John Vaile Saw the Potential of Financial Futures and Helped Make Them A Success

John Lothian

John Lothian

Executive Chairman and CEO

John Vaile had an aunt who invested in the stock market who bought Vaile some stock when he was 10 years old and that experience caused him to want to be a stockbroker. As a result, Vaile became a student of the market.

He went to a couple of different colleges in Illinois, then ended up in a program at Wharton for students who did not graduate from college. 

Vaile was working for Morgan Stanley and living in Lake Geneva, WI, surrounded by friends in the futures markets and he wanted to get involved with what was happening. He said he badgered Morgan Stanley to get involved. They gave him permission, but he said he could see how long it would take for them to truly become involved and he did not have the patience for that.

Instead, he reached out to John and Tom Geldermann, friends from Lake Geneva, who had their own brokerage firm at the Chicago Mercantile Exchange. Vaile decided to give up the six figure salary he was earning at Morgan Stanley for the opportunity to be an independent contractor at Geldermann and build a business there. It was a classic eat what you kill brokerage scenario. 

His first job was as a board marker for Blythe and Company. He was promoted and never stopped being promoted until he owned his own firm. 

For memberships, Vaile first bought an IDEM membership at the Chicago Board of Trade, then an Associate membership at the exchange. Finally, he went to Harris Bank and the department that lent money to buy exchange seats and borrowed the money to by a full membership at the CBOT.

He would eventually hire people into his company who owned seats, so the company did not have a lot of money invested in seats, he said.

As Vaile searched buy-side firms that were capable of trading futures, he eventually turned his focus to Europe.  Europeans had a greater appreciation for currency fluctuations, while Americans did not care as much, Vaile said. Thus, Europeans had a greater need to hedge using financial futures. 

When Vaile gave up his salary to take a chance on building a business, it had an impact on his family because it was a big chance, but he had his gaze on the longview.

Vaile misses the camaraderie of trading floors and equated it with going to a gym. He said that he built relationships with the honest people on the trading floor, the professional people there. 

His worst memories of the trading floor were big trading errors, high five figure or low six figure losses, he said. They were buy versus sell mistakes that were very costly.  

The relationship between the staff and the members was always an interesting dynamic, but Vaile and his fellow traders in the financial room were the innovators trying to prove something would work. The research staff was very cooperative, but the new financial members had to earn their way. 

Vaile hired a couple of students from the University of Chicago studying the Black Scholes options model. That is how Vaile learned options. 

Vaile saw a tremendous amount of generosity on the trading floor. He said he has never met anyone who was more giving than the people at the CBOT or CME. 

The life lessons he learned on the floor was to learn about people and what makes them who they are. He said there were so many benefits of working on the floor, especially about the importance of being honest and learning how to build friendships. 

One of Vaile’s mentors was former CBOT Chairman Al Gritzmaker. Another was John Geldermann, a former chairman of the CME. He said he also learned from his clients, especially those with research departments who would share with Vaile.

Vaile said he saw the expansion of electronic trading in Wall Street firms as the number of traders and screens continued to grow every time he visited firms.

After Vaile left Geldermann, he joined Elder IXL, an Australian firm, as second in charge of global futures and options. Vaile wanted to expand his business globally, but the job put him on an airplane to visit the 50 offices of the firm for quite a bit of the time, he said.

Vaile has helped start a non-profit organization that is making a difference for students in the North Lawndale area of Chicago. He launched a “Creating Entrepreneurial Opportunities” program at the Chicago Hope Academy and talked about the challenges the students face and the results the program is seeing so far. 

 

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