Recently read: The Futures
The Futures: The Rise of the Speculator and the Origins of the World's Biggest Markets, by Emily Lambert
This is at its core, a history of the Chicago futures markets. Other cities play into it as well, of course: The Chicago markets in stock derivatives interact strongly with the New York markets. Much of the history was new to me; I had a pretty good idea what sorts of things traded on the Chicago exchanges, but not how that came to be. They grew out of various regional agricultural exchanges. There's always a mismatch between when food is produced and when people would like to consume it, and futures markets provide (through speculators) a way to match up buyers and sellers at different time. Often this works well, other times not so well: The ban on trading onion futures is the result of one such incident. Originally there were many such markets (even two in Chicago), but as transportation improves, there's a tendency for centraliation. That's because buyers and sellers tend to prefer the largest market they can reach.
The book covers much of that history, and the rather amazing cast of colorful characters involved. Some of the interactions are memorable, too: In the aftermath of the 1987 crash, one of the New York bankers apparently asked, "Who is the Chicago Mercantile Exchange, and why do they owe us a billion dollars?". The answer, of course, being that they were the host of the stock futures market, and in the spectacular 1987 crash, much money was involved in settlement. The sometimes unexpected feedback betwen markets matters: In the 1987 crash, arbitrage between the Chicago and New York markets added to the volatility, and similar effects were significant in the more recent financial crisis. There's a lot of stuff to learn about these markets, and this book is a good source on the more human side of the markets.
Highly recommended.
This is at its core, a history of the Chicago futures markets. Other cities play into it as well, of course: The Chicago markets in stock derivatives interact strongly with the New York markets. Much of the history was new to me; I had a pretty good idea what sorts of things traded on the Chicago exchanges, but not how that came to be. They grew out of various regional agricultural exchanges. There's always a mismatch between when food is produced and when people would like to consume it, and futures markets provide (through speculators) a way to match up buyers and sellers at different time. Often this works well, other times not so well: The ban on trading onion futures is the result of one such incident. Originally there were many such markets (even two in Chicago), but as transportation improves, there's a tendency for centraliation. That's because buyers and sellers tend to prefer the largest market they can reach.
The book covers much of that history, and the rather amazing cast of colorful characters involved. Some of the interactions are memorable, too: In the aftermath of the 1987 crash, one of the New York bankers apparently asked, "Who is the Chicago Mercantile Exchange, and why do they owe us a billion dollars?". The answer, of course, being that they were the host of the stock futures market, and in the spectacular 1987 crash, much money was involved in settlement. The sometimes unexpected feedback betwen markets matters: In the 1987 crash, arbitrage between the Chicago and New York markets added to the volatility, and similar effects were significant in the more recent financial crisis. There's a lot of stuff to learn about these markets, and this book is a good source on the more human side of the markets.
Highly recommended.