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Gilbert Leistner – Open Outcry Traders History Project – Part Two

John Lothian

John Lothian

Executive Chairman and CEO

A Trader, a Teacher and a Builder of Markets All Over the World

In part two of his interview for the Open Outcry Traders HIstory Project, Gilbert Leistner spoke about his relationship with Les Rosenthal. 

He recalled regularly meeting with Rosenthal at 4 a.m. after the 1987 stock market crash to go over risk issues. Invariably, Leistner would get a call from Rosenthal’s wife asking if he was there, checking to see if Rosenthal really was headed to the office as he said when he left home at 4 a.m. 

Leistner shared a story about Rosenthal already at the office at 4 a.m. one time when Leistner came in and the U.S. bond market was sharply lower. Rosenthal had arrived two hours earlier, was agitated, and had started to sell bonds. As the bonds broke in London, he sold more and more. The Chicago market was called limit down and Rosenthal said to Leistner, “Let’s go to the floor.” With the bonds called almost limit down, Rosenthal confessed to pushing the market down and asked if he should cover, which he did.

Leistner loved the comradery of the CBOT. The AMEX had antics that were unacceptable to the point that some would land people in jail today. One trick was to send a runner looking for the key to the clearinghouse before the market open. Another was sending a newbie looking for an “odd-lot stretcher.”

Another prank at the AMEX for new brokers involved a stock with the symbol of WO, which stood for Western Oxygen. Western Oxygen didn’t exist, but when WO went across the wire it was an indication a new broker was going to get baptized.

A crowd would gather to trade WO and the broker would be given some orders by clerks in on the gag. Eventually the broker would be given a huge order for 100,000 shares to buy. After he filled the order, the clerk would tell him, “No, I told you to sell 100,000 shares.” The broker would go back into the crowd in a panic trying to unwind the trade, which he would struggle to do. At the end of day the surprise occurred, which you will have to watch the video to find out.

Leistner’s worst day on the floor was when he lost 25% of his capital in a single day, but it was a transformative day, as he learned much from it. The stock market crash of 1987 was very stressful, but was not his worst memory. 

Leistner said the day of the stock market crash was a revelatory day that opened a window to men’s and women’s characters and souls. 

He said the most unpleasant event for him had to do with being involved in the politics of the Chicago Board of Trade and being asked to build a swaps clearinghouse. In the end, Leistner’s committee was shut down and it appeared he had been fired, which was not the case. 

The experience left him not wanting to participate in CBOT politics. Leistner decided to lease out his seat and go to Europe, he said. 

His career was transformed by moving off the floor and joining Tony Saliba’s International Trading Institute. 

Leistner taught all over the world with Saliba, he said.

Later Leistner started consulting on his own, he said.

On the recommendation of a friend, he joined a speakers program at the French embassy in Paris as a commodities trader who spoke French. He then followed President Bill Clinton and Treasury Secretary Robert Rubin to African countries to implement promised capital market programs. 

He did more consulting in Africa as a result, helping countries build markets. 

Leister said when he was running traders, he could tell who where the call was by the tone on the chirp of the telephone ring. It was the globalization of the markets and the 24-hour risk that caused him to give up running a trading group, he said.

Leistner’s best day trading was not his most profitable day. It was a day when a severe move in the market he was trading and the put insurance he regularly bought saved fhim rom losing a half a million dollars. He ended up making $50,000 on the day, he said. By paying attention to further out standard deviations and putting in place a put structure on his position, which he paid for, he saved himself a big loss.

The evolution of his trading reflected the evolution of the markets, including the beginning of the trading of puts, Leistner said. Misplacing of options from sheets sold by early options pioneers allowed Leistner and others to figure out the concept of implied volatility. 

He was introduced to computers by another trader who ran some trading sheets on an early version of a personal computer. 

Leistner tries to trade with measured risk, focusing on his downside, he said.

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