Financial History 25th Anniversary Special Edition (104, Fall 2012) | Page 31
While equity markets were suffering
the traumas of the Crash of ’87, commodity markets were also undergoing wrenching transformations. Those, however, were
not driven by external crisis, or even the
concurrent events in the stock exchanges,
but rather the need to change or die.
“We always talk about the last 30 years
as the complete evolution of global commodity markets,” says Richard Baker, CEO
of Cleartrade Exchange. “From the beginning to the late 1980s it was all physical
real-time trade Repository and four daily
China Steel Indices, which are available to
clients worldwide.
Baker recalls that later contracts, such
as dry freight swaps, still took more than
a decade from their first introduction to
their full adoption. Iron ore contracts, in
contrast, were introduced just two or three
years ago in various exchanges, and took
only about 18 months from their launch to
full acceptance.
Of course hardware and software were
major drivers of that change as the technology itself gained traction. There is a
strong correlation between the computers
themselves and their usefulness as indexing and trading tools — at first to crunch
numbers for traders, and now to operate
as electronic exchanges themselves.
DAVID BANKS/AFP/Getty Images
Left: Traders on the floor of the Chicago
Mercantile Exchange trade fiercely in the
S&P 500 pit, October 20, 1987.
business in the pits. Goods were graded
on the floor of the exchanges, traders
were in there shouting and waving tickets.
Everything was simple, bilateral transactions. The day was over when they stepped
out. Then indexation began to appear, and
we commenced trading futures. It started
with sugar and cocoa and coffee, and they
took decades to develop acceptance.”
Cleartrade Exchange is itself a product of the shift to electronic trading that
began in the late ’80s. It is an electronic
global marketplace for over-the-counter
commodity derivatives and is regulated by
the Monetary Authority of Singapore. The
company provides a specialized ordermanagement and processing platform,
developed for the freight and commodity derivatives markets. It also provides a
Richard Baker, CEO of Cleartrade Exchange.
Gavin Lavelle, CEO of Brady plc.
www.MoAF.org | Fall 2012 | FINANCIAL HISTORY 29