Eugene Rotberg

The most innovative product was the “swap” first done by the World Bank in a transaction facilitated by Salomon Brothers with IBM in 1981. The swap in its original form permitted a borrower of one currency to shift its obligation into another currency or to permit a borrowing at floating interest rates to shift to a fixed-rate obligation or vice versa. The swap thereby permitted the liquefying of balance sheets so issuers were able to shift their original obligations through exchanging cash flows with a counter-party. Later, the swap was used in a wide variety of financial products. It is used today as both a risk-reducing and risk-taking product. The swap market has developed into the largest securities market in the world, accounting for over $500 trillion in transactions. It revolutionized financial management for governments and the private sector in the management of their resources.

The Institutional Investor magazine described his work at the SEC as follows: “In the mid-1960s, he spearheaded the SEC’s push to crack open the New York Stock Exchange’s (fixed) commission rate schedule. It was Rotberg, more than anyone else, who set in motion the forces that would culminate in the complete unfixing of commissions on ‘May Day, May 1, 1975,’ and the dawning of a new competitive era on Wall Street.”

Gene Rotberg, a lawyer and international investment banker, is an expert on risk taking, interest and exchange rates, financial market regulation, and the role of international development institutions. He served as vice president and treasurer of the World Bank from 1968 to 1987, responsible for overall funding and investment operations.

In 1968 he was asked by Robert McNamara, the recently appointed president of the World Bank, to serve as its vice president and treasurer. John Gutfreund, CEO of Salomon Brothers, later wrote, “It was one of McNamara’s blessings when he got Gene Rotberg.”

After receiving his law degree from the University of Pennsylvania in 1954 and subsequent service in the U.S. Army, Gene Rotberg joined the U.S. Securities and Exchange Commission (SEC) (1957–1968) as attorney advisor. He later became associate director for trading and markets and chief counsel for the Office of Policy Research. At the SEC, he was the principal author of the congressionally mandated “Special Study of the Securities Markets” in the early 1960s with respect to the operations of the over-the-counter market and the structure of the securities markets generally. In the late 1960s, he conducted public hearings focused on the activities of the major stock exchanges, its members, and investment banking and brokerage firms—particularly with respect to the antitrust implications of their activities and agreements. For almost 200 years, the stock exchanges and their members had fixed minimum commissions for transactions on the stock exchanges, which had to be paid by the public (nonmembers).