The History of Financial Futures traces the origins and evolution of financial futures through the firsthand accounts of the visionary pioneers who created them and the traders who transformed global markets.

Eleven years ago John Lothian News began work on a video series about the history of financial futures. We were motivated to get this history on video because of the death of Jack Wing, the CEO of The Chicago Corporation, who was an early supporter and proponent of the financial futures products. We wanted to preserve this history in video format before those that had created financial futures all disappeared. Too many of the early founders of financial futures are gone. But we did capture some of them, and the work on this series has continued in leaps and spurts. Today we are releasing part two of the episodes titled “Game Changers” before we launch part one, which is still a work in progress. The series is The History of Financial Futures. The episode title is “Game Changers, Part II.” The series is about the start of the modern era of futures trading, starting with the launch of financial futures at the International Commercial Exchange in New York before the ending of the Bretton Woods system, followed by the launch of the International Monetary Market in Chicago in 1972. The latter is the exchange that ultimately succeeded, and the word of this success was spread around the world. Much like Star Wars, we are not starting at the beginning. We are starting with part two. This episode of the series tells the stories of the creation of the European exchanges; Liffe, DTB, SOFFEX and Eurex. We need to work on a separate segment about the MATIF and other European exchanges. Back in 2010, we hired John Parry in London to conduct interviews with the founders of Liffe, DTB, SOFFEX and Eurex. Parry had recently retired from the public relations business and had returned to his roots as a (freelance) journalist. Parry had been the first editor of FOW in London. It was this early work on the History of Financial Futures series that spawned the idea for the Open Outcry Traders History Project. That series further fostered the idea for The Path to Electronic Trading. Besides launching Game Changers, Part II, we will also be releasing some individual interviews in the coming days we have recorded in the last couple of years as the research for this project has continued. We believe some of these interviews can stand on their own as part of our overall history of financial futures efforts. And we wanted to release these videos to encourage contributions to our GoFundMe campaign, to show you more of the efforts we have made over many years to capture the history of our financial markets. Included in the History of Financial Futures series is an interview with former CBOT communications head Ray Carmichael. He was at the CBOT from 1980 to 1990, a time when the CBOT’s trading went from 80 percent agricultural contracts and 20 percent financial contracts to the exact opposite. Carmichael’s interview will be released in two parts. We also have interviews with Galen Burghardt and Terry Belton, who both went from working at the Federal Reserve in Washington, DC to working for Discount Corp., an early leading futures commission merchant (FCM) offering access to financial futures and specializing in customer education about the new products. Burghardt is an accomplished author of several books on futures trading and Terry Belton went on to become a senior futures executive with JP Morgan. Additionally, we have an interview with Otto Nägeli, who has worn many hats during his long career in the markets. He was the CEO in the early days of SOFFX and helped manage the merger between SOFFEX and DTB to form Eurex. He will tell the story of how SOFFEX decided to utilize electronic trading because of competing interests and jealousy among the varied financial centers in Switzerland with stock exchanges. Had an open outcry exchange been set up in any one of those financial centers, the others would not have participated and it would have failed. Thus, one early trailhead on the path to electronic trading started with Swiss stock exchange jealousy and competition that could not be resolved without an innovation that changed the game of futures trading in yet another way. 00:00 Introduction 00:31 Sir Brian Williamson, formerly LIFFE 00:41 Chicago 1975-1980 00:52 Sir Michael Jenkins, formerly LIFFE 01:02 John Barkshire, formerly Mercantile House 04:02 European Financial Futures 04:31 David hardy, formerly LCH.Clearnet 04:41 Role of Bank of England 06:16 How trading began 07:18 Consultation process 08:02 LIFFE reflected change at City of London 10:42 Jurg Spillman. formerly Soffex 11:53 Jorg Franke, formerly DTB 14:44 Bund and LIFFE 16:13 Formation of Eurex 19:30 Open Outcry's limited future 19:45 Seductive buzz in Chicago 20:41
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The History of Financial Futures: Game Changers, Part ll

2022 is the 50th anniversary of financial futures and the birth of the modern exchange traded derivatives markets. In this video, John Lothian News discusses the birth of the financial futures industry in 1972 and how it has evolved into a market that traded $53.9 billion contracts this year. 5:28
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FIA 50 Years of Financial Futures Celebration

Richard Sandor is known as the “father of financial futures,” a name given to him by the Chicago Tribune and the Chicago Board of Trade for his work in helping to create 30-Year Treasury bond futures and many other financial contracts at the Chicago Board of Trade when he was their chief economist. Sandor was interviewed by Thom Thompson of John Lothian News for The History of Financial Futures video series. He tells the story of teaching at the University of California at Berkeley and being asked to help create an electronic exchange to trade interest rates. That effort only led to a white paper, but it started him on a path that led him to Chicago to become the chief economist of the world’s largest commodity exchange, the Chicago Board of Trade, on the eve of a transformative era for the derivatives industry. He helped create the Commodity Futures Trading Commission and pass the Commodity Exchange Act, which allowed for financial futures to be traded. He worked with then-CBOT Chief Counsel Phil Johnson, who went on to serve as CFTC chairman, and then-Senate Agriculture Committee Chairman Herman Talmadge, to define a commodity as anything “tangible or intangible,” which would allow financial futures. In fact, the first new contract to be approved for trading under the Act was a financial futures contract. Additionally, Sandor helped get the CFTC exclusive jurisdiction, which meant even if the futures contract was on a security, it would be governed by the CFTC. Ginnie Maes were ultimately launched on October 20, 1975, despite a last-minute effort by the SEC to derail the launch. When the 30-Year bond contract was launched, there was only $18 billion in U.S. 30-Year Treasury bonds outstanding. Chicago’s financial futures withstood challenges from the American Stock Exchange, which launched a Ginnie Mae contract, and the New York Stock Exchange, which launched a 30-Year bond contract. But the risk-takers in Chicago prevailed, Sandor said. Sandor left academia altogether to continue building a life in Chicago during an incredible time of innovation and growth for the futures industry. He later left the CBOT and went into the brokerage space to help further grow the products, first working for ContiCommodities. Over the years, he collaborated with other industry players, some of the most notable names of the era, to build financial futures into a worldwide phenomenon. The late Les Rosenthal, the CBOT chairman in 1980, was a mentor of Sandor’s. Today, Sandor is the chairman and CEO of the American Financial Exchange (AFX), trying to build new products to replace the disgraced LIBOR rate. Sandor is fond of wearing fedoras, which is a way of honoring his late father, who used to be in vaudeville. Get more news from JLN at http://www.johnlothiannews.com. Follow us on Twitter at http://www.twitter.com/JohnLothian, http://www.twitter.com/MarketsWiki or www.twitter.com/JLNOptions. Follow JLN on LinkedIn at https://www.linkedin.com/company/236044/admin. Follow JLN on Facebook at https://www.facebook.com/johnlothiannews. 17:06
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Richard Sandor Makes History with Financial Futures - John Lothian News

JLN interviewed American Financial Exchange CEO and Chairman Richard Sandor for the JLN History of Financial Futures video series. 4:06
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Doc Sandor - 50 Years of Financial Futures

Broker and Trader of Financial Futures at CBOT Shares Tales of Early-Day Hiccups Jim Marzano thought he was going to be a grain merchandiser at Stotler Grain. Instead, he ended up being a broker and a trader at the Chicago Board of Trade. In fact, he made the first trade in the 30-Year Treasury bond futures pit at the CBOT. In this video interview by Thom Thompson, Marzano shares some reflections of his favorite days on the exchange and about the volatility of the bond market after the 1987 stock market crash. He talks about the first delivery in Ginnie Mae (GNMA) futures, which almost doomed financial futures. His favorite day was the day Ronald Reagan was elected as U.S. president in 1980. The bond market moved 3 points higher, which was limit up, on rumors of the election results. Marzano said he did something you are not supposed to do – he sold the market limit up. Then he walked off the floor for 20 minutes. He talks about the volatility in the bond market after the 1987 stock market crash in the night bond session at the Chicago Board of Trade. Cash bonds were 6 points higher. Marzano ran the new-member seminars at the CBOT for several years and he talked about the chance of traders’ success on the trading floors. He also said he was amazed by the number of brilliant people on the floors of the CBOT. He stopped trading in 1998 to work on other projects related to the markets. He was an early user of computers at the CBOT. His firm had to leave the building where it was located because it could not give his firm enough electricity and cooling for the computers He walks us through the story of the first delivery of GNMA futures and how it was almost a failed delivery. There were three grain firms that were the major clearers of financial futures at the Chicago Board of Trade in the early days. Each of the firms had about $60 million to $70 million in open interest. The delivery day for the GNMAs was Christmas Eve, so the exchange closed early. The GNMA collateralized depository receipt was basically a warrant backed by GNMA certificates. The buyers of the GNMA who wanted to take delivery said they needed the specific pool numbers underneath the warrant, but that information was not available. The buyers told Marzano they could not make the delivery versus payment without those numbers. None of the firms had taken delivery of GNMAs before. The decision was made by Marzano, Peter Todebush and Richard Sandor to take delivery of the warrants as they would a botched grain delivery, to the firm. All the certificates were held at the First National Bank of Chicago. But there was the issue of paying for the deliveries. Because this decision was being made at 11:30 a.m.,there was no time to get the necessary permission to get the funds. They were told by the chairman of the First National Bank of Chicago to take an overdraft for the difference. Thus Marzano took out a $30 million loan over the weekend that he had no authorization to take. But such were the necessary actions in the early days of financial futures at the CBOT. He knew the First National Bank would stand behind the CBOT because it was one of the clearing banks for many of the firms. Those early lessons made it much easier for the subsequent creation and trading of the 30-Year Treasury bond futures. The math was more straightforward and the learning curve was much easier than for mortgage-backed securities. Get more news from JLN at https://www.johnlothiannews.com. Follow us on Twitter at http://www.twitter.com/JohnLothian, http://www.twitter.com/MarketsWiki or http://www.twitter.com/JLNOptions. Follow JLN on LinkedIn at https://www.linkedin.com/company/236044/admin. Follow JLN on Facebook at https://www.facebook.com/johnlothiannews. 16:04
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Jim Marzano: The History of Financial Futures

Carmichael Led Communications at the Chicago Board of Trade During a Decade of Incredible Growth in Financial Futures Ray Carmichael joined the Chicago Board of Trade in 1980, hired by then-CBOT president Thomas Donovan to lead communications for the exchange. Carmichael had come from the nonprofit world, so he understood how committees work in organizations. When he joined the CBOT, 80% of the volume of the exchange was agricultural and 20% was financial, mostly bonds and GNMAs. When he left, those figures had flip flopped to 80% financial and 20% agricultural. He was there for the worst day of his professional life, the day the stock market crashed in 1987, and he was part of a press conference in which futures markets were blamed for causing the crash. He was there for the exposure of an FBI sting operation on the trading floor of the CBOT and CME. That was what he said “did him in,” or caused him to leave the CBOT, after 10 years on the job. Carmichael sat for an interview with John Lothian News as part of the History of Financial Futures video series, part of our MarketsWiki Education program. The interview is broken into two parts. The first part is about Carmichael’s career, the second is more about the CBOT’s efforts to deploy electronic trading into its operations. He was there for the announcement of the Aurora trading platform at the FIA Boca Raton, FL International Conference. Later, the CBOT would deploy Project A, a local network trading platform. Here is part one of John Lothian News’ interview with former CBOT Communications Head Ray Carmichael. 17:23
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Ray Carmichael - The History of Financial Futures Part I

Carmichael Led Communications at the Chicago Board of Trade During a Decade of Incredible Growth in Financial Futures Ray Carmichael was in the thick of the new markets, the early days of electronic trading and huge change in the futures industry globally as the head of corporate communications for the Chicago Board of Trade. He was there when financial futures grew dramatically at the CBOT, making it “the most exciting time in the world to be at the Board of Trade; it was the glory days.” Carmichael is an excellent communicator and storyteller. In this John Lothian News interview, Carmichael talked about everything from Aurora to Globex to Project A, trading platforms of the CBOT. Aurora was unveiled at the Futures industry Association’s Boca Raton International Conference and scared the Chicago Mercantile Exchange, Carmichael says. It hit the “Merc like a ton of bricks.” The CBOT was a big Apple Computer fan, and their Aurora system used Apple Computers. However, the networks of the time could not support the Apple-like user interface of Aurora. So the CBOT joined the Globex Alliance. Before Globex could launch, though, the CBOT pulled out and released a local area network trading system, Project A. Carmichael talks about the competition between the two exchanges, which he describes as being like Coke and Pepsi. He said the competition between the exchanges made the exchanges great. He talks about representing the leaders in the futures industry as a communications professional. Whether it was the colorful Pat Arbor, or the CME’s Jack Sandner, the press loved the futures markets' colorful characters. He was willing to take the heat as head of public relations for the CBOT and developed a committee of members to really understand the value of public relations and marketing. He talks about the beginning of the FIA and its role in the industry. He talks about being surprised how successful it became amid the competing desires of the exchanges and member firms. Here is part two of the John Lothian News interview with Ray Carmichael, the former head of communications of the Chicago Board of Trade, for The History of Financial Futures video series. 14:12
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Ray Carmichael - Part 2 - The History of Financial Futures

Longtime Banker Played Key Role During Early Days of IMM Currency Deliveries John McPartland joined Continental Bank in 1973 after leaving the Air Force. He worked two years in the internal audit department where he learned about secured financing. He was honing his understanding just as accounting standards for the futures industry were emerging and the CFTC was being created. “The ideal candidate needed to know secured lending and accounting and I just happened to be at the right place at the right time,” McPartland says. McPartland had a succession of jobs until he started the futures subsidiary for Continental Bank. In 1982, he went to work for Leo Melamed, at Dellsher Investment Company, as director of research. “Basically Scott Gordon was Mr. Inside and I was Mr. Outside,“ McPartland says. “What’s important to remember is that during that time I was a member of the exchange.” There were four banks - First Chicago, Continental, Harris and Northern - and the banks all owned memberships on the Board of Trade and the CME. Memberships have to be held in the name of an individual, so it was the relationship bankers who actually held the memberships. The CME insisted that all of the settlement bankers serve on the clearinghouse committee. And by virtue of that, the CME hoped over time that they would understand how the clearing process worked and get comfortable with it. The International Money Market (IMM) was very small at the time. McPartland’s marching orders from the top were to find out what was happening. He was management’s eyes and ears. “We want you to go over there. Get involved. Find out what these guys are doing. And if they are a bunch of crooks, we want to know sooner rather than later,” McPartland says. “But if they're on to something, if this IMM thing is going to work, we have all the resources of the Continental Bank that we can throw at them to help them foster the organization.” In 1972, the IMM started on the Chicago Mercantile Exchange at its 110 N. Franklin St. address, which was a particularly small trading floor. It traded pork bellies and cattle. And the IMM wanted to trade about eight currencies. And it was decided that they were going to trade 12 contract months for each of the currencies. The opening day for the IMM, for the currencies, McPartland says the floor manager told Leo Melamed and Barry Lind: ‘ “Well, we don't have that many whiteboards. You know, we actually can't list currencies for 12 months. … Lind said, “Well then just do March, June, September and December,”’ recalls McPartland. As a result, the third Wednesday of March, June, September, and December, to this day are known as IMM days, when literally billions, if not trillions, of dollars of financial contracts mature. As the branding of the CME Group now overshadows the branding of the IMM, a whole generation of young traders do not know what IMM days are. So It's really not the IMM anymore, but everyone knows what an IMM day is, says McPartland. The senior management of Continental Bank was asked to be the delivery agent on maturing futures contracts. The head foreign exchange trader in New York was the incumbent president of the trade association of foreign exchange traders. The cash market foreign exchange traders didn't take kindly to the concept that commodity traders in Chicago were going to start trading foreign exchange. New York thought it was their purview, that they had a monopoly on that market. Similarly primary dealers didn't take kindly to the concept that the Board of Trade was going to start trading dollar bonds. Two things came about. First, Continental was the delivery bank agent for maturing futures contracts and early on there wasn’t much money involved. McPartland’s first total delivery was a total of $53 million. That would be a single transaction today. Second, Leo Melamed referred to the concept of a Class B clearing member, a class B arbitrage firm. After a while, the IMM started getting some decent volume, the market eventually grew, the open interest growth volume grew and the size of the deliveries grew. Another important thing happened: Paul Volcker became the chairman of the Federal Reserve and interest rates went very high, with the prime rate peaking at 21.5%. The value of overnight money became substantial. This led to a new way of settling transactions vs. an older complicated way via 300 baud telex machines. In 1976, Continental, Milt Stern and McPartland developed what was the first delivery vs. payment of foreign exchange. It was not instantaneous, but it was much improved from the old system. Implementation was not simple. It was an iterative process, trying to get the 30 clearing members and their customers to do it properly. 39:03
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John McPartland - The History of Financial Futures

Growing CME Europe Expanded the Reach of Customer Service For the Exchange William Knottenbelt was interviewed by John Lothian for The History of Financial Futures video series at the FIA EXPO 2022 as he was preparing to leave the CME Group. He joined the CME Group in 2008 after being approached by then CME Executive Bryan Durkin while Knottenbelt was the head of global futures for the Royal Bank of Scotland, which had been taken over by the U.K. government during the financial crisis that year. Joining the CME group was a "good moment to escape RBS," Knottenbelt told JLN. The first challenge for Knottenbelt, who was hired to run CME Europe, was to build it out in the face of the banks cutting personnel across departments, including futures. Knottenbelt said that before the Lehman crisis banks were very protective of end user client relationships, and the banks, not the exchanges, would educate the clients. However, after all the bank futures desks were cut back, the CME needed to grow its sales staff in order to go to the end customer directly, Knottenbelt said. The CME would still coordinate with the FCMs, he said. This was a big change. Knottenbelt also spoke about the history of the CME Europe exchange and clearinghouse and how it was an insurance policy in case regulatory differences between the U.S and Europe over swaps led the CME to need a European operation to clear some customer trades there. However, ultimately the issues were worked out and the hedge was not required. The CME did launch some European futures products on the CME Europe exchange that it decided to move back to the U.S. as it was struggling to get the margin offsets it wanted, and it would have taken too long to build up liquidity, Knottenbelt said. One big challenge during the 2011 to 2016 time frame for the CME and Knottenbelt was making sure the CME could cover the needs of clients in the European time zone in a timely fashion. Rather than having to wait until Chicago came online at 2:00 PM London time, Knottenbelt said CME Europe mirrored the operations of Chicago and was able to provide real-time information to European clients. It was a big shift to move these operations to London, but it paid dividends, he said. The CME then built IT operations in Belfast and Bangalore to help internationalize its operations more, he said. In 2016, Knottenbelt was tapped to run all CME international operations, and he sought to expand more into Asia. Increasing liquidity in Asia was always difficult, but strangely enough the CME Group was helped by former U.S. President Donald Trump, who used to tweet in the middle of the night. This made it necessary for firms to be able to execute trades during Asian time zones and helped build liquidity during those market hours. Knottenbelt said his biggest accomplishment was growing the international business, which was 20 percent of revenues when he was hired and is now a third of the CME's revenues. He also said meeting clients' needs outside the U.S. and working with other exchanges were accomplishments, though he did not start those relationships. He spoke about China and his first experiences there in 2000 when he was with RBS and was pushing the CME into China. Knottenbelt is working to get into executive coaching after leaving the CME, he said. 10:30
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William Knottenbelt - The History of Financial Futures - Part Two

Third Generation Commodity Trader Leads Bank Into Electronic Trading Era William Knottenbelt said he likes to call himself a third generation commodity trader. Both his father and grandfather were commodities traders and had their own firms in Indonesia. Despite that background, Knottenbelt said he thought he wanted to be an accountant. That thought did not last long after he secured a job at a commodity firm and realized he wanted to be on the trading side. Czarnikow offered him a job in London, but Knottenbelt wanted to work in France, so he was sent to its French subsidiary. After two years in France trading molasses, he came back to London with Czarnikow to trade white sugar. It was here that he first was exposed to the futures markets, hedging and taking outright positions depending on conditions. In 1986, the commodity markets slumped. Back in 1982, he had been offered a position in financial futures in Czarnikow when the London International Financial Futures and Options Exchange (LIFFE) opened, but he turned it down. . But by 1986, he changed his mind and took a job with NatWest on its financial futures desk as a broker. In 1986, many of the European banks did not use futures yet, so Knottenbelt and NatWest would educate the banks and sign them up for their first futures accounts. By 1990 he was running the broking desk. At that point, NatWest started looking at expanding into the U.S. and bought the U.S. operation of Canadian investment firm, Burns Fry Futures Inc. In the early 1990s, NatWest began to do more business in Asia and became a member of several exchanges. In 1996, NatWest bought Greenwich Capital, expanding NatWest's U.S. exposure, including access to the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT). One of the many challenges of leading a growing, new, developing business in a bank is where does it fit in the organization chart? Knottenbelt said he reported to all different kinds of divisions during his tenure, including fixed income, swaps, equities and FX. Ultimately, he came up with a solution in 2007, which was to allocate every future into the division of the underlying product. FX futures reported into the FX division of the bank, for example. In the 2000s, the Royal Bank of Scotland (RBS) took over NatWest and Knottenbelt became the global head of futures for RBS, he said. At the same time, LIFFE was going through its transition to electronic trading from open outcry. . Knottenbelt said RBS was able to move many of the people from the trading floor into the bank in other roles, though they lost some people. 10:24
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William Knottenbelt - The History of Financial Futures - Part One

Longtime industry executive is using decades of experience building new markets Garry Jones says his career has mirrored the evolution of the markets, from the days of open outcry, voice trading, faxed confirmations and more. Jones was interviewed by John Lothian News at the FIA International Futures Conference in Boca Raton, FL for the History of Financial Futures video series. He likes to say he was ahead of the curve, or tried to be. He came to Wall Street, after going to Stanford University Graduate School of Business, and started as an options trader. Jones was an early adopter of Bloomberg when he was at Bankers Trust and Merrill Lynch, using it to manage risk. Jones, who worked for Euronext.Liffe and NYSE Euronext, recalled LIFFE as once the largest futures exchange in the world as the markets moved electronic. LIFFE was nudged into electronic markets by Eurex, Jones said with a straight face. At another stop in Jones career, he was present for the initiation of BrokerTec, an electronic platform for trading government securities and repo. Espeed was the dominant player in the market, and BrokerTec was meant as a bank-led competitor that would allow the banks to control the governance, Jones said. BrokerTec was designed to improve trading and clearing processes and to reduce costs. Jones said that the cost of a trade when he was at Merrill Lynch was $100 per million to trade Treasury products. When he left BrokerTec, the cost was $1 per million, he said. Other electronic markets followed in the electronic space in Treasuries like MarketAxess and Tradeweb, he said. Jones was hired by Hong Kong Exchanges & Clearing to lead the London Metal Exchange and speed up the adoption of electronic trading. However, the members and firms were reluctant to change, he said. After Jones left the LME he retired, but he joined the boards of some banks and tech companies. That led to an opportunity to lead a tech company, NovaFori. NovaFori looks at the digitization of markets, Jones said. These are real world companies that are looking for digital solutions to analog businesses. Jones spoke about some of the concerns of the regulators he heard from at the FIA Boca conference. He said the biggest threats to the markets are the weakest links. He told the story about the BrokerTec Futures Exchange and what the strategy of the bank-led ownership group was, which was to force rule changes and fee reductions at the dominant exchanges. BrokerTec never succeeded in getting many customers to use the markets, but was successful in getting the Chicago Board of Trade to reduce its fees, Jones said. Cantor Fitzgerald also reduced its fees in the cash Treasury market because of the entrance of BrokerTec, he said. BrokerTec was a response to a single dominant player in a market, Jones said, but the result of the effort is more from the "thread than the reality" after considering all the heavy lifting that goes into establishing a successful futures market. Jones was at NYSE Euronext when the deal for Deutsche Boerse and NYSE Euronext to merge was announced. It took two years before the European Commission blocked the merger. Jones was running LIFFE and Andreas Preuss was running Eurex and they worked to put the two exchanges together to create a European champion to take on the CME Group. After the deal was scuppered, both sides knew everything about each other. LIFFE decided to push the cash and derivatives markets together, but Jones told them to instead invest in their derivatives business. Instead, he left NYSE Euronext and took gardening leave. However, when NYSE Euronext was later being acquired by Intercontinental Exchange, Jones said he worked for ICE on the acquisition as a consultant. Jones was looking at the business plan for the company that would be renamed NovaFori, which means new markets in Latin, when he was asked to run it. This was January 2020, right before the pandemic. 12:16
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Garry Jones' Career Is One New Market after Another NovaFori

Scott Early first became involved with the Chicago Board of Trade as a litigator with the law firm of Kirkland & Ellis when the exchange had a case go before the U.S. Supreme Court in the 1970s. Then the Hunt Brothers silver corner hit and there were a lot more lawsuits for the CBOT to deal with, and Early grew closer to the CBOT as he helped the exchange deal with them. He was ultimately hired as the exchange's general counsel when Tom Donovan took over as the CEO of the exchange. Early sat for an interview with John Lothian News for the MarketsWiki Education History of Financial Futures video series. He explains why the Commodity Exchange Act was put in place and how the politics of the exchange impacted the way it was run. Early talks about the differences between former CBOT Presidents Bob Wilmouth and Tom Donovan. During his tenure as general counsel, there was a dispute with Dow Jones about the CBOT's attempt to listed the Dow without permission from Dow. He explains what happened. Early explains one of the biggest issues that he dealt with during his time at the CBOT: the issue of margins that popped up after the stock market crash of 1987 and equity exchange leaders trying to blame futures margins as a factor in the crash. Look for part two of our History of Financial Futures interview with former CBOT General Counsel Scott Early coming soon. 16:05
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Former CBOT General Counsel Scott Early - The History of Financial Futures

Part two of the JLN interview with former CBOT General Counsel Scott Early in The History of Financial Futures series starts with him explaining why the Chicago Board of Trade's market share went down each year he worked at the exchange. It was because new exchanges all over the world were copying the success of the CBOT and CME and that was growing the overall derivatives markets numbers. And as the futures volume grew in the U.S., Congress took note and discovered a potential new source of tax revenue, which caused a change in tax laws. New fringe players came into the markets with contracts that skirted the laws of what was allowed, something that played out all the way to the passage of Dodd-Frank, Early said. The CBOT was well positioned for the creation of the stock index futures, as Phil Johnson, the then-head of the CFTC, had once been the outside counsel of the CBOT. And cash settlement was just another chapter in a long debate that continues to today about what is a futures contract, Early said. The reduction in number of FCMs in the industry is another subject Early speaks about. Early weighs in on why the CBOT and CME have never wanted to be under the jurisdiction of the U.S. Securities and Exchange Commission. He also talks about the relationship between the CBOT and the CBOE and how it evolved over time. A new younger generation of options traders at the CBOE without a historical appreciation for the CBOT impacted the relationship, Early said. 14:23
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Part Two of Scott Early - The History of Financial Futures

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. 29:50
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History of Financial Futures: Douglas Harris

Part One Lee Oliver grew up in South London and in 1981 left school for a temporary stint at brokering -- a prospect that seemed more financially appealing at the time than getting a university degree in German or history. In this video interview with John Lothian, Oliver talks about his career as a market maker and FX trader for several banks, beginning with Midland and continuing at Continental and Nomura Banks. 13:22
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The History of Financial Futures: Lee Oliver’s Career Turns Led Him From Brokering to Reporting

Otto Nageli, a longtime futures and options executive, died on May 5, 2022. JLN interviewed him in May of 2019 for the History of Financial Futures video series. In Part One, Nageli talked about getting his start at Credit Suisse, where he became the youngest branch manager the company ever had. He later got an offer to become a member of the executive management of the Bank of Tokyo in Zurich. Later he got a call asking him if he wanted to become the CEO of the first-ever fully electronic exchange and clearing house. He said yes, and he took over as the CEO of SOFFEX, which was launched in 1988, a year after the "Black Monday" stock market crash. Nageli talked about his experience with the combining of SOFFEX with Germany's DTB electronic exchange to form Eurex, the first transnational derivatives market. His first job at Eurex was as project manager for non IT issues, helping to organize that combination, and then his role was to make sure Eurex came together in a smooth transition. Eurex had started out trading options, and then began offering index futures. "At the start," Nageli said, "the options market was considered more important from an asset management perspective, particularly for private banking." Eventually he was part of the management team and became the deputy CEO of Eurex under Andreas Preuss. The combined Swiss and German exchange had a half German and half Swiss board of directors. Nageli said some people thought that if the exchange had four members on the executive committee, the assumption was that if they ended up with a tie it would be two Germans against two Swiss members, but in fact "it was always one German and one Swiss against one German and one Swiss," he said. 14:54
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Otto Nageli - History of Financial Futures Part One: From SOFFEX to Eurex

In Part Two of Otto Nageli's interview with JLN for the History of Financial Futures series, Nageli talked about the part DTB, the forerunner of Eurex, played in repatriating the bund contract and the establishment of Eurex. Nageli said German regulators considered futures and options to be gambling back then. "That was the main issue for the banks," he said. "They had no legal environment that would be fit for creating a derivative market. But they insisted they needed a futures contract on the bund." Liffe in London offered the bund futures contract first, in a market where the underlying was a key product. DTB eventually captured volume in Bund futures and options away from Liffe, the only exchange to wrest liquidity away from an established liquidity pool. Once Eurex was established, Nageli said, it became an issue of open outcry vs. electronic trading. He talked about all the nascent exchanges in Europe at the time. These exchanges were forming mostly because of interest rates and foreign exchange, he said. There was a big need for hedging some of these products. Nageli also talked about the influence of Chicago on these exchanges. At the early stage of these markets, he said, Chicago played an important role and the exchanges were eager to benefit from Chicago's longstanding exchange know-how. He spoke about how industry conferences connected the markets and the players, and how the Burgenstock conference came to be set up, eventually rivaling the Boca Raton derivatives conference in importance. He also discussed Eurex's transformation into a for profit company. 14:51
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Otto Nageli - The History of Financial Futures - Part Two : The Battle of the Bund; Burgenstock

Eurex’s Chief Technology Officer Tells His Story From the Battle of the Bund to Present Day In 1997, Wolfgang Eholzer decided there were not enough students studying physics and mathematics in Germany to make a career in academia and that maybe finding a job would be a good thing. The question was where was there enough going on. That question led him to Deutsche Boerse, which was starting a new electronic derivatives exchange and hiring like mad. He has been there since. Today, Eholzer is the chief technology officer of Eurex. JLN interviewed Eholzer for The History of Financial Futures video series from John Lothian News and MarketsWiki Education. To prepare himself for an interview with Deutsche Boerse, Eholzer bought a copy of Options and Futures at Cambridge University Press. He had three hours of reading time before the interview to learn about derivatives. One of his first projects was being involved with the "Battle of the Bund." Eholzer was involved in delivering two of the first green screens to London as part of a free screen promotion deal for six months. He delivered the screens from Germany to London in the back of a VW Passat, which he said was not the best choice, as the screens, which had worked in Frankfurt, did not work in London when set up. After a long night, it was discovered that one of the network cards had come loose, he said. Also, Eholzer had to buy some electrical adapters to make the German technology work with English electricity. An issue that came up in the early days of Eurex was problems with expiry dates. In 2001, there was an expert issue that occurred amid a triple witching stock index expiration Friday that coincided with a big party involving large quantities of beer being consumed by some of the people who needed to fix the issue. After trying to resolve the issue, it became obvious that sleeping it off and coming in the next day to fix it was the best solution to avoid a larger mishap, he admitted. There were valuable lessons learned from these early missteps, and today no parties are planned for key expiries, and no alcohol. Eholzer talked about the transition of the markets from point and click to algorithmic trading from 2005 to 2007 and how that impacted the exchange technology. After 2007, ninety percent of the trading on Eurex was computer to computer trading, Eholzer said. The speed at which computer orders take place greatly exceeds that of point and click traders, requiring larger capacity of the exchange to handle higher levels of data. This changed the relationship between the exchange and the member firms, as instead of talking to traders, the exchange was now talking to people who wrote the trading system code, Eholzer said. As the exchange dealt with the increase in data volumes, it was important to understand where their bottlenecks were, Eholzer said. With data lines initially of only 64 kilobytes, data compression was a big issue too, he said. Everything had to be measured so it could be improved, he said. One way Eurex learned a lot about its technology was its alliance with the Chicago Board of Trade to share the Eurex trading platform. After the CBOT exited the deal, Eurex tried to leverage the CBOT's customers' familiarity with the technology by opening its own U.S. domiciled exchange, Eurex U.S. That exchange failed and showed Eurex the difficulty of stealing products from established players, their own success against LIFFE notwithstanding. The next challenge for Eurex would be building a new trading system to replace the DTB trading system that went live in 1990. Eurex built a new trading system from scratch for the International Securities Exchange. Optimize, the name of the platform, used some of the ideas Eurex had come up with over time to improve performance. Optimize was the predecessor of the T7 trading platform, Eurex's current trading platform written in C++, which offers more throughput, lower latency and higher capacity than the 1990 DTB trading system referred to as Eurex Classic. One of the things Eholzer said Eurex learned was that one size does not fit all, but that two sizes fits most for interfaces. There is one interface for people who don't care about latency and throughput, and another for people who do. Sometimes there is a third choice, he said. The Eurex Classic system was not only a trading platform (matching system and gateways, and data distribution), it was a trading system, clearing, risk, and data management all in one, Eholzer said. When building T7, Eurex decided that was not the right approach for the new system, he said. Tomorrow we will publish Part Two of The Path to Electronic Trading interview with Wolfgang Eholzer. 23:52
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Wolfgang Eholzer: The History of Financial Futures

Eurex CTO Talks Technology Naming, Misdirected Microwaves and White Rabbits In part two of the interview with Wolfgang Eholzer for The History of Financial Futures video series from John Lothian News and MarketsWiki Education, Eholzer explains where the names of Eurex's trade matching engine and other technology came from. Eurex wanted a short name that could be easily copyrighted and easily reproduced for other products. So besides the T7 match engine, there is the C7 clearing system, as well as R7 and N7 (Network). Eholzer likes prime numbers from his time as a mathematician at Cambridge, so 7 was a good number to pick, he said. Besides a derivatives market with Eurex, Deutsche Boerse also has a cash equities business that was running on the old Eurex VMS machines. Deutsche Boerse was able to replace the 1990 Eurex trading platform on their cash equities exchange and on all their technology partner exchanges too. The T7 trading platform was designed to run in just one instance for all the various instruments that were trading on the platform: futures, options, stocks. However, in 2020, when Deutsche Boerse went to move their certificates and warrants business, which was still trading on the floor, it created a new instance for these markets. That is because there were 1.5 million instruments traded and it was more of a local German market than a Pan-European one. The 1990 "mother of all trading systems" would finally be retired in 2021 when new expiries and member and clearer data was moved to a new system. Eholzer reflected on the battle between man and machine and machine versus machine in trading, noting how much trading happens in just one data center. Elholzer noted that ten nanoseconds is the fastest reaction time some trading firms now have to the market within the Eurex datacenter. Some trading comes from outside the data center, which prompted him to recall a story of a colleague who discovered a misdirected microwave tower during a bike ride around the datacenter property and past all the microwave dishes. It turns out that the misguided microwave dish was aimed at a farm field where it was pointed at a shortwave receiver and tower. The data was being sent across the Atlantic via shortwave rather than cross-Atlantic cable, to give the trading firm an advantage in arbitraging between Frankfurt and New York or Frankfurt and Chicago. It is important to be able to measure all of this activity, Eholzer said, which brings him back to his physics days. In fact, he said the Eurex uses some of the same technology as the CERN Accelerator to measure the "nitty gritty" time differences. Eurex uses White Rabbit from CERN. White Rabbit (WR) is a technology developed at CERN to provide the LHC accelerator chain with deterministic data transfer, sub-nanosecond accuracy and a synchronization precision of a few picoseconds. ~ CERN Lastly, Eholzer said that trading firms are fascinating to work with because they are always looking for new ways to find an edge and are on the bleeding edge, not somewhere exchanges can or want to be. Exchanges want to be on the leading exchange of stability, as they don't have the same motivation to take risks trading firms will accept because of the return they bring. Eholzer notes he has lost many employees over the years to trading firms, but has hired some from them as well. 15:50
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Wolfgang Eholzer: The History of Financial Futures, Part 2

(Editor's note: John Lothian News interviewed SGX Chief Commercial Officer Rama Pillai at the FIA Boca Raton conference in 2019 for The History of Financial Futures video series from JLN and MarketsWiki Education. The plan was to weave the interview with other content into a larger narrative about the history of Asian financial futures; however, we have been slow to accomplish that goal. Instead, we are releasing our interview as a standalone piece with Pillai telling the story of the Singapore Exchange's development from a gold exchange to SIMEX to SGX.) In 1978, the Gold Exchange of Singapore (GES) was created by some Singaporean bullion dealers. Then in the early 1980s, the Monetary Authority of Singapore and financial community leaders sent teams around the world to examine different market structures. One was sent to Chiago to examine the Chicago Mercantile Exchange, Pillai said. The Singaporean team sent to Chicago liked the CME model and felt it would work well in Singapore. This led to the creation of the Singapore International Monetary Exchange or SIMEX. Thus began a collaboration between Singapore and CME pioneering the first international exchange linkage establishing the world’s first mutual offset system (MOS), a 24-hour trading system that started with the Eurodollar contract. That mutual offset system is still in place today, Pillai said. To get the exchange started, the Gold Exchange of Singapore and its traders were rolled Into SIMEX. The new exchange also advertised for new traders. To ensure best practices were developed, the exchange sent the first batch of traders to Chicago for several months for training in trading pits there. Some Chicago traders also made the return trip to Singapore to help continue training the traders. Traders from Singapore and Chicago formed relationships that helped establish the markets and encouraged some Chicago firms to establish operations in Singapore, Pillai said. Six local Singaporean banks fully supported the efforts as well, he said. In 1986, SIMEX added its next product, the Nikkei. This involved education efforts at the exchange and among market players. Pillai did not discuss the merger between SIMEX and the Stock Exchange of Singapore that created the Singapore Exchange, but he did discuss the move to electronic trading and how the exchange successfully navigated this. While other exchanges saw their local trading populations greatly reduced by the move to electronic trading, Singapore saw 80 to 85% of its local trading community survive, Pillai said. The exchange created an electronic learning center on the trading floor and brought market educator Dan Gramza in from Chicago to help its traders learn electronic trading. Gramza even had an office on the trading floor where he could counsel traders during the trading day. Piliai said as a result of the success of the efforts to help the locals, the Singaporean local trading community almost doubled in size by the time the move to the screen was complete. 42:15
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The History Behind SGX; An Interview with Rama Pillai - The History of Financial Futures

Longtime Washington Hand Who Led FIA, Reflects on the Start of CFTC, FIA and NFA as Financial Futures Began John Damgard spoke in 2019 to John Lothian News for The History of Financial Futures video series, when he was attending the FIA conference in Boca Raton. Damgard was a key player in creating the Commodity Futures Trading Commission (CFTC) in the 1970s. Many reasons pointed to the need for a regulator with greater capabilities than those of the Department of Agriculture, which had meager resources available for overseeing the agricultural futures of the day. In the beginning the impetus was the exchanges, Damgard said, citing the salad oil scandal and the case of Billy Sol Estes, a friend of President Lyndon Johnson. The exchanges were powerful, he said, and not accustomed to being told what to do. The exchanges also were anti-regulation, but the commodity brokerage firms were more flexible about new regulation. Damgard said the requirement for national registration was not controversial, but choosing the right number of CFTC commissioners was. Damgard argued for three commissioners, saying that any more would be a burden on taxpayers. John V. Rainbolt, who was associate counsel for the House Agriculture Committee, is credited with writing the Commodity Futures Act of 1974. He wanted to be one of the commissioners, Damgard said, but Rainbolt was not sure he would get a position if the law had just three spots. When the act was finalized into law, it had five commissioners. Damgard describes that the first chairman of the CFTC, William T. Bagley, was chosen, and then Rainbolt was named a commissioner as well as vice chairman, a role the CFTC no longer has. The list of politicians who helped the futures industry over the years, Damgard said, includes former Congressmen Dan Rostenkowski, Tom Foley, Michael Madigan and Dan Glickman, and Senators Richard Lugar and Chuck Grassley. Also helpful were Rep. Eligio "Kika" de la Garza II and Sen. Bob Dole. The Futures Industry Association (FIA) started as the New York Brokers Club, which was basically a social, luncheon organization. John Claggett was the head of the FIA and moved it from New York to Washington. The FIA did not arm-twist Congress but instead brought lawmakers educational programming about the industry, which they valued, Damgard said. The relationship was more about education and building trust. Some lawmakers did not want staff who were experts in particular subjects, but others allowed staff freedom to develop their interests. Walt Lukken, current president and CEO of the FIA, is an example of a staffer whose interest in the work of his boss, Sen. Richard Lugar, led to a career. Damgard also spoke about how the National Futures Association (NFA) was founded as a self-regulatory body in response to the desire of the exchanges and member firms to not have a “bigger and more powerful government agency.” The self-regulatory model, he said, allowed the industry to fund the NFA and gave it authority over who was in charge. Damgard credits Leo Melamed for getting it started. Melamed figured out a way for the firms to pay for the NFA, Damgard said, noting the exchanges already paid for internal regulatory functions. Melamed also figured out a way to make himself chairman, Damgard said, though he lasted only a few terms before the member firms installed John Conheeney as chairman. The leadership of the NFA has by and large been very solid, Damgard said, and continues that way today. The NFA was designed to relieve the CFTC from needing more money, Damgard said. He noted that most of the chairmen were not partisan, however he took exception to Gary Gensler’s chairmanship. Gensler, he said, leaned over backwards to “stick it to Goldman” Sachs, where Gensler was a partner before going into government work. Damgard also said Gensler would walk away from agreements the FIA had with the CFTC “under the cover of darkness” and give bad advice to the head of the Senate Committee on Agriculture. Damgard is proud of the way the CFTC has helped foster growth in the futures industry over the years and how Chicago trades more nominal equity value than does New York and how one of “his guys,” Jeff Sprecher, bought the New York Stock Exchange. Reflecting on the members of Congress who used to come down to Boca, a practice that is now illegal, Damgard said the congressmen would get $1000, a round of golf, and a minute or two to talk to the conference. Some of the congressmen really took an interest, like John Boerner, he said. While others were not helpful, mentioning an Iowa congressman who went to jail for tax avoidance. Lastly, Damgard reflected on exclusive jurisdiction for the CFTC at the federal level and how that helped the industry avoid duplicative costs and ineffective regulators. 24:23
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John Damgard - The History of Financial Futures

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The History of Financial Futures traces the origins and evolution of financial futures through the firsthand accounts of the visionary pioneers who created them and the traders who transformed global markets.

This series captures the moments when innovative financial minds developed the concept of futures contracts for financial instruments, moving beyond traditional commodity trading to create entirely new ways of managing risk and speculation.

Traders share compelling narratives about how financial futures revolutionized market strategies, risk management, and investment approaches, fundamentally changing the landscape of trading across stocks, bonds, currencies, and indices.

By documenting these personal stories, the series provides an intimate, insider’s view of one of the most significant financial innovations of the 20th century, preserving the human drama and intellectual creativity behind the development of financial futures.