Bonds to Buy

not trading pit history related but it's so good I couldn't help but up this up as I was laughing hard when a friend sent  it as QE2 ends today.

CBOE handsignals

You'll have to click on each photo to enlarge, sorry they're not of better resolution.  I'm not too familiar w/the CBOE and only visited once so this is the best I could find on the web.

Credit to quicktradesblog.com for uploading the following the CBOE hand signals:

 

The third and more detailed sheet is from the book Options: essential concepts and trading strategies  By The Options Institute, Options Institute:

Dōjima Rice Exchange - invention of futures

photo credit

While on a roll posting about old time grain stuff, I'll point out that futures trading began at the Dojima Rice Exchange in Osaka, Japan which existed from 1697 - 1939.  Rather than rehash info from wikipedia, you can read the article linked here.

Milwaukee - Home of the trading pit

A lot of people don't realize that the trading pit was invented at the Milwaukee Grain Exchange, which no longer exists, in the 1870s.  The building however was recently restored (without the trading pit) and is as much a reproduction as a restoration due to the amount of neglect since the exchange closed in the 1930s.

Photo of the Milwaukee Grain Exchange in 1912

Inside photo of the grain exchange w/the pit located behind the pillar.  Below shows people at the cash grain tables inspecting physical grain samples.

all photos from themakingofmilwaukee.com

A very excellent 12 minute audio clip from Milwaukee public radio describes the building and the role of Milwaukee grain trading, linked here. 

I've yet to visit the building but will later in the fall when I go up to Milwaukee for the PBR, and not the local kind.

Winnipeg Exchange *UPDATED*

During the 1800s, grain markets spread across the Midwestern prairie but eventually they became more centralized in Chicago and to a lesser extent Kansas City, Minneapolis and Winnipeg which all had price discovery done in a trading pit.   The Winnipeg Commodity Exchange is often overlooked but maintained trading pits until 2004 when it became North America's first futures exchange to go entirely electronic.  I regret having never seen it in person but at least was consoled by seeing the Winnipeg Jets play before they left!  Now that the Jets are coming back, my hope is to catch an early season game in Winnipeg this year and poke around to see what else can be learned of the exchange.

photo from flickr wintorbos

photo from David J Gagnon

photo from Canadian Wheat Board


In 2007 the Winnipeg Commodity Exchange was purchased by the Intercontinental Exchange and legacy WCE contracts trade on the ICE such as barley and canola. The WCE never was a big market, largely because all Canadian farmers have to sell their wheat to the Canadian Wheat Board who then markets the grain as a single pool.

For those that want some live action shots of the Winnipeg trading pits, this youtube clip has some midway through the newscast: linked here

And believe it or not, someone wrote a lengthy book on Winnipeg grain trading entitled The Exchange: 100 Years of Trading Grain in Winnipeg.

*UPDATE*  In the comment section, Andy, aka winterbos, whose photo was used above, was kind enough to enlighten us more about the Winnipeg Exchange and his comment is worthy of bumping up to the main page:

"It was a big market in the early 20th century. I believed that it rivalled Chicago in some respects for awhile. The Wheat Board monopoly dates only from around World War II. The last three Exchange buildings are still intact and kind of provide a visual history of the trade from the Victorian era through the early 20th century boom to the more corporate-looking late 20th century era.

The 19th century Exchange Building on Princess Street is just a facade now, but nicely kept up http://farm2.static.flickr.com/1185/1208882120_b1ef9589e2_b.jpg

http://farm4.static.flickr.com/3504/4005418955_48e0bdb1d8_b.jpg

The monumental 1906 Grain Exchange on Lombard Avenue is still a major office building, including for the grain trade. In this picture you can see the tall double-floor windows of the trading floor (visible in the first two interior shots you posted) on the 6th and 7th floors at extreme left. They've been re-divided into two floors again, unfortunately.

http://farm5.static.flickr.com/4108/4983013704_4467a1a29d_b.jpg

Since about 1980, the WCE (now ICE Futures Canada) has been in the Commodity Exchange Tower at Portage & Main. That's what's shown in your last image.

http://farm4.static.flickr.com/3096/2744792421_f342e39964_b.jpg

Here's a website about the old Grain Exchange Building:
http://www.grainexchangebuilding.com/building/ "

Scoville & Co. grain

I'm really appreciative to Laura Scoville Ekstrom who shared the following photos from her family archives as the Scoville family were CBOT members stretching back many generations. 

The above photo is of the Scoville and Company office in 1895 and Laura's Great Grandfather, Amasa Unruh Scoville is seated at the desk with his hat on next to his brother, John H. Scoville.  In the upper left corner, they have a framed photo of the CBOT building of that era which predated the current one.  (Click on the picture to enlarge) This photo I find particularly interesting because it was taken six years before The Pit was published by Frank Norris and many scenes are set in offices of grain firms such as one of my favorites, linked here.

Above is a better version of a photo of Laura's father from a 1967 National Geographic article on Chicago.

For the above 1996 Chicago Sun Times article, you'll have to click on it to enlarge the photo but it's a fun read as traders recall how the grain market at the time compared to prior markets in the past.  Fittingly it shows a photo of Lee Stern who remains the longest serving member of the CBOT currently and quotes James Scoville who at the time was a member for 50 years.  The only reason these guys and others trade for so long is for the love of the game!  2052 is a long time from now and if all goes as planned I hope to be celebrating my 50th year as a CME member then.

The other notable thing is how the old timers in the article stuck into a single market to have so many references to past movement.  It's easier in the grain complex with a few contracts to trade but from watching people at the Merc, a lot of traders jump to whatever is moving.  I remember seeing in the late 90s there was a big migration to the S&Ps or NASDAQ pits from the currencies and those same people went to the eurodollar pit later on and from there a few to the meats, personally I'm a one contract guy myself.

NYMEX butter certificate

Presented above is a NYMEX butter inspection certificate from 1919 which is actually a tribute to the origins of NYMEX even though we know of it as an energy exchange now.  From wikipedia:
"In 1872, a group of Manhattan dairy merchants got together and created the Butter and Cheese Exchange of New York. Soon, egg trade became part of the business conducted on the exchange and the name was modified to the Butter, Cheese, and Egg Exchange. In 1882, the name finally changed to the New York Mercantile Exchange when opening trade to dried fruits, canned goods, and poultry."
* I'm going on a mandatory trip w/my inlaws which will also be a digital detox for me so no posts for the next week. 

NYC

Last week I caught the tail of the heatwave which came through New York City during a visit and that brought back memories of when I was there in August 2001 during a more extreme heatwave.  The heat was especially memorable to trigger the recollection as a decade ago my lodging was a hostel w/no air conditioning but luckily my days were spent inside at NYMEX for that week. 

A couple years prior I briefly met the owner of my Kansas hometown's hockey team and talked w/him for a minute in the team's locker room about trading because he was a NYMEX local and at the time I was a clerk at the KCBT.  In 2001 I'd since moved to Chicago and figured that it'd be cool to be on the NYMEX floor so found his email on the internet and sent a quick note to see if I could come by and hang out.  The email was roughly that "I was 21, was NOT looking for a job/to get paid and I'd stay out of the way" but it was enough for him to say sure and the guys I was working with in Chicago also didn't mind me going either.
  
What a lot of people don't realize was how easy it was to find successful traders to talk to and get small bits of advice from on the trading floor.  The local at NYMEX was a really amazing guy and in my experience the successful traders were incredibly helpful to young guys coming up because they knew the difficulty and price of success.  On the contrary it was the failed, old men (mostly floor brokerage guys who blew out trying to trade) who were the most discouraging/resentful and had to be avoided. 

That week at NYMEX was an amazing experience although there isn't one particular lesson I learned but it was great to observe a successful practitioner by watching and soaking things in.  Later that same week I searched around the Bloomberg terminal for contact info on a famous trader/author in NYC to get my book signed and got invited over to his house!    It helps to be young and dumb but the overall lesson is that it never hurts to ask. 

Anyways so back to last weeks trip.....while visiting Lower Manhattan I went to the Museum of American Finance which is located on Wall Street.  It's a great place to visit for anyone interested in the markets although I felt it was a bit New York-centric.  One benefit of membership to the Museum is a subscription to their magazine Financial History which is fascinating for obscure but straightforward observations of risk management and history.

MGEX video

MGEX broker/trader Dave Darr made the following 5 minute video retrospective of the MGEX in 2008 before that trading floor closed later that year.  As I mentioned before, there wasn't much sadness with the closing of the floor as the March 08 wheat contract went to 25.00 (!!!) and the grain markets were incredibly active that year so everyone left the floor w/a good trading year.

hat tip to grain trader Kevin Spain for sending in the link

George W. Bush at CME in March 2001

President George W. Bush visited the CME in early 2001 and walked into the S&P 500 pit during the last hour of trading as pictured above.  I didn't go down to see him but should've in retrospect because I've really come to admire and appreciate him.  After the market closed Bush gave a short speech on allowing Americans to keep more of what they earn through tax cuts to what was obviously a receptive audience. 

His full remarks are linked here:
Remarks by the President at Chicago Mercantile Exchange

Gonna have to rethink that equity traders have less fun than futures traders *updated*

The guys at the Toronto Stock Exchange were able to bring a dancer directly on the trading floor to strip down to her underwear to honor a member which is something I've never seen or heard of happening around any futures trading pits.  However, it wasn't uncommon to see a stripper walk into the elevators at the CME w/a boom box in her hand to head up to someone's office.

The above picture was pulled from:
http://tsetradersarchive.blogspot.com/which is a similar blog to this one which recounts the history of the trading floor but is limited to the Toronto Stock Exchange.

*update*
Reader KC wrote in and made the following comment which deserves a bump up to the main page:

"Okay, it's a story about a guy and he wasn't really a stripper but Chris Farley once did a stripper skit with Patrick Swayze on SNL, so he can count. Farley worked as a runner for Merchants Grain in the CBOT's Mansfield Room while he was performing at Second City. As can be expected, he was a pretty good guy but Main Stage ends at about 1:00 am and the actors usually go out afterwards, so once he got to Main Stage he had problems getting to work on time, even at 8:45. At some point his late arrivals became too much, even for his rather easy-going boss (who was also a bartender at Alcock's) and Farley got canned. Merchants was located where Prudential is now located, the first desks on the west wall as you walk onto the floor above the corn options pit, so when he got fired he went up to the 5th floor Gallery above his desk (next to the west wall clock), and seconds before the 9:30 open he took off his shirt, pressed his rather large belly up against the glass and proceeded to do a belly dance while flailing his arms, it looked so funny that the corn pit was in hysterics and the display even slowed the open in corn by several seconds. And that's the last time I saw Chris Farley in person.

I also recall a stripper showing up in the viewing gallery above the floor of the Mid-Am back in the '80s when it was in the old CME building on Jackson at the river. It was somebody's birthday and she never got past her underwear before the guards got up there and stopped the show. KC"

In an update to the Farley story, JJ wrote in a comment which deserves to be bumped up to the main page:

"Farley worked for Garnac Grain not Merchants.I used to eat lunch with him every day.Our boss Roland Hirsbrunner did not work for Alcocks either,nor did anyone else in that small grain company which was a division of Tenco.He used to steal his lunch by walking out the back way on occasion down at the Ceres Cafe which was in the basement of the C.B.O T.Don't know if the story is true or not about his belly against the glass but he did moon the corn pit once or twice standing on the pits top step"