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| There was/is a sense of honor among men (& now women)-It was a private sort of club. With very strict rules. These old timers had ways of quickly sorting out any folks trying to be clever to rip off the public..there are to be no activities which would put the membership in a bad light. No financial defaults. If a firm was in trouble, overnight the deal would be salvaged and appear with new ownership. A lot of Chicago tradition. The CBOT was Irish-Catholic...The Merc was initially Jewish. Only individuals could own a CBOT membership, some corporations could be members on the Merc. If anyone was suspect in their dealings and while a free market, those folks found it was very difficult to execute a trade....their bids or offers just were not noticed by anyone in the pit. Plus, there were the usual cliques as in any enterprise...there were insider-insiders, insiders and the rest. Many of these folks have huge money, are concerned about their family heritage and their reputations, just like anyone else in business. I knew a fellow, not well, but if someone needed a quick $100K or more, he had some in his pockets and the rest upstairs. Margin calls at the clearing house are in cash (bank transfer), US treasury bills or Clearing house stock (don't know about today). Financial integrity and trading integrity is the key as before computers all you had to show for documentation was a piece of cardboard itemizing the trades. Electronic trading has obviously elminated much of that and in some instances is a better representation of the market.
An institution deep in tradition changes slow. It was a major change to have women members, a shock when smoking was prohibited & I know of no other institution which upheld a sense of honor among trades as either the CBOT or the Merc....if something clever was attempted, someone from the discipline committee would be on you immediately after the close.
Edited by SeniorCitizen 1/15/2008 12:01
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Trading, marketing and certainty
