What It Was Like In The Glory Days Of Trading Currencies In The Pits

Tracy Alloway (0:08)

Hello, and welcome to another edition of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:13)

And I'm Joe Weisenthal.

Tracy Alloway (0:14)

So Joe, we had a pretty big development happen in the world of finance and markets earlier this month.

Joe Weisenthal (0:21)

Yes, we did. Arguably, I mean, arguably the biggest job in finance, there was a, right? Wouldn't you say that?

Concerned the premier job in all of banking and finance?

Tracy Alloway (0:33)

I absolutely would.

So what we're talking about, of course, is Goldman Sachs apparently putting David Solomon in line to become the CEO once Lloyd Blankfein finally, finally resigns. This is something that people have been talking about for a while now, but now they're talking about it in the context of what it means for Goldman and what it says about the changing nature of the bank.

Joe Weisenthal (0:56)

Before we go on, I guess you could also say that the succession question for Berkshire Hathaway is right up there in terms of huge finance jobs. But there's something, as you say, very special and relevant about Goldman, because A, it's right here on Wall Street, and also because, as you put it, it does have these sort of multiple business lines that seem to rise and fall over time, causing the fortunes of the people who are involved with them to sort of rise and fall in sympathy.

Tracy Alloway (1:25)

Exactly. So the trope is basically that Lloyd Blankfein came from this trading background, and the new guy that's coming in, David Solomon, he comes from more of an investment banking background, and that signals where Goldman kind of wants to go. The thinking is that trading, at least in the old style, is dead, and it's time for the new Goldman Sachs. So as a former banking reporter, all of this news, this transition, made me a little bit nostalgic, Joe. So I thought for this episode, we could talk about some old-timey trading, we could talk about when men were men and traders were traders and most traders were men, and really dig into some of the trading world as it used to be.

Joe Weisenthal (2:12)

Yeah, I mean, it's always fun to talk about trading, and I think people have some image in their mind of what traders do and maybe yell on the phone and yell in an open pad and take huge risks and stuff like that. Probably looks pretty different today if you're on a trading floor, but people always love those old-timey stories.

Tracy Alloway (2:32)

So we have the perfect person to discuss this. It's Cameron Crise. He's a macro strategist at Bloomberg now, but he was a long-time options trader, and he's gonna tell us some of his war stories from trading.

Joe Weisenthal (2:49)

How's it going, Cameron?

Cameron Crise (2:50)

Yeah, very well. It's snowing outside. I'm about ready for the warm weather, but other than that, everything's going fantastic.

Tracy Alloway (2:57)

So, Cameron, I gotta say, this whole discussion was partly kicked off by a tweet that you put out about a particular character who was trading. But before we get to him, can you sort of set the scene for us? What exactly were you doing when it comes to trading? What was your role exactly?

Cameron Crise (3:16)

So I'm kind of one of the last of a generation of foreign exchange option traders that essentially served an apprenticeship on a physical exchange. Nowadays, 99.99% of all FX spot and option trades are done over the counter. But back in the early 90s, which is the period we're talking about here, I worked for Swiss Bank Corporation, which had just purchased O'Connor & Associates, which was one of the biggest and most respected option market-making houses in Chicago.

And our modus operandi was essentially to have the new crop of future traders serve an apprenticeship on the exchange, on the Chicago Mercantile Exchange. Now, there was still quite a bit of activity here, both in Chicago and on the Philadelphia Stock Exchange, which also listed currency options contracts. A lot of the flow, I think, came from European corporations who were looking to hedge some exposure and say dollar mark or dollar Swiss or dollar yen or whatever. So we were hired, essentially, by this firm stuffed full of MIT engineers and sort of Penn, Wharton Finance whiz kids and then thrown on to the floor of the Chicago Mercantile Exchange, which shall we say was not full of these sorts of people.

So when I started work, I didn't have a sort of a financing background. I studied public policy in college. I had actually been studying abroad when Sterling was ejected from the European exchange rate mechanism in 1992, which sort of fostered my interest in foreign exchange. So when I was hired six months later, I said, yeah, I want to go into FX and had these interviews with these really smart guys, and they were all guys, and then started on the floor of the Merc, not really knowing what to expect, but sort of thinking that it would be just full of people similar to the ones with whom I'd interviewed.