Chicago trading community and Mayor team up

Chicago Mayor Richard M. Daley describes the recent economic crisis as more of a restructuring than a recession and wants to “position the city of Chicago to reap the benefits of the better economic times to come.” To do that he has called on leaders of Chicago’s financial trading industry.

Daley convened a roundtable of business leaders at CME Group’s headquarters on Thursday to discuss ways the city can continue to help support and grow the industry.

CME Group Executive Chairman Terry Duffy said, “We discussed a whole host of challenges and opportunities facing the financial community from regulatory issues to global expansion. It is wonderful to have a mayor who values the vital role the [financial community plays in the city].”

Daley cited the 50,000 trading jobs in the Chicago metropolitan area and noted that each of those jobs contribute 1.7 additional jobs in other industries. He also pointed out that Chicago has more than twice the trading volume as New York.

While there were a lot of compliments tossed around from both sides there was an underlying threat acknowledged by both sides, which is that the modern financial services industry is extremely portable.

Chicago Board Options Exchange Chairman and CEO Bill Brodsky said, “Trading can go anywhere. Firms that bring so much to this city in jobs and the economic base can literally leave here in a flip of a switch,” while adding, “But importantly the mayor understands what is at stake.”

James Heinz, managing partner of proprietary trading firm Marquette Partners said, “I travel around the world and [CME and Chicago are] a global reference point in a borderless industry. Everyone is anxious to mimic what Chicago has, everyone is anxious to have this franchise.”

While there were dire warnings, the overall theme was positive. Mayor Daley and several industry leaders pointed out that the industry has added jobs in the city in the midst of the current downturn. This was not the case of an industry holding some government hostage pressing for tax concessions with the threat of a move, it was an attempt to point out the positive growth of an industry while at the same time pointing out some harsh realities.

And there also was an attempt to separate the Chicago financial trading industry from what is often loosely referred to as “Wall Street.”

‘It is worth pointing out that there are some segments of our financial markets that provided a place of shelter for the most damaging parts of the economic crisis, futures and options markets are chief among them,” Duffy said. “Futures and options markets functioned flawlessly providing liquidity, transparency and central counterparty clearing that continued to work throughout the crisis.”

Heinz pointed out that Chicago's trading community is too often lumped in with those players that contributed to the recent credit crisis.

Despite what seemed to be a sense of urgency, no one cited any particular regulatory proposal or specific threat that had caused them concern. This seemingly was a shot across the bow over any attempt to add cost or constraints on the industry. Given some of the regulatory proposals we have seen since the crisis began, there is a need to separate the regulated futures industry from the investment banking and over-the-counter trading world.

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