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Recession forces Chicago trader's hand
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Brendan Tagler wants to get out of the pits. For the last 11 years, Tagler, 39, has worked as an open outcry trader on the floor of the Chicago Mercantile Exchange, trading commodities on the S&P 500 Futures exchange.
“I stand there and yell and scream and make hand signals,” he said. “That’s how I make a living."
The hand signals, known as arbing, (which is short for arbitrage) are used on the trading floor to transmit buy and sell orders. Since most trading is now done electronically, fewer trades are transacted on the floor, which makes Tagler's job not only more difficult, but increasingly obsolete.
Tagler's front-row seat to the economic recession has taken a toll on his family, he said. Also, camaraderie among traders has given way to more short-tempered outbursts and less cooperation on the floor.
“It's harder to make any money down there...the order flow on the floor is way down. It's not a viable way to make a living. This last year, especially, has been a roller coaster. It's been frustrating and stressful for me and my family. It's time for a change," Tagler said.
Ann Saphir, a senior reporter for Crain's Chicago Business who covers media, financial services and Chicago's exchanges, said that the advent of electronic trading has changed the rules of the game. Being on the floor has lost its advantage.
"Now that customers can use both trading platforms, even if you are in the pit and you think you know which way the flow of the orders are going, it can be deceptive, because customers are using the electronic system as well. You simply don't have the whole story, and you can get run over very easily," Saphir said.
Tagler himself has little interest in trading electronically. Instead, he'd like to use his skills doing trade reconciliation or troubleshooting for a client or brokerage house, which he did in the early part of his career.
" My kids want me to become a middle school teacher, so I may go back to school for that," he added. "I just need something more steady. I'm open to suggestions."
Michael Gorham, director of the Stuart Center for Financial Markets at the Illinois Institute of Technology, said that experienced floor traders like Tagler can be difficult to place in the electronic trading arena, because their skills, are "geared toward an older way of life."
Gorham said some traders who have survived the switch from floor to screen trading have started proprietary trading firms, and they are hiring the younger generation to do the trading because they are faster on-screen than those from the floor.
"It's a generational thing," Gorham said. "Kids have been raised on computers, they have faster typing skills and are quicker at switching screens.
"Traditionally, these guys who worked on the floor were independent entrepreneurs, they ran their own business. If they made a lot of money trading, the best option may be to start their own business doing something else."
Got an idea or suggestion for Tagler? Leave your thoughts below in the comment section or email him directly at bptagler@sbcglobal.net. He's also on LinkedIn.
