Sunday, October 31, 2010

Exchange membership vs. Taxi medallion

 picture from

An illustrative comparison between memberships at the Chicago Mercantile Exhcange and Chicago Taxi medallions.  For ease, the comparisons listed are between a full CME B-1 membership which allows trading in any pit, member margin rates and the lowest member fee rates in any legacy CME products.  The CME B-1 membership is the highest priced membership at the CME Group by almost double the cost of other memberships.

CME B-1 last trade: $560,000
Chicago Taxi Medallion last sale: $182,000

Number of CME B-1s: 625
Number of Chicago Taxi Medallions outstanding: 6,726 (this is recent as of link but varies slightly upward)

Monthly lease cost of CME B-1s newest leases: $1850/month
Monthly lease cost of Chicago Taxi: $2000/month approximately from $500/week drivers tell me

Income for CME B-1 user: varies
Income for Chicago Taxi driver according to U of I survey: $4.38/hour

Granted there are other details which aren't touched upon but it's clear that stacked side by side, it would seem that more economic opportunity lies in a Chicago Taxi Medallion than a CME B-1 membership which is pretty sad.  I have a lot of reasons why the CME B-1 and other seats are lacking, mostly because of what I believe is a coordinated devaluation by the exchange management.  The pit is pretty much dead so this shouldn't be seen as a ode to that but the memberships are still important in the electronic market and ought to be valued higher.  A more accurate comparison would be between a CME B-3 (IOM) membership which trades closer to that of a medallion but the result is just as stark. 

Trading floor order entry terminology on LIFFE

I just got back from London and while there, picked up this guide from a former LIFFE clerk which was put out by JP Morgan for it's customers and floor staff on the proper terminology of orders on the LIFFE floor.  Enormous errors were always possible with order entry and execution so it was important to make as few mistakes as possible and these guidelines would help eliminate such errors.  To read the text, you'll have to click on the pictures to enlarge. 

Friday, October 29, 2010

Lumber futures opening

Lumber futures opened on October 1, 1969 and rather than use a bell to open trading, trading began once the artificial tree was chopped down by lumberjack and hit the ground.  One thing that seems to be consistent from the contract launch is that noone under the age of 40 trades it. 

Thursday, October 21, 2010


I've been meaning to do a long post on books regarding trading pit history but I really don't have the time and since I feel guilty for being a infrequent blogger, just decided to take snapshots of my main trading bookshelf.  Most of the books are regarding the history of trading in the pits, the exchanges, contracts, etc.... but some are on the shelf and shouldn't be but I didn't bother to move them.  Just because a book is on there doesn't mean I like it or thought it was good, just that I picked it up and to be honest I can't recall anything in any of those books making me profits trading.  Anyways, if you're looking to read up on the history of the trading pits, this is a good trailhead to find books you might've overlooked.  To enlarge the photos, click on them.

Tuesday, October 12, 2010

Vive La France

I've managed to get all of the MATIF (Paris Bourse) hand signals recently and once the rare confluence of free time, motivation and sobriety all fall in line for me I'll post them up.  The funniest which highlights the cultural differences between France and the rest of the world for example is the signal for Goldman Sachs which elsewhere is indicated by the thumb pointing to the where a wedding band is worn on the ring finger.  On the MATIF floor, Goldman Sachs in indicated by two musical things, either mimicing playing a saxophone (Sachs sounds similar to sax) or playing a guitar as the second best selling musician in France is Jean-Jacques Goldman.

Wednesday, October 6, 2010

High school trading

PND Trading Project from charlie roy on Vimeo.

A former CBOT guy and current principal of a high school in Peoria was kind enough to share the above clip of a mock trading program his school developed to teach students the role of futures, hedging and the markets.  As Peoria is in the heart of the grain belt, it's a wonderful way for students to get practical experience in something so important.  As with all education, the most important thing is for the students to want to learn and he found a  way to do exactly that!

 From watching the video, I thought the kids did a great job and seemed a lot more comfortable doing mock trading compared to adults.  One funny thing I remember from watching some mock trading sessions at KCBT and CME is that they usually mix in professionals amongst the amateurs and often the amateurs will offer below or bid above the market so the pros do a quick arb to put things back in line. 

A Kid From The Windy City

One recent book that was published locally is A Kid From The Windy City by Lee Stern who is the longest serving member of the Chicago Board of Trade at over 60 years.  The book focuses a lot on his personal life experiences growing up and at the CBOT along with ownership in a couple sports franchises, the Chicago Sting of the NASL and the Chicago White Sox.  It's a very easy read and a good retrospective of a man from the CBOT who has succeeded in many endeavors. 

Friday, October 1, 2010

Handsignals of the New York Trading Pits

 The newest edition to the tradingpithistory print series is "Hand Signals of the New York Trading Pits" by Mike Nudelman and will be printed up soon in Chicago by Dan Grzeca.  All the handsignals were based upon those used at the NYMEX and was developed w/the assistance of an options trader who is currently on the trading floor.  It will be listed in the shop soon for preorders although printing will be a little bit into the future. 

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