Short break

As I'll be headed to London shortly to visit the grave of my hero of all heroes, Sir Richard F. Burton, it's a good time to take a couple week break and come back w/new improvements and ideas for the blog and hand signal project.  Burton did a great deal to inspire the trading pit history project as I've read through most of his writings and am continually impressed with the detail of which he documented observations w/new cultures during his extensive travels.  It's my aim to channel some of Burton's talents to take this project to the next level by reflecting upon what he has accomplished.

Just as impressive as Burton are some enthusiast's websites which provide wonderful ideas to present education and knowledge sharing on any project.

The most extensive book on Burton took it's title in part from an Alexander Pope poem which certainly applies to Burton and just as easily applies to the trading mentors I've been fortunate to learn from:

....with pleasures too refined to please,
With too much spirit to be e'er at ease,
With too much quickness ever to be taught,
With too much thinking to have common thought:
You purchase pain with all that joy can give,
And die of nothing but a rage to live

For anyone who is interested in learning more about Burton, I'd suggest to read The Devil Drives as a good introduction.
 

Eurodollar option opening

Pictured above is another photo purchased from the SunTimes archive which was taken at the launch of the eurodollar options contract at the CME.  Given the honor of ringing the opening bell was George Stigler who is a Nobel Prize winning economist at the University of Chicago.

Eurodollar futures are one of the most actively traded futures contracts but most people don't know the history of their development.  Wikipedia does a nice job explaining how it was a Soviet bank in the 1950s which began the market and you can read about it by clicking here: http://en.wikipedia.org/wiki/Eurodollar 

Handsignals of the Singapore Trading Pits print

Soon to be off to Dan Grzeca for printing is the newest addition to the trading pit history print collection, Hand Signals of the Singapore Trading pits by Mike Nudelman. The Singapore print is based upon handsignals used on the SIMEX floor, renamed SGX, which closed in 2006. Dimensions of this print are the same as the Chicago print at 18" x 24" on heavy stock paper, numbered and signed by the illustrator and we're expecting a run in the 200 range, priced the same at $100/each. They should be available for preorder through the shop shortly but shipping time will be about a month off.

The NY and London prints are also very close to completion and like every print will feature a different color and face. The only female face is featured on the Singapore print because my primary floor broker on SIMEX was a woman.

MATIF hand signal video

Formation MATIF
envoyé par bhaouari. - Regardez plus de films, séries et bandes annonces.

I'm in Paris and will try my damnedest to pick up some handsignals from MATIF whilst here. Above is a video which explains the hand signals and for the first time in my life, I'm regretting skipping so much school because dropping out of French in my sophomore year of high school is hurting now although I understand most of it. I hope to get the video translated to share some insights but the hand signals look very similar to those used on other trading floors, specifically the CBOT. The reason why the CBOT was the basis was hand signals is because MATIF got started with the guidance of the CBOT and I've corresponded w/the gentleman who helped develop signals for MATIF. As for brokerage houses he could only remember a couple, Societe General was a salute ("salute the general") and Credit Lyonnais was a lion claw as (Lyon sounds similar to lion). Not suprisingly the video doesn't list brokerage signals.

Intermarket magazine on function of trading pit

OK so I claimed that I wouldn't share anything from Intermarket magazine but a nice email from a gentleman yesterday where he mentioned how this website helped him understand what his dad did at the CBOT prompted me to upload the following articles. In the first two issues of Intermarket in 1984 a floor trader, using a pen name, wrote two articles on the function of the trading pit. Rather than breed confusion w/my commentary on it, I'll just say it's pretty close but I have a difference of opinion on some details. So this is the only thing I'll upload from Intermarket as I know that I can't distribute the interviews which appeared in the magazine.


Inter Market Floor

Leo Melamed early photo

Leo Melamed is certainly the most photographed participant in the history of the futures industry and below is a photograph I purchased from the archives of the SunTimes. I do believe that it is from his earliest media exposure as it is from a 1967 SunTimes article on Leo and which is the earliest listed story on his website.

Unveiling the Mystery of Trading Hand Gestures

Although I'm unaffiliated with them, I recently wrote an article for the newsletter of the National Introducing Brokers Association regarding the history and use of trading floor hand signals. The article provides a condensed (1000 words) overview on that particular functionality of the trading pits and it is linked below:
Unveiling the Mystery of Trading Hand Gestures

Hitler 'stashe

As I'm in Germany, this is a good time to take a break from my substantial activity in the local market to write a bit more on the Deutsche Bank handsignal used on many trading floors.

I've been told by a floor veteran that the Hitler's 'stache signal initially was used to indicate Dean Witter in the gold pit at the CME in the early 1980's because the desk manager for that brokerage was very difficult and was referred to as a Nazi. Eventually that signal became associated with Deutsche Bank but I don't know when/how that transition was made. The handsignal for Dean Witter eventually was mimicing being on the phone in reference to one of their marketing slogans.

As for the use associated with Deutsche Bank, the signal was certainly "unofficial" (not officially designated by the exchange) and used because someone on the floor started to indicate that firm w/the signal so it stuck. At the CME, it was the index and middle fingers held horizontally beneath the nose but evolved into just the index finger horizontally and a downward scratch motion as if Hitler was scratching his 'stache. LIFFE consistently had the two horizontal fingers from what I've been told. I've seen some use the same fingers vertically which is a more accurate representation of the mustache but it might be confusing with a quantity of 1 or such and thus wasn't widely accepted/used.

So why was this signal even used? The "official" designation for firms was to signal the three digit firm number, Deutsche Bank for example was 092 at the CME. Thus, it was a much short and efficient way to signal a memorable, albeit politically incorrect, hand signal than to indicate four signals, a house to indicate brokerage house and then the numbers 0, 9, and 2.

Could something else been used rather than the Hitler signal, of course but it stuck once someone started using it. If a signal was needed today, I'd suggest things such as references to Sprockets or the TechnoViking to reflect Germany.

The other German banks such as Commerzbank or Dresdner Bank were generally not large enough players on the trading floors to have specific signals applied to them.

SIMEX floor close

Being in Singapore over the past week and reminiscing w/a former trader on SIMEX, it brought back a lot of memories for me....none good as it was a tough, illquid market for outside customers to trade. Anyways, below is a video that someone put up on youtube of the final day of the SIMEX (renamed SGX) floor in 2005 and the footage is of the Taiwan stock index pit. Further reading for those interested is a paper on Business practices of Simex locals that was published in a local management review paper. I should write the correct postscript to that paper but I won't.

CBOT 1885 building opening program

Unless proven otherwise, I have to imagine that the below copy of the CBOT 1885 building opening program is the only existing one or certainly the best preserved copy. Thus, I present it in entirety and click on each scan to enlarge:

CBOT 1885 building invitation

This CBOT 1885 building opening invitation is coupled with the program from the same.

Prior CBOT buildings

Wikipedia has a good article on the prior CBOT buildings but they don't have these photos below which I present (remember to click on them to enlarge):


In 1865, the first permanent home of the CBOT was established in the Chamber of Commerce building at LaSalle/Washington.


Because the Chicago Fire destroyed the prior building, the follow structure was built a year after the fire in 1872 at the same location.


And the predecessor to the current CBOT building began construction in 1882 and was opened in 1885.