading.
He is the former chairman and CEO of the American Financial Exchange (AFX) established in 2015. The AFX main product, the AMERIBOR benchmark index vyed to replace U.S. dollar Libor as a lending benchmark. Sandor is chairman and CEO of Environmental Financial Products LLC, which specializes in inventing, designing and developing new financial markets. He is widely recognized as the "father of financial futures"Resolution signed by William F. O'Connor (Chairman of the Board). Board of Trade of the City of Chicago. July 21, 1992 for his pioneering work in developing the first interest rate futures contract in the 1970s, when he served as chief economist and vice president of the Chicago Board of Trade (CBOT).Speaker: Richard Sandor. Financial Times World Energy Council Energy Leaders Summit. October 2009. Retrieved November 2011.
Sandor is also the founder of the Chicago Climate Exchange (CCX) – the world's first exchange to facilitate the reduction and trading of greenhouse gases.Leila Abboud. Economist Strike Gold in Climate-Change Fight. The Wall Street Journal. March 13, 2008. Retrieved November 2011. In 2007, he was named the "father of carbon trading" by Time Magazine for his work in designing, developing and launching CCX and affiliated exchanges.James Cameron. Heroes of the Environment: Richard Sandor. Time Magazine. October 17, 2007. Accessed November 2011. Among Sandor's academic roles, he is the Aaron Director Lecturer in Law and Economics at the University of Chicago Law School and an honorary Professor at the University of Hong Kong and the School of Economics at Fudan University. He formerly taught at graduate and undergraduate levels at several universities throughout California, Illinois, New York, China and England.
Sandor is known for asserting that the next financial revolution will be in the convergence of the financial markets and the environment. He is often credited for founding the field of environmental Finance. His first book Good Derivatives: A Story of Financial and Environmental Innovation, was published by John Wiley & Sons in April 2012.
Early life and education Sandor was born in New York in 1942. He received his Bachelor of Arts degree from Brooklyn College and holds a Ph.D. in economics from the University of Minnesota.
Pioneer of Financial Futures As a professor on sabbatical from the University of California, Berkeley in the 1970s, Sandor became the chief economist and vice president of the Chicago Board of Trade (CBOT). At the CBOT, Sandor not only pioneered the first interest rate futures contract,Peter Norman, The Risk Controllers: Central Counterpart Clearing in Globalised Financial Markets. West Sussex, United Kingdom: John Wiley & Sons Ltd. 2011. p.121 but the most widely traded and imitated interest-rate futures in the world, the Treasury bond futures contract. This revolutionized the field of finance and earned him the title of "father of financial futures." Sandor originally coined the term "derivatives"My Word is My Bond: voices From Inside The Chicago Board of Trade, Arlene Michlin Bronstein. Hoboken, New Jersey: John Wiley & Sons, Inc. 2008. p.313 to describe the futures and options contracts that were traded on the Chicago exchanges. Its definition was subsequently expanded to include not only regulated products on futures transactions, but any customized product traded off the exchange, i.e. bilateral OTC transactions. Sandor was honored by the CBOT and the City of Chicago in 1992 for the creation of financial futures.
Sandor was also a strong proponent of electronic trading at a time when most exchanges favored open-outcry. In fact, he had presented the case and designed the platform for electronic trading as early as 1970 – even before the concept of electronic trading was patented.Paul E. Schaafsma of Foley & Lardner LLP. The Next Patent Frontier- Financial Product Patents. FindLaw: For Legal Professionals. February 18, 2003. Retrieved November 2011. At Berkeley, he was the project leader of the California Commodity Research Project (CCARP), which looked at the feasibility of establishing a for-profit, all-electronic exchange in at the time when none existed.Phillipa Leighton Jones. Sandor Paper Could Aid Defense. eFinancial News. November 4, 2002. Retrieved November 2011.
At the CBOT, Sandor championed innovative financial instruments such as event-linked derivatives. Sandor served as vice chairman of the CBOT Insurance Committee and was the originator and co-author of the catastrophe and crop insurance futures and options contracts.Daniel P. Collins. Richard Sandor: Inventing Markets out of Thick Air. allBusiness. October 1, 2007. Retrieved November 2011.
From 1991 to 1994, Sandor was chairman of the Chicago Board of Trade Clean Air Committee,Michael Himick Ed. Securitized Risk Strategic Opportunities for Insurers and Investors. The Glenlake Publishing Company Ltd. 1998. p. xi which developed the first spot and futures markets for sulfur dioxide (SO2) emission allowances and supervised the annual allowance auctions conducted on behalf of the U.S. Environmental Protection Agency.Taylor, Jeffrey, and Rose Gutfeld. "CBOT Selected to Run Auction for Polluters." Wall Street Journal. September 25, 1992, p. C1 He also led the effort to create the Dow Jones Sustainability Index (DJSI) – the first global index that tracks the financial performance of leading sustainability-driven companies worldwide."The DJSI—a story of financial innovation." How I See It. Environmental Finance. Dec 2001–Jan 2002
Sandor has held a variety of senior executive positions in financial service companies, such as Drexel Burnham Lambert, Kidder Peabody and Banque Indosuez.The World According to Richard Sandor . DerivativesStrategy.com. December 1999. Retrieved November 2011. Sandor has served on numerous Exchange committees and boards, including the Chicago Board of Trade (CBOT), the Chicago Mercantile Exchange (CME), IntercontinentalExchange (ICE), London International Financial Futures Exchanges (Liffe) and the International Advisory Board of Marché à Terme International de France (MATIF).NABE Washington Economic Policy Conference 2005 Session 22 – The Role of Climate Exchange in Efficient Pollution Reduction (Speakers) . March 21, 2005. Retrieved November 2011. Sandor played an advisory role in helping Swiss Options and Financial Futures Exchange (SOFFEX) become the world's first electronic exchange.Richard L. Sandor. Good Derivatives: A Story of Financial and Environmental Innovation. Hoboken, New Jersey: John Wiley & Sons Inc. 2011. Chapter 14 Teaming up with Boston-based Battery Ventures, Sandor also helped to promote Liffe's electronic trading platformLeah McGrath Goodman. Blackstone's Battery Mates, Dealmaker. March/April 2007. Battery Dealmaker and is credited for Liffe's successful contract – the universal stock futures contract.Patrick L. Young and Charles Sidey, Single Stock Futures – A Trader's Guide, West Sussex: John Wiley & Sons Ltd. 2003. p. xiv He also assisted the New York Mercantile Exchange (NYMEX) on the design of the options contract for crude oil.The Volatility Exchange volx.us
Sandor has served several times as an advisor to the Commodity Futures Trading Commission (CFTC) on matters related to financial, energy and environmental futures.CFTC Names Members of the Energy Markets Advisory Committee. CFTC Press Release: PR5496-08. May 02, 2008. Accessed November 2011.
The Father of Carbon Trading Using Environmental Financial Products as the incubator, Sandor founded the Climate Exchange PLC (CLE) family of companies. They include Chicago Climate Exchange (CCX); the Chicago Climate Futures Exchange (CCFE), a futures branch of the former; and European Climate Exchange (ECX), Europe's leading exchange operating in the European Union Emissions Trading Scheme (EU ETS) and the benchmark for world carbon prices. Additional global affiliates included the Tianjin Climate Exchange in China, the Montreal Climate Exchange in Canada and Envex in Australia. The emissions covered under the Chicago Climate Exchange were larger than that of Germany under the European Union Emissions Trading Scheme. It included 50 states and all major sectors of the U.S. economy. Its membership represented 17 percent of the companies in the Dow Jones Industrial Average, and 20 percent of the largest -emitting electrical utilities in the U.S., and 11 percent of Fortune 100 companies."CCX: Cap-and-Trade in the United States," Chicago Climate Exchange, December 2008.
Sandor and EFP are turning their focus to the feasibility of a market-based mechanism as a tool to address water quality and quantity issues. This follows on extensive studies done by Sandor and his team while still at Chicago Climate Exchange (CCX). Sandor and his group of researchers studied the potential of a water quantity exchange for the state of New Mexico; the viability of a water market in the Great Lakes region;Jacob Bunge. Carbon Trading Pioneer Dips Toe into Water Markets. Wall Street Journal. July 18, 2011. Retrieved November 2011. examined the potential benefits of implementing a rules-based exchange for water resources in Alberta, Canada;Richard L. Sandor, Michael J. Walsh and Jeffrey. K. O'Hara. "The Potential Benefits of an Organized Exchange for the Sustainable Use of Water in Alberta." June 2010. and helped develop a pilot nutrient trading effort in Pennsylvania.Pennsylvania Nutrient Trading Executive Summary, Chicago Climate Exchange, November 17, 2009.
In August 2002, Sandor was chosen by Time magazine as one of its "Heroes for the Planet" for his work as the founder of the Chicago Climate Exchange.Katherine Ellison. Heroes: Richard Sandor, His Market is a Gas. Time Magazine Special Report. August 26, 2002. Retrieved November 2011. Five years later, he appeared in Time magazine's fifth annual list of "Heroes of the Environment" for his work as "the father of carbon trading." In 1992 Sandor served as an expert advisor to the UN Conference on Trade and Development on tradable entitlements for the reduction of greenhouse gas emissions.UNCTAD, Global Greenhouse Emissions Trader – a quarterly newsletter dedicated to greenhouse gas emissions trading, December 1997, Retrieved November 2011
In June 2010, CLE was acquired by the IntercontinentalExchange (ICE).
Recognition In November 2004, Sandor was the recipient of an honorary degree of Doctor of Science (Honoris Causa) by the Swiss Federal Institute of Technology (ETH) of Zurich, Switzerland Peter C. Fusaro, Marion Yuen. Green Trading Markets: Developing the Second Wave. Oxford, United Kingdom: Elsevier Ltd. 2005. p.221. for his work on the design and implementation of innovative and flexible market-based mechanisms to address environmental concerns. In 2010, Sandor received the John H. Dales Memorial "Leadership in Environmental Markets Award" from the Environmental Markets Association.Leadership in Environmental Markets Award. Environmental Markets Association. March 22, 2011. Retrieved November 2011.