Financial Futures Pioneer Continues as Early Adopter on the Right Side of Major Trends
Bradley Rotter was on the financial floor of the Chicago Board of Trade when the Treasury bond market was working out its inefficiencies in its early days. Sparse institutional interest in bond futures in the beginning created lots of opportunities and sometimes the markets would move limit up and and limit down in the same day.
Rotter was interviewed by John Lothian for the Open Outcry Traders History Project. This is the second part of a two-part presentation of that interview.
Rotter said he saw many good deeds on the floor of the CBOT, including traders helping other traders who had blown out and needed capital to return to the trading floor. Rotter lent one trader $50,000 to return, but the terms of the deal included the stipulation that the trader had to go running with Rotter each morning at 6 a.m. on Lake Shore Drive. Rotter said he believed the discipline of the running would help the trader focus and lead to an early payoff of the loan. He was right.
Earning a place in exchange history, Rotter made the first trade of the day when options on bond futures were launched, he said.
Rotter has a grudge against one bond pit broker that he holds to this day. He said he sent an order for 200 bond contracts to Ray Elbin, a broker he used some of the time. Right after he sent in the order, the Federal Reserve conducted an expected move that sent bonds up a full point. Rotter said he knew his order was in on time and despite being a limit order, should be filled, so he went to Elbin to get his fill. Elbin told Rotter his order was unable. When Rotter later received the unable order back at the end of trading, there was a tear and a portion missing from the paper order.
After other traders cleared out of the trading pit, Rotter rummaged through the mass of paper trash on the trading floor looking for the corner of his order that was torn off. Sure enough, he found it with an endorsement for 200 bonds and the initials of a local who routinely stood near Elbin who apparently took the other side . The order had been filled, but Elbin pocketed the fill, Rotter said. It was “outright theft” Rotter alleged.
Rotter fired Elbin as a broker for AG Becker and Elbin never touched another order for the firm.
Rotter said he could sense that electronic trading was on the horizon, perhaps based on his early experience with the Cantor Fitzgerald trading platform. That caused Rotter to leave Chicago and the trading floor and move west.
He moved to San Francisco and traded off the floor from there. He also invested in hedge funds starting in 1982, taking profits from his personal trading account to give to other traders to manage.
Rotter claims he was perhaps the first customer of the legendary commodity and bond trader Richard Dennis when he first accepted managed futures accounts.
He also followed the Turtle Trader program started by Dennis and Bill Eckhardt and suggested one of his employees should apply. She was the only female to apply. Rotter later staked some of the early Turtle traders after they exited the training program, he said.
Rotter also invested in money manager Willis & Jenkins, despite a fee schedule that was 6 and 30, or a 6% management fee and 30% incentive fee. It turned out to be a good investment.
Rotter said he collects millennials to help him keep current with tech trends, which is where he learned about cryptocurrencies. He also invested in quantum computing and cybersecurity. The crypto market in 2013 reminded Rotter of the early days and inefficiencies of financial futures. Rotter said the growth of crypto currencies has surpassed that of financial futures by a landslide and called cryptocurrencies one of the “most important things in financial history you will ever see.”
Eventually, Rotter said, every market will be tokenized using smart securities technology. Clearing will go from T+3 to T+ 3 milliseconds, he said.
This has been a John Lothian News report. Please visit us on JohnLothianNews.com.
The video has been reported by John Lothian and edited and produced by Patrick Lothian.