In 1997, 10,000 people traded on the floors…Today, about 10% remain.
Thus begins James Allen Smith’s movie “Floored,” which will premiere on Futuresmag.com Sept. 6.
As we see in this sometimes harrowing, occasionally funny, often sad documentary is how electronic trading swept the futures industry leaving behind those who couldn’t adapt.
Released in theatres in early 2010, the movie captured this sea change that turned the world upside down for many who had been extremely successful on the floor but couldn’t, or just didn’t want to, make the move to computerized trading. No doubt there are many success stories, but this is not their story. For the most part, the movie tells the tale of a group of floor traders who describe in their own words how their world got smaller. In a business where Darwinism is a basic tenet, this movie shows the stark reality of what happened to those who couldn’t adapt.
Smith found himself in Chicago in 1996 after following his girlfriend of the time from Missouri. A graduate of the School of the Museum of Fine Arts in Boston, Smith had adapted to a world that wasn’t hiring painters to one that needed web designers. Turning down an offer with advertising agency Leo Burnett, he took the riskier path and vied for an offer from a new company called Local Knowledge, co-founded by Ray Burchett and Steve Prosniewski, in which he had a six month gig to help grow the business with a website and other duties.
“Right away I was rubbing elbows with a lot of traders,” he says about the experience. “Local Knowledge had a bunch of traders on staff…[and I loved] the environment — that wave of intensity when you walk on the floor. That’s why I start the film with six or seven anonymous voices talking about the first time they walked on the floor. I [know I] got goose bumps.” This was back in the mid-1990s when the floor was still brimming with action. Despite Globex’s introduction in 1987, the floor was still king in the mid-1990s and a lot of money was still being made there.
One of the founders of Local Knowledge was Steve Prosniewski, whose brother Rob is one of the traders followed in the movie. Smith asked Steve about doing a movie about the floor in 2001 and Steve told him about a trader who had been profiled in Cigar Aficionado magazine, who talked about his sail boat and second home, and after the story came out, no one wanted to trade with him. In a world of conspicuous consumption, those who actually bragged about it were shunned. So Smith continued to work in the markets arena and worked with Steve on a smaller movie production. A few years later, Steve brought up the idea about the floor movie and told Smith that maybe now, with the floor dying around them, there was a story.
Unfortunately the Chicago Mercantile Exchange (CME) wasn’t quite on board until someone who was close to CME Chairman Terry Duffy got permission to film on the floor. A movie three years in the making finally got the go ahead and Smith proceeded to interview some colorful (both in language and style) floor traders. A few either made the leap or retired, holding onto to their floor earnings. Others weren’t as lucky. Mike Walsh, whom Smith had worked for prior to doing the movie, provided a wincing portrayal of traders (almost) at their worst. “Anybody who knows [Mike] has a lot to say about him, both good and bad, me included. But seeing someone like him, or Rob or Jeff [Ansani] just really attracted me to tell that story,” Smith says.
The tale is woven showing these traders largely railing against the new world of computers, deriding it as an unfair system that was killing the floor, as well as their way of life. One telling segment has floor trader Kenny Ford arguing with Mike Fishbain, a software engineer, about electronic trading and the “evil thing” that is a computer. Ford is adamant about how terrible electronic trading is, not giving Fishbain room for reply. Ford personifies the staunchest of those who even today trade in pits that still remain open.
When the movie was premiered in late 2009, Smith says “it put the Merc back on its heels a little bit…I think [Steve sold it as] this kid wants to do this film and all of a sudden it’s on the front page of the business section of the [Chicago] Tribune. I don’t think they were expecting that it would turn into what it had turned into.” Also, between the genesis of the film, around 2006 and its premiere in late 2009, the CME had finalized a merger with the Chicago Board of Trade (CBOT), and weathered, like the rest of the industry, the 2008 financial crisis. Although the futures exchanges proved themselves during the crisis, volumes still dropped dramatically, only now stabilizing. In addition, all pits were consolidated to the CBOT floor. During that time even the membership voted to move a contract like Eurodollars, the largest of all the pits, to electronic trading. Smith said the change from when he started the film to when it premiered was dramatic. “[The CME] was the big corporation going ‘whoa, whoa,’ we control our image, not some punk guy,” which was the response from some floor traders, he said. “I respect that and my only response is ‘you have great stories, you’ve seen a lot of things…I hope other people continue to tell other stories from here. This is just my view, this is what I saw.”
He says premiere night with many of the cast in the audience was nerve racking, but adds that almost all those portrayed thought he did a good job. CNBC commentator Rick Santelli, who is interviewed in the film, stood up after the movie and said “you did a fantastic job James..it might not be pretty but it’s all true,” Smith recalls. “At the end of the day, a poll of 10 traders who have seen the film, two or three hated it while seven or eight loved it. No one walks out of the movie shrugging their shoulders. It evokes a lot of emotion for those guys.”
This perhaps is an analogy for those who accepted change and moved on and those who didn’t want to see the change coming. When asked what part or story was his favorite, Smith says “Rob Prosniewski’s part is the one that sticks with me because when I first started talking to Rob, he was gung ho,” he recalls. “At the beginning we filmed him on the floor, all those opening scenes, and he said, ‘next time you see me I’ll be on a computer.’ Then six months pass and he’s still on the floor, and nine months pass, and a year later I catch up with him on camera and I ask, ‘what’s going on, why aren’t you [trading upstairs]? and there’s a scene I call “wind-blown Rob” because he has a fan blowing on him because he’s so hot…that’s when he, well, he broke down…That stuck with me because he tried so damned hard [to move upstairs]. As much as Kenny, the guy who hates computers, embodies the mechanical processes the floor traders are going through in terms of being scared of computers, I think Rob embodied the emotional struggle and emotional hardship of it….”
No doubt, the pathos of seeing a glorious old world dying and viewing the effects on those who couldn’t adapt is captured in ”Floored.” It’s a history lesson of the futures industry worth viewing.