Standard sized S&P 500 futures delisted 1982-2021

S&P futures

S&P 500 futures launch button from first day of trading in 1982 at the Chicago Mercantile Exchange. Also shown are buttons given out to promote more traders to spend 15 minutes trying to trade the contract, buttons promoting the launch of options on the S&P contract and the button from the first day of trading the E-mini S&P 500 contract

The standard sized S&P 500 futures contract will be delisted on Friday, September 17, 2021 and it will close an era for that specific contract which was first listed in 1982.  Liquidity has long transitioned over to the E-mini S&P contract, which was launched in 1997, so it’s more of a nostalgic closure than anything that has bearing on market function.  Although the contract did launch to some decent volumes, a rival stock index futures contract from the NYFE had the potential to draw liquidity away from the CME’s S&P 500 contract so Merc executives Melamed & Sander requested after launch that established traders from other trading pits spend 15 minutes a day trading in the S&P pit to nurture liquidity.

These pinback buttons were given out only to those on the trading floor for a single day on the launch of a contract, so it can be thought of as a type of ‘rookie card’ for a futures contract, but way more scarce.  Pictured in the upper left is the original button that was given out on the day of the S&P 500 trading and was based upon the STP oil logo.  The upper middle and right buttons are the ones which were give out to remind traders to spend 15 minutes each day trading the S&P contract.  The bottom ‘Pac Man’ buttons are from the launch of S&P 500 options on futures in 1983.  For good measure, I also included the launch button from the E-mini S&P contract in 1997.

***I also need to note that there’s been some spam issues in the blog that continue to be addressed.  This website doesn’t promote, sell or endorse anything that has to do with anything that can ever make money so if you ever come across something along those lines, it should obviously be considered spam.  It’s always been my intention to keep this website purely about old trading pit history and zero to do with my or any current trading.***

LIFFE documentary from 1986

This wonderful documentary from ITV was uploaded to youtube earlier in the year and is now making the rounds after I saw it uploaded to the LIFFE floor facebook page.  The tv documentary runs 27 minutes and was released in 1986.  In particular, the mix of raw floor footage and interviews with a few of those who worked on the LIFFE floor at the time, really makes it worth while to watch and get a feel for the trading floor environment.

Tokyo Stock Exchange Hand Signals

Gurksky Tokyo Stock Exchange

Trading floor of the Tokyo Stock Exchange photographed by Andreas Gursky, photo credit

Once again, it’s been a while between posts as I had to have a friend sort out some technical issues with the website hosting, been busy with trading, living life and also working on another creative project I’ll elaborate more about later on.

All the talk about social distancing or even canceling the Olympics in Tokyo makes me long for some Japanese open outcry trading and in a deep dive on the subject, I actually found that the Japanese exchanges had a long history of using trading floor hand signals.  The following videos show how the Japanese traded open outcry at the Tokyo Stock Exchange.  To get a closer understanding, I used youtube’s transcript feature and then plugged the Japanese text into google translate along with asking a Japanese friend that I met at the CBOT (one of my first friends from the floor as he was a former yakusa enforcer who ended up at the CBOT, which is a wild story in it’s own right, but both of us knew no one else on the floor starting out, so we hung out together a fair bit and remain friends).

I couldn’t find any information on the origin of Japanese stock trading hand signals so if anyone can add to this in the comments, please do so.  Previously, I did cite some history about a Harvard Business Review study on the Dojima Rice Market and the Origins of Futures Trading, which also showed that dumbass trading clerks are just as old as the futures industry.  The Tokyo Stock Exchange (TSE) was founded in 1878, consolidated with other exchanges as part of the Japanese Stock Exchange in 1943, shut in 1945 and then reopened as the Tokyo Stock Exchange in 1949.  It’s also interesting that the TSE floor served as the General Headquarters of the Allied Forces after the war until 1948.

One of the most striking things about the Tokyo Stock Exchange trading floor is how there is zero individuality that stands out with everyone, besides exchange staff in brown suits, all dressed identically in a dark blue or black suit over a white shirt.  Of course there is zero racial diversity so everyone is Japanese with dark hair and while there has always been a method to the madness of every trading floor, the approach of the Japanese was certainly unique.  (The uniformity of those on the Japanese floor brings to mind the Simpsons episode from 1991 where Homer is accused of being a “free-thinking anarchist” because his white work shirt was accidentally dyed pink and he was the only one at work not wearing a white shirt.)

The first set of videos is the most comprehensive and stems from the late 1980s or early 1990s in the TSE trading floor that opened in 1985.  I’d recommend turning on the closed captioning (CC button and then going to Settings (the sprocket looking button next to CC) and then turning the language from Japanese to auto translate into English).  The video is split into two, roughly 10 minute clips and the example of specific hand signals straddles both clips.  It was good to see that the TSE hand signals had similar shortcuts like drinking a beer to indicate Kirin Beer, signaling a rowboat for NYK shipping lines, mimicking driving a car for Toyota, etc….

For some raw footage from the visitors gallery during the Bubble era, this video shows how full the TSE floor was at it’s peak around 1990 when over two thousand workers were on the floor.  Apparently the TSE had a jackets optional dress policy in the summer months so it’s all a sea of white shirts on the trading floor.  Also seen is the one and only hand signal robot at 8:02 of the clip.

This next video appears to have been taken towards the last day of what’s referred to as “Gekitaku trading” in 1982.  The JPX website refers to this as “group competitive call auction trading” which began in 1900 and I don’t really understand it entirely, but if interested you can read about it starting on page 184 of this linked PDF.  Opening and closing of this style of trading is initiated with an exchange official using a wooden clacker, now that’s old school!  The second part of the same video shows the closing of the TSE trading floor in 1999 and is rather boring.

Next is a video from around 1960 of the TSE which was made to highlight the postwar recovery.  The video isn’t entirely about the TSE so I linked it to begin where the trading floor section starts at 5:16 of the video.  A portion of the video explains how hand signals were used on the trading floor with similar examples to the first video of this post.  There is a second part to the video without closed captioning offered, but doesn’t deal much with the trading floor and by appearance, mostly the back office and continues on about Japan’s industrialization.

To wrap up this post, the last short video is of the TSE in 1935 and I was surprised to see young women working as clerks on the trading floor because in later clips, it’s an all male environment.

In a separate post sometime, I’ll write a bit more about Japanese commodity exchanges.

Game stays the same, only the players change

Stock market bucketshop trading ticket from 1901

I don’t write much about the equities markets, mainly because I don’t participate in them and have a lack of interest. The recent squeeze in GME and other stocks did remind me of the above relic from my collection of the famous Panic of 1901. The trading ticket is from the St. Louis branch of the Central Stock & Grain Exchange of Chicago, which was a famous bucketshop of it’s day, and it represents a lot of similarities of the recent frenzy in stock trading.

A lot of speculative manias come down to what I regard simply as distribution of access, although the current buzzword used is “democratization” of the markets with Robin Hood or similar trading apps. Whether it’s crypto or commission free stock trading, the barrier to entry is nonexistent which can be a good thing or a bad thing but history suggests that for the majority, it’ll be a money losing endeavor to get caught up in.

Bucketshops required little to no minimums, gave easy margin access and weren’t subject to many regulatory requirements either (sound familiar?). To get in on the action just required cash on the barrelhead. Trading apps now have a little more restrictions compared to bucketshops of the 19th century, but have added gamification features that are the envy of any casino operator.

All that said, it’s not surprising that this rare bucketshop relic is from the trading frenzy in 1901 as the panic involved the greatest short squeeze seen up to that point in Northern Pacific railroad stock which sent it up 10x in May of 1901. The Global Financial Data blog has a detailed summary linked here about the squeeze in Northern Pacific and I’d suggest reading it for additional background, particularly how the squeeze was eventually diffused.

The bucketshop trading ticket pictured is for shares of Union Pacific which were caught up in the squeeze for Northern Pacific and as might be expected, the purchase was closed out at a loss a few days later as noted on the back of the card. Trading is an incredibly tough game that people don’t realize when so many others are seemingly making easy money. I had the benefit of learning a lot by osmosis on various trading floors and heard a lot of “sayings” which I didn’t really understand the meaning at the time, but eventually the wisdom was understood. Two of my favorite trading floor sayings to share, “the amateur looks for the greatest reward and the professional looks for the least amount of risk” and “there’s old traders and bold traders, but no old, bold traders.”

Jesse Livermore was probably the most famous bucketshop trader of the same era, even operating from St. Louis briefly, and his fictionalized story is told in Reminisces of a Stock Operator. Livermore’s account is worth reading to hear how he traded during the 1901 panic, did most of things right but still managed to lose all his money and go broke once again. That boom/bust trading cycle continued his entire life until he ended it with suicide in a New York hotel cloakroom. I should also note that many RobinHood traders are probably already familiar with the work of Livermore’s granddaughter.

As for the Central Stock & Grain Exchange of Chicago, it was most famous for it’s battle with the Chicago Board of Trade over market quotations after the CBOT had cut off providing market pricing to bucket shops. I believe that the Central Stock & Grain Exchange of Chicago was the last bucketshop to maintain a quote feed from the CBOT, using legal means that eventually went all the way to the Supreme Court.

I have no idea where this current trading mania leads to although it’s gotten far more bizarre that I could’ve imagined already. During the height of the Robin Hood restrictions on GME, I finished a Sunday lunch in Palo Alto and figured I’d drive by Robin Hood HQ in Menlo Park on the way back to the City just to see if anyone was protesting. As it turned out, I saw one lone protestor outside of Robin Hood’s HQ, a man in his 20s, dressed in a Jesus style biblical shepherd outfit and holding a sign stating “God hates market manipulators.” I didn’t have my phone on me, otherwise I’d post up a photo of the guy.

Kansas City Board of Trade documentary from 2006

I transferred this documentary onto youtube from a DVD the Kansas City Board of Trade offered after it was produced in 2006. The documentary was produced as part of what appears to be a PBS affiliated series called Voices of Vision, showing both the speculative and producer perspectives on the hard red winter wheat contract which was traded in the pits at the KCBT.

In 1998, I got my first look at a trading pit from the visitors gallery at the KCBT and instantly knew that it was all I ever wanted to do in life. Shortly after that first look at 18, I got a job as a pit reporter and blew off my plans to go to university a couple months later. As you can understand with the profiles and interviews, it was a very inviting atmosphere for a young guy to be introduced to the futures industry. A lot of great memories come back whenever I see pictures or videos of the KCBT floor!

I might as well repost the video of the final trading bell I took as well there.

1993 CBOT video

I finally got around to converting this sixteen minute 1993 CBOT promotional video from cassette, about futures markets and the trading floor. In particular, I think this video is great with how it leads with the professional perspective of a top step bean local, who has none of the amateurish bravado, but shares his perspective of how serious things are for a local and how a career can be ended in a single day.

1865 CBOT building Inaugural Banquet program

1865 Inaugural Banquet of CBOT building reception program, shared from my personal collection

As anyone who has been a part of the trading floor environment knows, there ain’t no party like a Chicago trader party, and that’s rang true going back to the origins of trading in the city. The CBOT and it’s members were quite flush just months after the end of the Civil War, and offered this luxurious banquet to open up the new 1865 building, their first permanent home within the Chamber of Commerce building.

I love any Chicago collectibles preceding the 1871 Chicago fire, but especially CBOT items as they’re pretty rare. In a prior post, I touched upon the fire as it related to the CBOT, burnt down the above building, and shared a members ticket in my collection from that year. Although I have other opening items for the subsequent CBOT buildings, the only similar item I’ve seen to commemorate the opening of a preceding CBOT building is either at the Chicago History Museum or the Chicago Public Library, can’t recall where I saw it.