In the December 1999 issue of STOCKS & COMMODITIES, I suggested that the day of the exchanges was coming to an end. This month, our interview features Mr. Futures Exchange himself, Leo Melamed, chairman emeritus of the Chicago Mercantile Exchange and frequent spokesman for an industry confronting regulatory inertia. Melamed is bullish on exchanges and has been in the forefront of the Merc's effort to wire together a federation of exchanges that have agreed to share the execution and clearing business by not listing each other's instruments. Competing against them are the Chicago Board of Trade (CBOT)/EUREX alliance, an industry coalition called BrokerTech, slowly evolving equity exchanges, and a swiftly increasing herd of electronic communications networks (ECNs).

Melamed believes that business is likely to stay with the heavyweights unless they fail to mutate into what their customers demand, namely purveyors of fast, cheap executions at the best prices available. If that's the target, the contest may be over already, because that game depends on software and the ECNs already have it. Plus, customers don't plan to be held up by regulators over what they can trade or where someone can access them. The only hope for the heavyweight exchanges is the Citigroup and Blackbird approach: mutate and wait for the laws to catch up later.

While you'll soon be able to trade anything, anywhere at any time, think of the strain on you, particularly the lack of sleep. It's been possible to ignore overnight trading up to now, but in the near future, the action overseas may be so vital you may need someone on duty at all times with one eye open. Even independent traders may need to be on a team of traders. (Late shift, anyone?)

A team? Where would you find one? And how would you work together? Who knows what those other guys would do? Actually, the whole idea could be quite beneficial. Instead of making and repeating mistakes in private, you'd be practicing with folks whose money you're exposing, people who aren't likely to ignore success or failure. The feedback would be instantaneous and enlightening, if abrupt.

You'd be invited to be on the team. You might start as a flunky trading something quiet and sharpen your spurs for a few years before you join the varsity. Or you might get pushed out the door for lack of performance. If you thought of going out on your own, you'd face those endless 24-hour days yourself or form your own team. That happens all the time in the institutional world, trading worldwide. Now it's changing lives for individuals.

The turn of the millennium is a fitting time for change. Thousands, perhaps millions of new traders are swarming the markets, enabled by instant communications and unhampered by the tedium of data acquisition and maintenance, coddling software, or complex quantitative approaches. Now you can square off with people all over the world -- or form your own team from people all over the world. The old ballgame has been swallowed by a new one, and only the verities -- fear and greed -- remain. It's time to assess what your trading priorities are. Good Fortune!

John Sweeney, Technical Editor 

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