Simplex Trading makes a market out of uncertainty

Consider the least theatrical moment in finance: a price appearing on a screen. Someone wants to buy an option. Someone else is prepared to sell it. Between those intentions sits a question that sounds almost childishly simple. At what price? Simplex Trading has built a business around answering that question while accepting the consequences of getting it wrong.

Two prices. One difficult promise.

A market maker offers to buy at one price and sell at another. The distance between them is the spread. For everyone else, those prices provide something useful: a chance to transact without waiting for another investor with exactly the opposite wish. Liquidity is a dry word for the convenience of finding somebody home.

The spread also conceals a problem. After buying an option, a dealer owns a position whose value can change before it can be sold or hedged. A seemingly attractive price can become an expensive mistake. Market making therefore combines valuation, execution, and risk management. Being willing to trade is only the beginning; staying willing requires a working system.

Simplex’s audited filing describes an own-account operation trading U.S. exchange-listed options, equities, and futures. Its securities business deals with exchange members rather than carrying ordinary retail customer accounts. The person using a brokerage app can benefit from market liquidity without ever becoming a direct Simplex customer. That distance helps explain why a firm can matter to a transaction while remaining invisible to its initiator.

The engineer sits close to the risk

The business dates its Chicago beginnings to 2004. The current broker-dealer LLC was formed in 2010. Those dates describe different things: an operating history and a legal entity. Erik Swanson arrived between them, joining in 2008 after college. He became head trader in 2011 and CEO in 2014. His route to leadership began with the activity the company exists to perform.

Read the software engineer vacancy and the machinery becomes more tangible. The work runs from trading algorithms to high-speed data analysis and execution-engine design. C++ and Linux appear in the requirements. The advertised annual base salary is $125,000 to $200,000, plus a discretionary bonus. Useful trading software has a payroll attached before it has a profitable trade.

Simplex says it builds proprietary software and develops strategies around changing market opportunities. That creates a tight connection between the people writing code and the people using it. The code’s usefulness is tested by execution and exposure, not merely by whether a feature ships. A fast system that implements the wrong decision simply gets the firm into trouble sooner.

“Minimal bureaucracy, maximum speed.”Dave Haufe, Chief Technology Officer

That is Haufe’s description of the workplace, rather than an independently measured performance claim. The company’s recruitment materials make the choice concrete: work happens in the office, inside Chicago’s Federal Reserve building. Collaboration comes with physical proximity. For candidates, the practical question is whether working alongside traders and engineers suits them, along with the problems and compensation.

The competitive proposition is this combination of internal tools, direct trading experience, and room to pursue a new strategy. Those ingredients must earn their keep together. A rival can quote a better price, process information faster, or manage inventory more cheaply. The firm’s preference for building its own systems leaves it responsible for both their advantages and their maintenance.

A new route to the order

Better software is one way to expand. A different route to trading activity is another. In 2021, Swanson described a relationship with institutional routing broker Matrix Executions as part of Simplex’s move into wholesale options. In a 2022 interview, he described an investment in Matrix that gave Simplex a wholesale options business. Distribution had become part of the strategy.

The setting mattered. Retail participation was drawing attention and new entrants. Swanson discussed both increased volumes and the need to handle more data. That opportunity brought competition as well as activity. His stated ambition included improving execution prices for retail brokers. For a reader assessing the business, the useful distinction is between finding trades through exchange quoting and building relationships that bring broker flow.

There is also Simplex Ventures, which backs early-stage companies. The website explicitly identifies it as a separate legal entity under common ownership. One portfolio example is Spline Data, whose founder, Matthew Smith, describes building automated municipal-bond prices and yield curves after spending too much trading time correcting data. Here the financial opportunity begins upstream: improve the information before trying to improve the decision.

The exception that cost $200,000

In September 2023, Simplex settled an SEC proceeding without admitting or denying the findings. The order imposed a $200,000 penalty and censure over short sales made from October 2018 through December 2020. The SEC found improper reliance on a market-making exception to the requirement to locate shares for borrowing.

The failure concerned eligibility for that exception, despite an existing pre-authorization system. After examiners raised concerns in October 2020, Simplex changed its procedures around December: short sales outside easy-to-borrow lists required affirmative locates, and authorization could not exceed the shares located. The documented correction put a harder limit into the workflow.

What travels beyond the trading desk

Three ideas travel well: keep builders close to users, invest in the information behind decisions, and make operational permissions specific. These are lessons suggested by Simplex’s public record, rather than a recipe for reproducing its returns. They require access to real feedback and the authority to act on it.

The limits matter. This model needs capital, specialist people, reliable infrastructure, and controls that keep pace with decisions. Copying the speed without those conditions would copy only the visible part. Simplex’s interesting product is the whole arrangement: a price, software capable of acting on it, and a firm prepared to own what happens next.