for crying out loud - malamed 2009

[...]... global colossus for the management of risk: The CME Group * * * For Crying Out Loud is the informal history of the Chicago Mercantile Exchange between 1996 and 2006, during which time the Exchange was successfully transformed from a market operating within an age-old openoutcry trading framework into a technologically cutting-edge electronic trading system and from a tight-knit, not -for- profit entity... growth in Clearport, our over-thecounter clearing facility for oil and gas swaps, and we are expanding to include the clearing of interest rate swaps, foreign exchange options, agricultural and metals swaps, and credit default swaps Like the transformation of Foreword xi floor-based open-outcry markets to global electronic trading systems, this new arena will further transform our business and take us... ultimate accountability for credit risk management of trading counterparties At the core of its safeguards lie several risk management procedures that are fundamental to its success and dramatically distinguish exchangetraded futures from over-the-counter (OTC) derivatives These include a performance bond or “margin” deposit; a “no-debt system” that performs a twice daily mark-to-market procedure to ensure... Central Limit Order Book for securities markets, and in 1976, it issued a formal call for automation.11 In 1976, Professor Junius W Peake together with Professor Morris Mendelson and R Williams Jr responded by proposing to the SEC a plan for an electronically assisted auction market for securities that would include screen-based rather than floor-based trading, auction principles for trade execution, anonymity,... stood for Post (Pre) Market Trade, a nomenclature I purposefully selected to allay any fears that PMT might encroach on the sanctity of open outcry.6 The system would operate exclusively before and after regular U.S business hours No existing pit-traded instrument would ever need to compete with the electronic screen during the open-outcry session It was a holy pledge that could not be changed without... futures exchange Throughout this history, until the beginning of the twenty-first century, all the trading at every U.S futures exchange was conducted by open outcry With such deep roots and enduring heritage, for anyone to suggest a different architecture for the execution of futures trade was not only revolutionary, it was crazy In 1977, as chairman of the CME, I wrote an article for the Hofstra University... were fully paid for on the CME books—no defaults, no failures, no federal bailouts That’s right! In the midst of the unprecedented global financial meltdown, as marquee names of finance, no matter of what stripe, age, or financial strength, trembled or failed, the CME performed its operational functions without a hitch or disruption It was without doubt one of the finest hours in its 100-year plus history... newly installed CME chairman upon my retirement in 1991, liked to point out, the large open interest was proof that the CME had a built-in reservoir for continued growth It was a valid observation.2 Now I thought it was time to step down and pursue some private-sector goals I planned to launch Sakura Dellsher, a futures brokerage firm formed from a merger between my firm, Dellsher Investment Company, and... now CME Group, Inc is a well-known poster child for change From the innovation of live animals as contracts for trade in the 1960s, to financial instruments in place of agricultural markets in the 1970s, cash settlement replacing physical delivery in the 1980s, and electronic trade instead of open outcry in the 1990s, the CME defied the status quo But it never came easy or without a fight xxi PART Battling... options against the cargoes of incoming and outgoing ships And in the tenth and twelfth centuries, during seasonal merchant fairs in Brussels, Madrid, and elsewhere, merchants would gather to loudly and openly negotiate for the future delivery of merchandise It was not until 1826 in England, and two decades later in the United States, that the traditional open-outcry futures market was established In . Cataloging-in-Publication Data Melamed, Leo. For crying out loud : from open outcry to the electronic screen / Leo Melamed. p. cm. Includes bibliographical references and index. ISBN 97 8-0 -4 7 0-2 294 3-9 . JWBT139-Melamed June 26, 2009 9:23 Printer Name: Yet to Come B P1: OTA/XYZ P2: ABC fm JWBT139-Melamed June 26, 2009 9:23 Printer Name: Yet to Come Praise for For Crying Out Loud: From Open Outcry to. was successfully transformed from a market operating within an age-old open- outcry trading framework into a technologically cutting-edge electronic trad- ing system and from a tight-knit, not -for- profit entity