Andy Yemma – John Lothian Profiles, Part Two

Andy Yemma - John Lothian Profiles, Part Two
John Lothian

John Lothian

Executive Chairman and CEO

Andy Yemma’s Insider Perspective on CME’s Key Moments and Egos

In part two of his John Lothian Profiles interview, Andy Yemma dives into the FBI investigations of 1989-90, which came as a shock to him. While he noted that CME traders often violated exchange rules and occasionally faced CFTC cases, the magnitude of the FBI case was unprecedented. Yemma’s initial awareness of the FBI case came from Bill Crawford, a former Tribune reporter who had experience as a police reporter and then covered the exchanges.

The news of the FBI investigation surfaced when many exchange leaders were in Washington, DC, attending the inauguration of George H.W. Bush as president. The investigation triggered a frantic response, with the CME’s immediate commitment to cooperation.

Yemma described how the story evolved from the front pages of the Chicago Tribune and Chicago SunTimes to gradually descend to the lower sections of the front page, eventually landing on the front of the business page and then moving tothe back page of the business section as events progressed.

Drawing parallels with the 1987 stock market crash, Yemma pointed out that the CME’s response involved the appointment of another blue ribbon committee. This panel featured notable figures such as the economist Merton Miller, who would later share the Nobel Prize in economics in 1990, and former Senator Thomas Eagleton, who subsequently became a CME board member.

Yemma credited John Geldermann with the concept of using handheld computers to record trades executed through open outcry on the trading floor. This innovation, he explained, resulted in the creation of an electronic audit trail.

Yemma pointed out that the majority of exchange members did not concern themselves with inter-exchange rivalries. However, influential figures within the CME regarded their exchange as the more innovative of the two prominent Chicago futures exchanges. While characterizing the Chicago Board of Trade (CBOT) as the more “establishment” exchange, he expressed some skepticism about whether certain CBOT members could truly be labeled as part of the establishment.

He discussed some of the challenges the CME had surmounted, such as the infamous onion scandal that led to the prohibition of onion futures. Additionally, he mentioned a relatively minor front-running incident involving the S&P futures that foreshadowed the FBI investigation and may have contributed to it.

Yemma recounted an amusing anecdote about the Eurodollars’ transition to the upper trading floor, resulting in the CME claiming the title of the “largest” futures exchange in the world based on trading floor space. This development caused quite a stir at the CBOT, prompting them to construct a new trading floor playfully referred to as the “Arboretum” in honor of then CBOT Chairman Patrick Arbor.

Furthermore, Yemma addressed the topic of Leo Melamed’s ego and the prevalence of strong personalities both on Wall Street and in corporate America. He also noted occasional confusion between the titles of “Founder” and “Father” of financial futures, typically associated with Leo Melamed and Richard Sandor. He added a humorous touch by mentioning the occasional mix-up between the names Sandor and Jack Sandner, which elicited a chuckle.

He said he enjoyed working with Sandner, Melamed and Brodsky, but he did not want to find himself between them when they were having difficulties.

As an example of exchange competition, Yemma recounted the story of when the CME extended an invitation to George W. Bush to visit the exchange following the conclusion of the second Gulf War. The CME had initially sought to keep Bush’s visit confidential from the CBOT, but inevitably, word got out. Ultimately, Bush paid visits to both exchanges, with the CME being his first stop, which provided some satisfaction to the CME leaders.

Yemma also mentioned the regular influx of politicians who visited the exchange to meet with members of the CME’s political action committee. Nevertheless, the most notable celebrity to grace the exchange during Yemma’s tenure was former Soviet President Mikhail Gorbachev. Gorbachev was presented with his own trading jacket, and mock “perestroika futures” were created in his honor.

Overall, the highlights of Yemma’s time at the CME included the stock market crash, the FBI sting, and the development of electronic trading, he said.

Yemma mentioned that he never managed to get the newspaper ink out of his veins or forget the wire service writing style, characterized by tight deadlines every minute. All of these experiences continued to influence and benefit his career along the way.


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