Photographs By Joshua Roberts
John Damgard has been leading the Futures Industry Association (FIA) since 1982, witnessing some of the most dramatic changes in the industry. He was there as the Shad-Johnson agreement freed up the possibility of futures on stock indexes; as electronic trading was launched and became the primary tool of execution; during the consistent and ongoing consolidation of brokers and exchanges, and the myriad of shocks and scandals that tested the industry.
Damgard, who grew up in Ottawa, Ill., came to Washington as a volunteer for President Richard Nixon. Following President Nixon’s resignation, he went to work for the U.S. Department of Agriculture (USDA). He would become the point man at the USDA on the creation of the Commodity Futures Trading Commission (CFTC).
After the 1976 election, he left government and was hired by A.C. (Ace) Israel to run the Washington office of commodity firm ACLI International. He was a representative to the FIA when he was at ACLI and would later be recruited to run the organization after its move from New York to Washington.
Damgard recently announced that he would be stepping down as president of the FIA after nearly 30 years. We spoke to him regarding the enormous changes to the industry during his tenure and the challenges the industry faces.
Futures Magazine: What were the goals of the FIA when you joined in 1982?
John Damgard: Common clearing was always a goal. Anything that created efficiencies in the market was a goal. The other thing that was important to the firms is that they were concerned that exchanges were being run exclusively for the floor members who owned the place and the customers weren’t always getting a fair shake. They saw a real opportunity for the industry to grow much more quickly if the image of the exchanges could be improved, so we worked long and hard on that.
It [was about] best practices, standards and improving the reputation of the exchanges. For instance one of the first rules was never have a conference in Las Vegas, because we had been criticized as being nothing but a gambling pit. A conference in Las Vegas would send the wrong message.
FM: At times the relationship between the FIA and its members and the exchanges has been strained, talk about how that dynamic has evolved and what you see as the role of the FIA.
JD: One of the biggest issues we have had over the years was electronic trading. I remember John Conheeney, a former FIA chairman who was an outside director of the Chicago Board of Trade [CBOT] at the time, making a speech where he forecast that sometime in the distant future a black box might be the way orders were managed. They summarily kicked him off the [CBOT] board on the spot because they saw that as a threat to their livelihood. It was open outcry forever in those days. The fact that the firms believed that that there were ways for making the markets work better for the customers clashed with the self interests of a lot of the floor traders.
Leo [Melamed] accomplished a marvelous thing by convincing the Merc that there was a need for Globex. There was a gradual realization that as other parts of the world came here to learn how futures worked, many of them bypassed open outcry and believed in electronic [trading]. Exchanges like DTB (Deutsche Terminborse, the predecessor of Eurex) said we think we can match trades with computers. It was the competition from Europe that really sped the Chicago exchanges to seriously reflect on electronic [trading].