Douglas E. Harris not only can talk about The History of Financial Futures, he was a part of its development.
In this video interview with John Lothian, Harris traces his beginnings in the industry back to 1975, when he began work as an associate for the then-small law firm Baer Marks & Upham and was assigned helping exchanges including Comex determine what rules it would need to file to the Commodity Futures Trading Commission, then in its infancy.
In 1979, Harris joined JP Morgan, which was just starting to trade futures and was deciding if it should create its own FCM. He said he was one of the group tasked with evaluating that decision; the group recommended that the bank create an FCM entity and become a clearing member — something they eventually achieved.
Harris later served as senior deputy comptroller for capital markets at the Office of the Comptroller of the Currency, from 1993 through 1996, but noted that when he was with JP Morgan there was considerable debate between the Federal Reserve and the OCC about the regulation of banks’ trading activities.
The two regulators took very different approaches, he said, and in the Fed’s view, banks were limited to trading futures that directly related to banks’ other functions, like interest rate futures. The OCC, on the other hand, looked at the trading activities themselves and was considered “more liberal,” allowing trading in energy and agricultural contracts. Over time, the Fed grew to back the OCC’s approach and began to look at trading activities.
When Harris joined the OCC, he had to adopt an even broader approach that took him overseas. Asked about the Barings Bank failure, which was related to an unauthorized trade made from its Singapore office in 1995, he said it was a “wake-up call” for regulators. While at the OCC, Harris was dispatched to Singapore to persuade officials there to allow U.S. bank examiners — the OCC, Fed and FDIC — to look at U.S. bank activities and records in Singapore.
Harris took the role of chief operating officer and general counsel with BrokerTec in 2001. He said BrokerTec succeeded in what it set out to do, which was to lower fees for large trading firms to give them more flexibility and to push electronic trading forward. It was challenging, he said, because although senior management supported the initiative, traders were “minimally committed” at the time because of BrokerTech’s limited liquidity compared with open outcry.
Harris became a managing director of the Promontory Financial Group, a consultancy, before it was acquired by IBM. He’s now retired, but remains a board member of the NFA and was named to the FIA’s Hall of Fame in 2021.
