Ilan Levy-Mayer Shares the History of Cannon Trading and its Path to Electronic Trading

Apr 25, 2023

John Lothian

John Lothian

Executive Chairman and CEO

Ilan Levy-Mayer was interviewed by John Lothian News for the Path to Electronic Trading Video series. Mayer joined his brother in the futures broker business in Los Angeles after Ilan’s hopes for a basketball career were cut short by an injury. 

Levy-Mayer’s brother was a jewelry dealer who started trading silver back in the early 1980s. Mayer, or Mike as Ilan’s brother was known, had success in the bull market of the metals, but less success when prices went down. He then decided to become a commodity broker. 

In 1988, Mike started Cannon Trading in Beverly Hills while Ilan was a senior in high school. Cannon had eight brokers when it started and was largely a cold calling business, Levy-Mayer said.  However, within a few years the internet came along and Mike had the insight to buy a number of key futures related domain names, Ilan said.

In 1995, after college, Ilan was playing basketball in Israel and he “blew up” his knee. He was then working for an internet company in Israel and Mike and Ilan’s late sister-in-law convinced Ilan to come to Los Angeles and give the brokerage business a shot.

At the time, Cannon Trading had a couple of domain names that were bringing in some business, CommodityTrading.com, CommodityBrokers.com, E-Futures.com, and several more. Ilan joined the firm in 1997-98, passed his Series 3 and began to work for Cannon Trading. At the time, the company was small – about four people, he said.

Ilan started to use old CME leads to cold call people to try to sign them up for futures accounts. He said he did not have much luck and did not enjoy it, so he started to focus on the website. Cannon offered two booklets on their website, “Opportunities & Risks” from the NFA and “25 Proven Strategies For Trading Options” from the CME.

Ilan’s internet knowledge allowed Cannon to be highly ranked in Yahoo.com and AltaVista and resulted in many leads of people who wanted to trade futures. This led to growth at the firm as it added more brokers.

Then came the first steps of electronic trading in the form of the Leo Web trading platform from LFG. Cannon also offered Patsystems’ J-Trader platform when it became available. Cannon was clearing through firms like Alaron, LFG, Refco and later at PFG, he said.

Levy-Mayer spoke about the early days of Leo Web when orders were printed at a trading desk and called to the trading floor, where support from the trading desk was key to check to see if a client deserved a fill on an order in a market that may have traded through a customer’s price after the order was submitted.

Today, Levy-Mayer said he considers the trading platforms to be nearly bulletproof in terms of performance. 

He said a couple of his experienced colleagues were very helpful in determining if customers deserved a filland in situations in which a market was limit up and a customer wanted to get out of the market. Some customers did not feel comfortable placing orders electronically, he said, so the firm offered broker-assisted trading.

Patsystems was not one of Levy-Mayer’s favorite systems, he said. It was not as reliable, but also it was designed more for a former local on the trading floor than a retail trader in Los Angeles, he said. The look and feel was different from other platforms, he said. 

Cannon was clearing through both MF Global and with PFG when the firms went bankrupt and worked to help their clients go through the process to get their funds returned. He said, “It consumed us.” 

Those bankruptcies hurt Cannon’s business for two to three years and left a bad taste in customers’ mouths, he said.

Cannon is trading through several clearing firms today that cater to retail traders. They are with Gain Capital, which was bought by StoneX, and with Dorman Trading, which was bought by Miax. They are also with IronBeam and Phillip Capital. They have a white labeled version of Gain Capital’s Open E-Cry trading platform that Cannon offers as E-Futures. 

Clients also use CQG, but also many front ends that connect to APIs, including tools like Jigsaw, Bookmap, Overcharts, and TradingVue. Cannon offers 10+ platforms, he said.

Order flow trading is something customers are interested in, and several platforms offer interpretations of where stops may have been triggered or where iceberg orders may be.

Some of these programs may be using AI, but Levy-Mayer said he was not sure. 

He spoke about how commissions have changed over the years, starting when he first joined his brother at Cannon Trading. In 1998, Cannon was offering $11 per side, with an asterisk. The asterisk was for exchange fees. Commissions are now less than the exchange fees for the self directed online traders, he said. 

Levy-Mayer said there is still value in service to the client, still value in knowledge. There are still clients who are not day traders who appreciate the service. 

However, he said that the price of commissions has been the steadiest downtrend in the history of commodities. Straight down, down, down. 

One of the secrets of Cannon’s success is that many of its employees have been with the firm for many years. When employees hear a broker say something he or she should not be saying, the broker is told, “That is not how we do it.”  He said the firm is like a family, and employees act in the best interests of the firm. Cannon has only had one CFTC issue in 30 years, which is a remarkable record for a firm in the retail space. 

Cannon also trains new brokers with an emphasis on compliance, he said. When there is an issue, he and his brother dig into the problem and try to figure out what is the right resolution, he said.

The biggest challenge for Cannon is hiring new younger brokers, he added.

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