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The Trading Pit- Unvarnished Capitalists

The opinions expressed by columnists are their own and do not necessarily represent the views of

I traded in a trading pit for 23 years.

Mano e mano.

It was hyper physical, and really unlike any other type of business on earth.

Outsiders would come and gawk at us from the visitors gallery like visitors to the zoo.


The trading floor in New York is not at all like the trading floor in Chicago. In New York, it was much more genteel. Chicago was noisier, and after you got done with your day you might as well have been in a rugby scrum. But it was exhilarating.

The reason I point this out is that the MF Global case is starting to be framed between two people. Jon Corzine and Terry Duffy. I don’t know Corzine, but he did graduate from both schools I went to, Illinois and Chicago. I do know Terry Duffy, and he graduated from another school I went to called the school of hard knocks.

Corzine worked on Wall Street for Goldman. He traded other people’s money. They made money by trading against their customers. It was a confidence game. However, because the firm was perceived as a “white shoe” firm, they could hide under that umbrella. Goldman isn’t known as Dracula on Wall Street for nothing.

Duffy worked for himself in a trading pit. He traded his own money. Trading pits, while nuts, do have a very strict code of etiquette. There is a regimented orderly fashion to how business is done. There are some things that are central to every trading pit environment to make them work. First, if you can’t trust the person you’re trading with, you don’t trade with him anymore. No trades, you are out of business. Simple as that. Second, working in a trading pit is a continuous game. In the interpersonal struggle, sometimes you have to give a little to continue playing. There are as many personalities as there are people in a trading pit, and you have to be able to do business with all of them. No one says you have to “like” everyone, but you have to get along. There have been many times where I stepped aside and didn’t trade at financial cost to myself to allow someone else to get that trade because I knew they needed it. They would repay the favor someday, or then we’d have issues. Everyone there is trying to maximize their own gains. Believe me when I tell you, many times it got really interesting.


The $CME had some severe internal political issues from 1991-1999. Sometimes I was on the opposite sides of those issues with Terry. But, it never got personal, and when he spoke I always listened because I knew I could trust whatever he said. I had traded with him and his word was his bond.

Daily, when you are in close contact with a person, you get to know things about them. Especially when there is a lot of money on the line. When you are losing money and trades are continuously going against you in a trading pit there is no where to hide. It’s also when you begin to see the true measure of character a person has. Will that trader honor that trade you did even though it’s way against them and they are hemorrhaging money? It’s an open question, and one that I have had to face both for myself and watching others many times in my career.

I can say when the chips were down, Terry always did the right thing. Even when there was going to be great financial cost to him, he wrote a check and made every trade good. Knowing publicly what I know about Jon Corzine I don’t think he would have done the same thing. At least, anyone that allows customer money to go missing to fill up a hole they created doesn’t seem on the level to me.

In the constant stream of volatility and noise that happened each and every day, Duffy balanced the interests of his customers, his own trading account, and the interests of the individual locals that were trading their own money for profit. I know sometimes it raised his blood pressure, but he was able to do it because of the kind of person he was. Besides, we were all “in this” together and we knew that even the petty disputes that we would have daily weren’t important in the grand scheme of things which was creating a safe, honest market for people to do business in.


It’s a lot easier to contemplate the concept than to actually put into practice. Picture going into an enclosed area with 50 total strangers and then having to trade one item with your own money for profit. It’s brutal. Yet, some of the most trustworthy friends I have come from the futures business. When the chips were down, I could lean on them for support.

Terry is one of those friends. I certainly quibbled with the CME’s slow reaction to the MF crisis. However, I know him well enough to say that he wouldn’t have thrown a gauntlet down in a Congressional Hearing without knowing full well that Corzine and MF were at fault. I can imagine what it must have been like to be in the room when CME found out that MF transferred customer money and they found the receipts for it. Everyone understands competition in the business, but no one has patience for theft.

Corzine not only killed his own company, but his actions were detrimental to $CME. It ticked him off. You don’t spend a life in a trading pit building your business, building the breadth and reach of an exchange, and then have one jamoke in a suit tear it down overnight because he doesn’t have the character to assume responsibility for his own loss.

You learn a lot more in a trading pit than how to buy and sell. You learn a lot about character, and who has it and who doesn’t. It’s Martin Luther King every day, “judged by the content of your character”. The ones with character survive. You can’t without it.


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