Trading Places
Ian heads down memory lane
As some readers may know, I have worked on the CME trading floor for most of my professional career. I visited while in college and was in awe of the size, the noise, and the chaos of the trading floor. It was like nothing I had ever seen before. In college, I read textbooks, learned how to audit a balance sheet, and did a million case studies but this was different.
There was an energy to the floor, an immediacy to it. Problem-solving in live-action, with millions of dollars on the line - I was in love. You couldn’t raise your hand and ask the teacher to explain the answer or break out into study groups to find the optimal solution. On the floor, you had to figure it out and figure it out quick.
After this visit, I begged an acquaintance for a summer job down there. During the summer of my sophomore year, I fetched him and his desk coffee and lunch while learning basic option theory when I had time. The following summer, I worked with a market making group and learned even more (while still fetching lunch, obviously).
While the hours were tough for 20-year-old Ian - 6 AM start, with an hour plus commute from my parents’ crib - the experience encapsulated everything I loved about business. No one cared about your background, your grades, or your seniority. All that mattered was getting the job done. As someone once perfectly described it to me, the floor was made up of intelligent carny folk.
And let me tell you there were way too many people with ponytails…
And we spent a lot of our downtime betting on how many chicken nuggets, burgers, or (live) goldfish an intern could eat.
Not to mention the high level of alcohol use. The real ones know the bar in the basement (named after the goddess of grain) Ceres would serve you a whiskey coke that consisted of a full glass of whiskey with a can of Coke on the side.
And if you weren’t careful someone might make paper spurs and put them on your shoes and yell “Yee-haw” while you walked by. Or do the same to your jacket collar and hum the Jaws theme song.
We would chant “USA, USA, USA” when good financial numbers came out and “Boo” bad economic news.
Meanwhile, I was called unspeakable things by every boss, client, and co-worker I’ve ever had on the floor and I loved every minute of it. Maybe I just enjoy the high school locker room mentality (although there are a lot of badass women on the floor) but the camaraderie formed on the floor has left me with multiple lifelong friends.
Unlike me, most of you probably know very little about the trading floor aside from Trading Places…
Or Ferris Bueller…
But the Chicago Board of Trade has a long and rich history in Chicago. It was founded in 1848 making it one of the oldest exchanges in the world. Originally it was used to help people buy and sell commodities in a centralized place where credit risk could be minimized. To illustrate the focus on commodities people actually used, in 1919 the Chicago Butter and Egg Board was spun off into what is now known as the CME Group.
Yes, you read that correctly, trading butter and eggs was a legitimate and important thing back then. As time evolved they moved from commodities like grains and butter, to energy products like oil, and eventually to financial products.
And that brings us to today where I trade something called Eurodollar Options (which has nothing to do with the Euro currency). Basically, this means I trade options (don’t worry about those) on short-term interest rates that the Fed decides. Last Friday, however, they closed the giant trading floor pictured above, marking the end of an era for trading floors, well described in this SunTimes piece.
Leaving our giant airport hangar looking like this…
But not before we took one final picture (that I missed)...
What’s the Upside?
I am a 32-year-old dinosaur working in a dying aspect of the financial world. But despite every other trading floor in the world essentially being closed, we have survived in spite of our parent company the CME Group’s wishes. Humans are inefficient, take up space, and cost them a lot of money so they once again have moved us to another, newer, and smaller trading floor as the human element of trading withers away.
And while I generally agree with them and the shift to electronic and algorithmic trading, I take some pride in what this group of carnies has accomplished.
Cheers to the last of a dying breed.
For Your Weekend
Read:
What is ESG and Is It Right For Me? by the Weekly Upside
Last week, Elon Musk called out ESG as a scam after Tesla was dropped from several ESG indexes. Confused about what ESG is? Our resident ESG expert wrote this primer to get you up to speed. Give it a read!
Watch:
Stranger Things - Season 4 (Netflix)
The hit show is back for its final season.
“Season three of Stranger Things introduced us to new cast members like Maya Hawke’s ice cream scooping Robin, and Paul Reiser as the mysterious Dr. Owens (remember when he showed up!?) and it left off with us wondering whether or not Eleven was really stripped of her powers, and who the mysterious prisoner referred to as “the American” in a Russian prison might be. Season four, which is new on Netflix this week, seeks to answer some of our lingering questions from last season, while posing a whole bunch of new ones too. These new episodes also mark the return of Brett Gelman as conspiracy theorist Murray Bauman, and new faces like Robert Englund (that’s Freddy Krueger in case you didn’t know), who’s getting in on the meta-’80s-horror fun.” (Decider)
Chuckle:
