Course of the Exchange – John Castaing

It’s been a long while since I’ve been back on here to pontificate and curate, largely because I’ve been so busy, I barely have time to wipe my ass. This trading lull ahead of the election and wanting to clear a lot of stuff that’s been backed up ahead of an upcoming project, is giving enough of a push to post up some stuff I’ve had around….

Course of the Exchange, December 31 ,1708 edition from my personal collection

Update: One interesting thing after this post was published was that there were many references to 2020 representing the “UK’s worst recession in 300 years.” The December 1708 editions of Course of the Exchange I have, lead into that period of the Great Frost of 1709, which was the coldest European Winter of the last 500 years according to Wikipedia. Makes it even more remarkable to have these in my collection!

Beginning in 1698, Huguenot stockbroker John Castaing began publication of Course of the Exchange, and other Things, from Jonathan’s Coffee House on Exchange Alley in the City of London. Jonathan’s is largely regarded as the precursor to what became the London Stock Exchange as it, and other nearby coffeehouses, were a centralized gathering place for brokers and speculators to transact or share information. An excellent background article on the London coffeehouses of the 17th and 18th century is: The Lost World of the London Coffeehouse by Dr. Matthew Green. Also, this sample chapter in PDF form from The First Crash: Lessons from the South Sea Bubble is also recommended background reading.

Plaque marking where Jonathan’s Coffee House once stood on Change Alley in the City of London, personal photo

Castaing’s Course of the Exchange was not the first financial list published, but it was quickly taken to be the authoritative source on pricing due to it’s accuracy and consistency. Since it’s founding in 1698, Course was published twice a week on Tuesdays and Fridays as those were the days that foreign mail was dispatched from London. As a result, Course is the also notable to have been the first English business paper to be published more than once a week. I don’t think it’s a stretch to say that Castaing created the world’s first reliable financial data provider and the increased frequency of publication was the first step in latency reduction which now measured in nanoseconds (billionths of a second).

Four sheets of Course of the Exchange from my personal collection, 1708, 1776, 1777 and 1803

Even after Castaing’s passing in 1707, the format of Course remained very consistent by listing price information with the same format on one side of a single sheet. As the sheet was printed bi weekly, the edition number for that year is listed at the top of each page. There isn’t much broadly written on what Castaing created but one blogger noted that his ties to the Huguenot community was instrumental to the accuracy and following among the London business community.

I have an extensive collection of trading floor memorabilia of all types, but these pieces are some of my favorites across my collection. If anyone is aware of other pieces in a personal collection, please email me. From my research the largest original collection is at Guildhall Library in London (also the site of LIFFE trader statue, atleast on my last visit), followed by the Bodleian Library Oxford, British Library, a handful of single pieces at a few American Universities and of course these at Chez Carlson. With my December 1708 batch, which I obtained from one of the most prolific financial history collectors, I still am a bit in awe to have something that was created when Benjamin Franklin was a toddler (the only American reference point I could think of to show how old it is!). I also think it’s really interesting to look over the price changes, or lack there of, from the 1776 and 1777 sheets during the American Revolutionary War. Clearly the 1776 and 1777 sheets were posted on a nail, also a nice touch I like for the utilitarian use.

Photo I took on last visit to Tate Modern of 1847 Edward Matthew Ward painting, The South Sea Bubble, a Scene in ‘Change Alley in 1720

It’s hard to imagine the early 1700s when stocks were traded in coffeeshops although an excellent illustration of early share trading, particularly during the South Sea Company bubble of 300 years ago, is on display at Tate Modern Museum in London. Edward Matthew Ward’s 1847 painting, The South Sea Bubble, a Scene in ‘Change Alley in 1720, depicts the mania and street scene on Change Alley outside of Garraway’s Coffee House, where Castaing published Course of the Exchange after moving on from Jonathan’s Coffee House originally. There’s a lot of interesting details to the painting so I suggest viewing it in person next opportunity in London. There is no direct reference to Course of the Exchange in the painting but I’ll share some photos of some details that I found interesting in it below.

Writing on the torn paper has the words “hemp” “and flax” “capital” “million” “100”
The note on the door states, “The business of the owner is suspended from unavoidable circumstances.” Clearly the gentlemen on the left are surprised at that while the man consoled by a woman is having reality sink in of losses. There is also a chalk hangman drawn on the door.
Centered in the scene are some new speculators who are eagerly looking to get aboard a new issue. The pamplhet that is being read only has the legible words “Perpetual Motion – Capital One Million.”
The shrewdest looking person is the gentleman at the table who looks like he’s awaiting on other’s decisions to close a deal. To have a table setup in that scene makes it clear that he is The Man and also surrounded by others who know what they’re doing. The shady people behind him made me immediately think of some MFers in the eurodollar pit.
I’m not sure exactly what’s going on in this section but the couple in the lower left appear tapped out and likely tore up the paper certificate in front of them. Behind is a pawnbroker that likely provided liquidity for share purchases and a woman appears to either pawning some jewelry or getting some mystical advice.
Beneath the man at the table is a basket full of paper clippings, none appear specifically to be Course of the Exchange but would’ve likely have been if truly accurate.

LIFFE badges

LIFFE badges
LIFFE badge collection

Just a quick post as it’s been a while, the above photo is my collection of LIFFE badges that were distributed on the floor to commemorate a product launch or benchmark attained. There are probably a dozen badges that I know I don’t have but they’re for minor products generally and this is certainly one of the more, if not the most complete, collection out there. If you happen to have any which aren’t shown, please email me (tradingpithistory ‘at’ as I’d love to expand this collection.

In the US we refer to these as pinback buttons but apparently in the UK they’re called badges. Of the ones shown, the most notable are side by side in the middle right, the Bund futures launch and the FT-SE 100 futures. My favorite just for appearance is probably the mosaic pattered BTP futures launch badge from 1991. Any mention of that contract reminds me of a comment a friend once made of it that LIFFE’s BTP pit was more corrupt than Sicily.

My collection of CME and CBOT buttons was expanded quite a bit since I last took a photo of them and at some point I’ll have to do another photo. Next up, hopefully later this week, is another post I’ll have to do that’s also London related, regarding one of my most favorite and historic items in my collection of trading floor stuff.

Bag of bucks

grocery bag
Bag of bucks

The bag of bucks was something that really epitomized the trading floor as it was the type of thing that could only be thought up there. I can only speak to my observation of it a couple times on the CME floor in the equity index quadrant, as a clerk around the S&P pit in 1999 and 2000, but have to imagine it occurred also at the CBOT and elsewhere more frequently at the CME before I got there.

Like anything with the trading floor, it’s concept was very simple. The person running it would walk around the trading floor and announce that they were starting a bag of bucks later on and specify some additional details like if it was for $20 bills or $100 bills and if a single bag for everyone or if there’d be a second bag that was for clerks only. In those days, clearing firms had a fair amount of cash on hand which could be withdrawn from a trading account so the sums could escalate easily to five figures. To participate, all it took was to write your name or badge on the bills and drop them into the bag, unlimited. Once the collection was complete, the bag would be shaken a bit to mix it up then someone would get the honor of pulling a single bill from the bag and whoever’s name/badge was on that bill won the entire bag of bucks. Tipping out a cut to the person who organized it was the only vig.

Although the bag of bucks encapsulated the spirit of the trading floor, it also juxtaposed the function of the trading pits. Since the bag of bucks was a closed activity funded only by participants on the trading floor, it was essentially shuffling money around in a lottery style, zero sum game. The trading pits required outside order flow to trade against and as I’ve written before, locals wanted to trade with brokers filling outside orders rather than profit off other locals. Another thing was for all the billions in notional value that exchanged in the trading pits, none was done in tangible cash. Good traders always had an edge to base decisions on and the bag of bucks was a pure gamble, albeit a simple one for entertainment more than anything. It also wasn’t necessarily verboten to speak in terms of dollar amounts but rather than talk dollars, traders generally speak in terms of “ticks” when discussing money on the floor.

Obviously, the CME couldn’t condone the bag of bucks so it had to be done a little quietly. There were other activities like Super Bowl square pools or making markets in sports events which can be found in any workplace but the bag of bucks was unique to the trading floor. Before my time at the Merc, I also heard that when an adjacent street was closed, some fat guys from the floor were organized to race each other. Betting on fat guys racing is also something I can’t imagine happening anywhere other than at the Chicago Merc.

Eurodollar futures contract open 1981

Eurodollars futures open
Opening day of eurodollar futures trading at the Chicago Mercantile Exchange on December 9, 1981

The eurodollar futures contract is over 37 years old and having traded it for about half it’s (and my own) lifetime thus far, I was quite pleased to obtain this roll of film which documented the opening trading day of the contract at the Chicago Mercantile Exchange on December 9, 1981. There’s an issue embedding the file so click this link HERE to see the entire film roll of photos which will open up the uploaded 41MB pdf file.

When the LIBOR based contract was launched, the interest rate was over 13% which is pretty much unthinkable now considering the current environment of zero or negative rates across the globe. Not only is the volatility unimaginable with 13% interest rates but I can only think that the bid ask spreads were wide enough to drive a truck through in that trading era. Meanwhile as I write this, the size in front month eurodollars is 70k x 100k (including a single order of 30k on the offer). Another stat I can throw out there is according to my historical data, eurodollars had about 3.5 million open interest when I started as a clerk for some local traders there in 2000 and that ballooned to over 17 million a year ago but is down to about 12.5 million currently.

This FRED chart shows the LIBOR rate going back to the 1970s and illustrates the downward trend in rates since the day pictured, with a lot of credit due to the eurodollar contract and other financial futures, which presented hedging opportunities and reduced uncertainty to the capital markets.

One of the things I found funny was that when I went into the eurodollar pit as a 22 year old to trade, there were a lot of old guys who are pictured in some of these photos as young guys. A small amount of people are also pictured wearing the pinback button which was given out to commemorate the contract launch. Pictured below is one that I have in my collection:

ED futures launch button
Eurodollar futures contract launch button on December 9, 1981 from Chicago Mercantile Exchange

Nail a trader

Late 19th century satire publication, Puck Magazine, ran a cover story in 1888 advocating retribution against the largest CBOT trader of the era, Benjamin “Old Hutch” Hutchinson, after he orchestrated a corner which helped squeeze the price of wheat from 90 cents a bushel to $1.60. The illustration is pretty much a libertarian nightmare of state sponsored theft and redistribution of private property which was lawfully earned.

Written below the caricature of Old Hutch with his ear nailed against a door is written: “A Hint from Our Ancestors. They Nailed the Wheat Cornerers of the Middle Ages to the City Hall Door, and Distributed their Spoils Among the People.”

I could not find particular examples of speculators being punished through cropping (the official name for the punishment) although Victor Niederhoffer wrote in his excellent essay, The Speculator As Hero, of severe punishment of those who violated price controls during the siege or Antwerp in 1585. If anyone can find an example of speculators actually getting nailed by their ears, leave it in the comments and I’ll include it in the post.

It’s hard to watch but youtube has videos of people willingly getting their ears nailed to a post such as this one (click here). Medieval punishment techniques are an internet rabbit hole that’s tough to go down because apparently it wasn’t just a singular punishment like cropping, other brutal techniques were often combined to maximize the pain.

Leeson Lager / Bank Breaker shot *updated*

Nick Leeson Lager Harry's Singapore
Bank Breaker shot and last bottle of Leeson Lager

Quick note: It sure has been a long time since I logged in, the website software even changed since I last posted. Last year was my busiest trading year volume-wise and nearly my busiest for travel as well, add into that all sorts of kid activities w/my 4 year old and this project just fell by the wayside. We’re starting the year with a couple months in Singapore so appropriate to get the blog warmed back up and pickup on a subject it left off on. Lots of great content to post up as I’ve picked up some awesome historical trading artifacts in the past year that I’m excited to share eventually.

With the old SIMEX trading floor at One Raffles Place long torn down to make way for a higher building, there isn’t much left of the Barings scandal in Singapore but Harry’s bar on Boat Quay still has a couple remnants. Harry’s is famously the bar most associated with Nick Leeson in Singapore, to the point that it’s listed in guidebooks and walking tours will stop to note of it’s association.

To anyone who hasn’t been to the Harry’s location recently, it’s totally remodeled with the bar moved across to the other side of the room and doesn’t look anything like it used to inside. On my recent visit, I settled in and looked over the menu to see if there was anything to play on it’s past as a trader bar. Sure enough, they have a Bank Breaker cocktail which consists of a shot of whisky dropped into a glass of Midori and soda. The Midori references the Japanese Nikkei futures Leeson traded and I assume whisky because he’s from the UK.

It was a slow night so I got to chat w/a waitress who worked there since the mid 90s and she was able to share a lot of stories from when the bar was filled with SIMEX traders. She also brought out what’s likely the last bottle of Leeson Lager (88888 Reserve “Probably the World’s Most Expensive Beer” US$ 1.4 bn proof) to let me take a picture of it. Leeson Lager was limited to 100 cases and brewed by a Hong Kong brewery in 1995.


A friend of the blog, Felix K., wrote in and provided a link to an extensive interview that Leeson gave to Singaporean magazine Expat Living. The entire interview is worth reading but in particular, he commented that his time spent at Harry’s bar is more of an urban legend.

Nick Leeson: The Original Rogue Trader 19 December 2017

“Harry’s on Boat Quay is still a popular haunt for city types. When you went there to have a drink at the end of the day was it done with a sense of celebration or nervousness?
It’s one of the great myths of my time in Singapore; I very rarely went to Harry’s on Boat Quay. Yes, it was a popular place with expats. Yes, I was an expat, but as I mentioned previously I preferred to socialise with the locals that worked for me. If we did go for a drink after work it tended to be to bars at the other end of Boat Quay. One in particular was called Big Ben, it had a pool table, you could play darts and we knew the bar staff reasonably well. If a client or somebody from London was visiting, I might have had one drink in Harry’s but that really would be it.

At the time, I was living two lives; the reality of what was happening on the trading floor as opposed to the lies that I was positioning to everyone else. The last thing that I wanted to do at the end of the day was dissect how the trading day had gone which was typically the subject of discussion amongst the expats in Harry’s. I wanted to get away from all that.

I’ve lost count of how many hundreds of people who have told me that they drank in my favourite bar in Singapore or tried the “bank breaker” cocktail. Harry’s was one of the successes of that period; a couple of the traders in Japan have gone on to be extremely successful as well.”

Another authentic Barings Bank trading jacket from SIMEX

Barings Bank trading jacket Nick Leeson Singapore SIMEX

Baring Bank trading jacket from Nick Leeson’s SIMEX desk

I see that Nick Leeson is continuing to sell replica Baring trading jackets so this is a good time to present what an authentic Baring Bank trading jacket from the SIMEX exchange in Singapore looks like, as this one pictured was a recent addition to my collection.

The above jacket was issued to one of the lead execution brokers on Leeson’s Barings desk with the acronym DIN and whose nickname was “Fat Boy.”  Anyone who has read the book Rogue Trader should recognize the nickname and role easily.

I had actually bought this jacket in 2011 but didn’t get my hands on it until recently because the original purchaser wouldn’t ship it outside the UK upon purchase so a friend in the UK received it until he finally sent it on to me earlier this year.  The original purchaser got the opportunity to purchase this jacket from KPMG, the Barings bankruptcy liquidator, in 2007 as a consolation for losing the ebay auction for Leeson’s original trading jacket which was auctioned off.  I’m not sure what the price he paid KPMG for this particular jacket, as it was blacked out in the correspondence I was given for documentation, but his losing bid for Leeson’s jacket on ebay was over 16,000 GBP!

This is the second Barings jacket from Singapore I have and don’t really need two but also don’t sell anything in my collection so perhaps I’ll see if a museum like the British Museum would like one as a donation.