Mike Manning recently announced he is retiring after 37 years in the futures industry. During his career, he has worked and served on almost every level in the business, from runner to trader, back office at Goldberg Brothers Trading and LIT Amercia to president and CEO of Rand Financial, a perennial top 50 broker. Manning also served on the board of governors and numerous committees at the Chicago Board of Trade. He spoke with JLN’s Jim Kharouf about his career, market events and his Chicago firefighter roots.
Q: How did you get started?
A: I was attending the Chicago Teachers College (now Chicago State University) and an acquaintance of mine from the neighborhood mentioned they were looking for runners at the Chicago Board of Trade. I was hired sight unseen and told to come down on a Monday. I knew in the first hour, if not the first week, I had to stay at this place. I didn’t have the slightest idea what was going on but there was so much electricity in the air. It was right at the beginning of the Russian wheat deal which sent commodities through the roof. CBOE was just getting started and guys were trolling the floor to offer people jobs. There was just unbelievable growth then in 1972-1973 on the commodities side and over at CBOE, which needed to staff a new floor. I remember asking a guy on the floor about working over at CBOE and he said, “Ah, they’ll be gone in six months!” But it was virtually unlimited opportunity
Q: When you look back at the business, what will you miss most?
A: Certainly the people, my co-workers and colleagues, even my competitors.
Q: What do you make of the current push in Washington toward the clearing of OTC products
A: I always thought there should have been an exchange for these products and (they should have been) centrally cleared. Even the so-called toxic assets, if they were centrally cleared, would not have had the counterparty risk. We would have had much better control over the counterparty risk.
Q: I wonder if a central clearing house for credit default swaps would have helped better manage that market, especially given the margin requirements and clearinghouse oversight?
A: You’re right. It may have limited the growth of that sector but I don’t think that is such a bad thing. It was unfettered, unregulated growth.
Q: The Board of Trade and the Merc were such long-time rivals, what are your thoughts now about a unified Chicago futures exchange?
A: On a certain level you miss the rivalry. Even though I consider myself a Board of Trade guy, at the Merc there were just better strategic thinkers over the past 20 years or so. When the Board of Trade was going to do night trading, Leo Melamed said they were going to do it electronically. When the Board of Trade was fighting over doing an IPO, the Merc did it.
Q: During your career, who would you say were mentors or people who really helped you out?
A: Bob Goldberg and Dave Goldberg of Goldberg Brothers Trading (were such people). Goldberg Brothers was a large locally-based firm that cleared a lot of locals. I started there in late 1980 and they sold the firm to LIT America around 1989. They were fair. They were firm. They treated people with respect. I worked for them at a time when I wanted a mentor and to find someone to help define myself as a professional. The firm was growing like crazy and Dave always hated it when someone would say something about how big we were growing. He always said “That’s not our goal. Our goal is to be the best firm we can be and rest will take care of itself.” Dave Goldberg went on to start Burling Bank. Bob Goldberg went on to be a well known and respected high school girl’s basketball coach. His last school was Regina High School.
Q: What event stands out as the most memorable experience in your career?
A: As far as catastrophic events, the Crash of 1987 is it. Things happened then that didn’t seem possible. I’ll never forget the risk management reports we used, computer printouts and the matrix we used for various volatility scenarios. We looked at the worst case scenarios and that all went out the window. We were all living in sort of a fool’s paradise when it came to how bad things could go, or the impact on bonds. No one even used the term “flight to quality” back then until the bonds ran up about 10 handles. It was tough.
Q: How about the latest market events?
A: That October 1987 event, in hindsight, pales in comparison to Sept. 15, 2008. With 1987, it can be argued that it was a massive correction. But last year, there was a good 60 to 90 days in the fourth quarter where credit markets had seized up. We were right at the tipping point or going into complete global financial collapse. That was easily the most frightening.
Q: You come from a family of firefighters. Can you tell me about that and your career as a firefighter?
A: My dad, grandfather and great-grandfather were all Chicago firefighters. My great-grandfather on my mother’s side, Robert Ambrose, was killed in a fire in 1901. His name is on a plaque at the fire academy. I took the firefighter test when I was about 20, about the same time as when I started at the Board of Trade. And as much as I enjoyed the Board of Trade, I always thought I’d be a fireman. In the late 1970s I got called by the fire department and I left the Board of Trade. But I was really into what I was doing at the Board of Trade. I was assigned to a firehouse and then went back to the Board of Trade on my days off. I worked 24 hours on and 48 hours off, and I worked those at the Board of Trade. I did that for about two years and an old boss of mine was hired to start Plaza Clearing for Solomon Brothers. He hired me to be the back office manager and I did that for about a year before trading for myself in the bond pit. In 1980, Bob Goldberg hired me to work part time in the back office for them while I traded. I missed the fire department though and went back for a third year but kept my part-time job with Goldberg Bros. After a year, Bob and Dave Goldberg sat me down and said they wanted to put me in charge of the whole back office operation, but I’d have to quit the fire department. That couldn’t have come at a better time because Harold Washington was elected mayor of Chicago, and the city council wars were underway. I got a telegram from the city, the only telegram I ever got, telling me I might be laid off. So I took the Goldberg Brothers job.
Q: So being a firefighter and an executive, what do the two jobs have in common?
A: They both put out fires. There’s organized confusion and long periods of inactivity interrupted by sheer terror.
Q: What’s next?
A: Not sure. If I get bored, and I’ll believe that when I see it, I may come back and do something. I wouldn’t run a clearing firm again.