From Open Outcry to Electronic Trading: Andy Tan’s Journey Through the Evolving World of Finance

John Lothian

John Lothian

Executive Chairman and CEO

Andy Tan was interviewed by Robert Lothian of John Lothian News at the SGX Center in Singapore for the Open Outcry Traders History Project during FIA Asia Week 2023. Tan shared that he had been fascinated by finance from a young age. However, it was a visit to Singapore’s central business district, known as Raffles Place, that truly captured his attention.

Raffles Place is a major financial and commercial hub in Singapore, named after Sir Stamford Raffles, the founder of modern Singapore. It is home to some of the city’s tallest skyscrapers and most prominent landmarks, including the Singapore Stock Exchange. It was there that Tan observed traders donning colorful jackets, sparking his interest in pursuing a career in the field.

Tan pursued a bachelor’s degree in business following his military service, aiming to break into the trading world. However, his education primarily offered theoretical knowledge, lacking practical experience.

Tan responded to a newspaper advertisement seeking floor traders, beginning his career with DBS Trading in 1991. He then moved to Merrill Lynch in Singapore in 1992, where he remained until 2011.

Tan’s career initially involved working in clearing and interacting with clients. However, his curiosity and desire for deeper understanding led him to explore further. He began self-educating by reading books about options and engaging in discussions with proprietary traders and clients, aiming to grasp the essence of their focus and strategies.

Tan’s proactive approach to learning and engaging with the market through writing commentaries and conversing with customers significantly boosted his confidence. This newfound confidence, coupled with his expanding knowledge and skills, helped him rise up the corporate ladder. By 1997, his efforts culminated in his appointment as a fund manager for Merrill Lynch Futures.

Tan found the aspect of undergoing four audits, including those from SGX, to be a less enjoyable part of his job.

As the era of floor trading came to a close in 2005 with the advent of electronic trading at SGX, Merrill Lynch transitioned Tan into a role within proprietary trading, specifically in the Asia index arbitrage group. In this new capacity he spent three years in Singapore followed by another three in Hong Kong, before ultimately departing from Merrill Lynch in 2011.

Tan initiated the transition of his floor team towards electronic trading as early as 2000, amid the Y2K period, by gradually moving some members off the trading floor. He observed a widespread skepticism among the interest rate traders on the floor regarding the feasibility of electronic trading. They particularly doubted its capability to handle complex trades like butterflies and condors. This skepticism led many to underestimate the impact of electronic trading, leaving them unprepared for the shift. Consequently, those who did not adapt to the new electronic trading environment became the “early casualties” when the SGX fully transitioned to electronic trading in 2005, according to Tan.

Tan reminisced about a significant error early in his career stemming from a miscommunication during a transaction. While attempting to execute an order by signaling to a broker 20 meters across a trading pit, Tan misinterpreted a hand signal. He believed he had successfully filled an order for 100 contracts, but in reality, the broker’s gesture indicated the opposite—that he was out of the order. This error resulted in a financial loss of $10,000 USD, a mistake that remains vivid in Tan’s memory.

Tan credits his entry and subsequent success in the trading world to the guidance of two key mentors. His first mentor, a trader from Chicago named Sean Byrne, visited Singapore and recommended an options book to Tan, significantly enhancing his understanding of options and boosting his confidence. Byrne later relocated to Tokyo, solidifying his role as Tan’s mentor. Tan was also mentored by Eugene, a colleague at Merrill Lynch, who played a pivotal role in Tan’s transition from a floor trader to an electronic arbitrage trader.

(Interview by Robert Lothian, story by John Lothian, video edited by Patrick Lothian, story edited by Sarah Rudolph)

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