Arcesium Executive Highlights Hedge Funds' Balancing Act: Advanced Tech vs. Top Talent

Don Morton: My Second Client As A Full-Service Broker, Has Passed Away At Age 89

His Highly Complex Bond Option Position Helped Get Me Fired From First American, But It Was Not His Fault   Don Morton, the second futures brokerage account I ever opened as a full-service futures broker, passed away on Monday, December 2, 2024, at the age of 89. Don was a brilliant options trader who served as the executive director of the Tennessee Legislature's Fiscal Review Committee. He was also a U.S. Army veteran of the Korean War and a certified public accountant.   I met Don when I worked for First American Discount, where he was a customer at Table 3. Don traded options spreads, primarily on 30-year Treasury bond options. I don’t recall exactly when his account was transferred to me after I was promoted to a new trading desk for high-risk customers, but he was part of my equity run. This included large, active day traders, traders from the Hume SuperInvestor File, a German introducing broker with numerous sub-accounts, and other high-risk traders.   Don’s highly complex options position actually played a role in my being fired from First American. Another key figure was Gil Leistner, who led an options market-making group at Rosenthal. Gil also played a pivotal role in my career, teaching me and a select group of First American colleagues about the intricacies of options trading.   The week before the 1987 stock market crash, Bill Mallers, Sr. shouted my name across the trading room midday on Wednesday. He called me over to my old trading desk, number 3, and informed me that the Dow was down 200 points. He mentioned an account holding 80 S&P 500 option straddles that was losing money, on margin call, and said the client could not be reached by telephone. Mallers had concluded that the new head of the desk, my former number two, was not up to the job.   I sat down at the desk, reviewed the equity run, and checked the price of the S&P 500 futures. At that time, deltas weren’t included on the equity runs provided by GMI, nor were they available on the quote screens. While we had last trade prices for options, they were often grossly outdated.   I had to extrapolate the deltas manually by analyzing the market and the distance of the account’s strike prices relative to the market. From there, I calculated a delta quotient for each position. I then summed up all the delta quotients, both long and short, to determine the net delta position. Finally, I multiplied that net delta by the change in the underlying market to assess the overall impact.   After completing the calculations, I determined that the account was actually making about $10,000 that day and was not on margin call. The customer had sold the straddles in August, and although the market rallied in the fall, he consistently met all margin calls for his million-dollar account. When the straddles were sold, the market was positioned in the middle of the straddle. By October, the market had risen significantly above the straddle, which the customer had margined up to maintain. However, as the market fell, it landed right back in the middle of the original straddle position. When I explained this to Bill Mallers, Sr., he decided that I should take over handling the account in the future. By Friday, the stock market's decline had intensified, and the S&P futures were dropping sharply, putting the account in serious jeopardy. That afternoon, I was discussing potential next steps with the client when Bill Mallers, Jr. decided that the situation's gravity required the Mallers family's direct involvement. At that point, I stepped aside, and Bill, Jr. took over the conversation with the client at 3 p.m. on the Friday before the infamous 1987 stock market crash. The client, located in Arizona, explained that he couldn’t reach the bank before 3:15 p.m. to wire the required funds, as per our standard practice for wire transfers. Instead, he asked if we would accept a $1 million check sent overnight via FedEx. Bill Mallers, Jr. made the critical decision to accept the check and personally came into the office on Saturday to ensure its arrival and handling. On Monday morning, as the stock market opened sharply lower, the $1 million check turned out to be no good. We had no choice but to liquidate the client’s position, resulting in a $1.5 million loss. First American eventually pursued legal action against the client to recover the funds, reportedly spending $1.5 million in legal fees before ultimately abandoning the case, or so I was told. It was on that tumultuous Friday that Don Morton entered the story. Earlier in the day, Gil Leistner had observed irregular and chaotic volatilities in the bond option pit at the CBOT, reminiscent of the turmoil in the S&P 500 earlier in the week. Leistner relayed his observations to Les Rosenthal, who then informed Bill Mallers, Sr. I would only learn about this chain of events years later during an interview with Leistner for the Open Outcry Traders History Project—though that particular detail was never included in the final interview. Bill Mallers, Sr. shared the information about the irregular volatilities with me because Don Morton was holding 10 to 15 equity run pages of bond and note option spread positions. I suggested to Bill, Sr., "The first thing to do is call the customer, explain the market conditions, and ask what impact he thinks this might have on his position." Bill, Sr. thought this was the most ridiculous idea he had ever heard and that I had completely lost my judgment. He promptly pulled me off the trading desk and sent me to sit in the smoking lounge.   The smoking lounge, notorious for being a place where even plants couldn't survive, was hardly an ideal setting for me to cool down after five days of adrenaline-fueled work in the high-stakes world of listed derivatives. Sitting idle in that stifling environment, surrounded by the lingering haze and inactivity, was unbearable for someone accustomed to the constant rush of the trading desk. Frustrated and unable to stay idle, I finally told them, "If you’re not going to let me work, I’m going home." When I returned on Monday, Bill, Jr. called me into his office and fired me. I asked to speak with Bill, Sr., and was told he would be in at 11. I returned at the appointed time, and when I spoke to him, he simply said, “Call me in a week.” When I called Bill, Sr. a week later, he told me to come back in. When I returned, I found that I was no longer assigned to the high-risk desk. Instead, I was placed on what we called the "cheap ass" desk, handling accounts that opened with less than $5,000 and were charged higher commissions. It was clear that the writing was on the wall for my time at First American Discount Corporation. After a brief sojourn as an off-the-floor trader with Joe Corona and Bruce Lawrence's Meltdown Trading Group and a stint as a member of the MidAmerica Commodity Exchange, I made my way back to the brokerage business. I joined Gerald Commodities as a full-service broker, eager to apply my experience and rebuild my career in the brokerage side of the trading world. When I left FADC, it was to become a trader, not a broker, and I didn’t take any customer lists or contact information with me. However, some of my favorite FADC clients’ telephone numbers were imprinted in my memory. I called them to let them know I was now a full-service broker, ensuring they were aware of my new role and availability. Don Morton was the second customer to open an account with me at Gerald. Interestingly, the Friday when Bill, Sr. shared his critical thoughts about customers turned out to be Don’s best trading day ever. Don was long volatility through bond and note spreads, including butterflies, and capitalized on the chaotic market conditions.   Don remained a loyal client throughout my brokerage career, transitioning with me as I evolved professionally. He became a managed futures customer of Jon Matte and Defender Capital Management when I began marketing Defender to clients. Don continued with the program even when I started trading the Defender system at John J. Lothian & Company, Inc. Ultimately, he closed all his accounts to focus on providing for his grandchildren, a testament to his priorities and thoughtful planning. One of my favorite stories about Don involves the opening of his account at Gerald. Normally, customers were required to fill out account forms detailing their assets, income, and trading experience, after which compliance officers would speak to them to ensure they understood the risks of futures trading. However, this step wasn’t necessary for Don. When I asked why, the compliance officer explained that Don’s account paperwork was so meticulously filled out—with his income and net worth listed down to the penny—it was clear this CPA, who worked for the Tennessee Legislative Fiscal Review Committee, had a comprehensive understanding of the risks involved. His precision and professionalism left a lasting impression. Don and I kept in touch over the years, primarily through Facebook. He would occasionally comment on my posts, and I made a point of wishing him a happy birthday every year. It was a simple yet meaningful way to stay connected. Rest in peace, my friend.

Arcesium Executive Highlights Hedge Funds' Balancing Act: Advanced Tech vs. Top Talent

David Nable discusses AI adoption, pass-through models, and the evolving expectations of portfolio managers in the hedge fund industry In a recent interview with John Lothian News, David Nable, a senior executive at Arcesium, highlighted the growing challenge hedge funds face in balancing advanced technology adoption with the demand for skilled portfolio managers. Nable emphasized that top-tier talent has high expectations for seamless technology infrastructure when moving to a new employer. "What we found is that the portfolio managers who are coming from some of the top industry participants have a very high bar for what they expect to just work for them to come in and be able to do their jobs," Nable said. He noted that this expectation extends beyond trading and research systems to the underlying infrastructure, adding, "All of the things that nobody wants to notice, they want it to just work." This demand for advanced technology has significantly impacted how hedge funds attract and retain top talent, according to Nable. He explained that the pass-through expense model allows hedge funds to offer more competitive compensation packages and invest in cutting-edge technology without compromising their financial health. "The pass-through model for organizations that are able to implement this type of business model, I would argue, puts certain organizations at a competitive advantage," Nable said. "They're able to invest in the best systems, the best data, the best talent, and they do so because they have a different economic model in place that allows them to do this." However, Nable emphasized that this approach comes with heightened expectations for performance. "The flip side is they have to outperform," he noted. "If they don't, investors are going to look and say, you know, what's my net return?" Despite scrutiny, Nable pointed out that firms using pass-through models have generally outperformed their peers, attracting significant capital inflows as a result. To meet these high expectations, hedge funds are investing heavily in infrastructure to quickly evaluate new data sources. Nable explained that this investment has reduced analysis time from weeks to mere hours in some cases. "If they can capture that new source of data, evaluate it more quickly than their competitors, and put it into their investment process, it seems to be a competitive advantage," he said. Nable then discussed Arcesium's core platform, originally developed within the D.E. Shaw Group. "For our clients today, often they get to leapfrog some of the legacy technologies that are in the industry to be able to support everything from high frequency, quantitative, high volume trading strategies to more esoteric strategies," Nable explained. Addressing the challenge of balancing technology adoption with talent acquisition, Nable described it as a "chicken and egg situation" where firms must strategically decide whether to prioritize investing in advanced technology or securing top talent. He suggested several approaches, including targeted investment in specific strategies, collaborating directly with potential talent on technology decisions, and leveraging non-compete periods to prepare infrastructure. Regarding artificial intelligence, Nable views it primarily as a "copilot" in current investment management practices, enhancing efficiency rather than making investment decisions. "I don't think we're there yet. Today, it's still very much an efficiency play, albeit a dramatic one," he concluded, suggesting that the industry has only begun to scratch the surface of AI's potential. Nable went on to highlight the transformative impact of AI-driven technologies on the financial sector, emphasizing their role in enhancing decision-making processes across various functions within hedge funds. He explained that AI is being used to analyze vast amounts of financial data, facilitate rapid testing and implementation of quantitative trading strategies, and enhance risk management through continuous portfolio monitoring. Furthermore, Nable pointed out the use of AI in analyzing alternative data sources and optimizing asset allocation. He also noted the role of AI-powered chatbots in enhancing compliance and documentation processes. Lastly, Nable emphasized the importance of robust data infrastructure to support these AI initiatives while ensuring compliance with regulations. He cautioned that "firms must carefully navigate compliance and data protection issues, particularly when dealing with proprietary trading strategies."

Lake Geneva Yacht Club and Chicago's Futures Markets: A Shared Legacy

THE INTERTWINED HISTORY OF THE LAKE GENEVA YACHT CLUB, THE CHICAGO BOARD OF TRADE, AND THE CITY OF CHICAGO TRACES BACK TO THE 19TH CENTURY, WITH KEY FIGURES LIKE JULIAN SIDNEY RUMSEY AND NATHANIEL KELLOGG FAIRBANK ESTABLISHING DEEP CONNECTIONS THROUGH SAILING AND BUSINESS By John J. Lothian   ELMHURST, IL - (JLN) - When I mentioned the news about my cousin Tom being hired as the new manager of the Lake Geneva Yacht Club ("LGYC") yesterday in JLN, I mentioned Thomas "T" Freytag [https://www.marketswiki.com/wiki/Thomas_S._Freytag], a co-founder of Geneva Trading, as a contemporary reference to give it relevance to the normal newsletter fodder. However, the history of Chicago's futures markets and the LGYC have a common founder in Julian Sidney Rumsey. [https://www.marketswiki.com/wiki/Julian_S._Rumsey]   In fact, the City of Chicago, the Chicago Board of Trade [https://www.marketswiki.com/wiki/Chicago_Board_of_Trade] (CBOT), and the LGYC share an intertwined history dating back to the mid-19th century, with the Sheridan Trophy serving as a symbolic link between these institutions. CHICAGO'S EARLY DAYS AND THE CBOT In 1848, as Chicago was experiencing rapid growth, the CBOT was established to bring order to the city's burgeoning grain trade. The CBOT quickly became a central force in Chicago's economic development, coinciding with the opening of the Illinois and Michigan Canal and the city's first railroad. These transportation innovations positioned Chicago as a major hub in the international grain trade. Shortly before the Great Chicago Fire of 1871, a railroad line to Lake Geneva was completed, allowing Chicago's elite to access their lakeside summer homes by rail. JULIAN SIDNEY RUMSEY: A KEY FIGURE Julian Sidney Rumsey, a founding member of the CBOT, played a pivotal role in connecting Chicago's business world with Lake Geneva's leisure community. Rumsey served as president of the CBOT in 1858 and 1859, and later became mayor of Chicago at the outbreak of the Civil War. His influence extended beyond Chicago to Lake Geneva, Wisconsin, where he maintained a summer home.   NATHANIEL KELLOGG "N.K." FAIRBANK Nathaniel Kellogg Fairbank [https://www.marketswiki.com/wiki/Nathaniel_K._Fairbank] was the first commodore of the LGYC, president of The University of Chicago board of trustees, a founder and president of The Chicago Club and a founder of the Commercial Club of Chicago. He was also a major trader at the CBOT, where he served as an officer. His company produced soap and baking products. He was also involved in one of the greatest squatting incidents in Chicago when ship captain George Streeter's schooner went aground off Fairbank's property that is now called "Streeterville." There is a Fairbanks Court on the western edge of Streeterville. THE LAKE GENEVA YACHT CLUB AND THE SHERIDAN TROPHY In 1874, Rumsey and Fairbank became founding members of the LGYC. That same year, an event occurred that would cement the connection between Chicago's business elite and Lake Geneva's sailing community. On August 31, 1874, Lieutenant General Philip H. Sheridan, a famous Civil War hero stationed in Chicago, visited Lake Geneva.   To celebrate Sheridan's visit, local residents organized a yacht race in his honor. Rumsey's boat, the Nettie, won this inaugural race. The participants had collected about $200 for a trophy to be called the Sheridan Prize, intended as a perpetual award for annual races. The trophy that has been awarded since is modeled after Rumsey's boat Nettie.    THE BIRTH OF A TRADITION The Sheridan Prize became the genesis of the LGYC. The trophy, along with three trustees chosen to oversee it, marked the formal beginning of the club. This event solidified the connection between Chicago's business community, represented by figures like Rumsey, and the recreational pursuits at Lake Geneva.    The Sheridan Trophy race at the LGYC is considered the second-longest continually raced sailboat race in the United States, having been established in 1874. It follows the America's Cup, which is the oldest. ONGOING LEGACY The Sheridan Trophy continues to be a prestigious award in LGYC competitions Labor Day weekend every year to this day, serving as a tangible reminder of the historical ties between Chicago's business elite and Lake Geneva's sailing community. This connection, forged in the late 19th century, exemplifies how the economic power concentrated in institutions like the CBOT influenced the development of leisure activities and communities in the surrounding region.    If you need more convincing, I suggest taking one of the guided tour boat rides from Gage Lake Geneva Cruise Line, where you can hear about all of the 19th century Chicagoans who had huge summer homes on the shores of Geneva Lake. If you are lucky, your captain on one of those cruises might be Captain Jack Lothian, the brother of the new LGYC manager. If your captain is seven feet tall, that is Jack.  MY OWN LEGACY   Many members of CBOT and CME, along with their children, have learned to sail at the LGYC and the Geneva Lake Sailing School, founded in 1938. My cub-boat racing instructor was former CBOT bond-pit trader John Porter. Thomas F. Cashman [https://www.marketswiki.com/wiki/Thomas_F._Cashman], son of FIA Hall of Fame member and longtime CBOT soybean pit broker Thomas J. Cashman [https://www.marketswiki.com/wiki/Thomas_J._Cashman] ("TJC"), also learned to sail there. Despite never sailing, TJC was a long-standing club member and part of the Old Guard.   T. Freytag is the retiring commodore (immediate past commodore) of the club and a former president of the Geneva Lake Sailing School. I sailed against his brother Billy and sister Kate when I was a kid. Later, I was a longtime member of the club as well and raced a C Scow with many friends and with my wife Cheryl, served as C fleet captain for a couple of years and served on the board of the Geneva Lake Sailing School, including as treasurer.     My uncle, Thomas A. Lothian II, who gave me his 1970 wood Johnson Boatworks C-scow when he retired from racing and after I graduated from college, was the commodore in 1974 when the LGYC celebrated its 100th anniversary and the 100th running of the Sheridan Trophy race. He started sailing on Geneva Lake, after first racing in his home state of Ohio, when he and my aunt would stay on the property in Fontana that then belonged to the Glenview Community Church. Some of my earliest memories are from being at the church camp.    When the church sold the property, my parents bought property in Williams Bay, where the church property caretaker was village president. My uncle also bought a home in Williams Bay. TJC and his family moved in across the street from him and they became good friends and served together on the village board.   In 1973, the Cashmans moved across the bay to a home a couple of houses away from our summer home and TJC coached my older brother Scott in little league.  T. Freytag's grandfather lived just down towards the lake from the Cashmans and he served as my father's lawyer when my father was president of our lake home subdivision.    The LGYC has come a long way from Julian Rumsey's days and the founding of the club and the start of the Sheridan Race, but the seeds that Rumsey and Fairbank planted continue to grow through the CBOT and Chicago today.

Celebrating 25 Years of the John Lothian Newsletter – A Leap of Faith in 1999

Standing Out in 1999 Led to a Career Standing Up For The Markets Twenty-five years ago, in August 1999, I began producing this daily newsletter as a marketing and networking tool to promote my electronic trading [https://www.marketswiki.com/wiki/Electronic_trading] brokerage services, Commodity Trading Advisor [https://www.marketswiki.com/wiki/Commodity_Trading_Advisor] offerings, and my personal brand. I was competing with large discount commodity firms that were transitioning to electronic trading, and I needed to market myself and my firm and find a way to stand out, but I didn’t have many monetary resources to do so. Therefore, I had to think outside the box. My specific goals at the time were to increase the number of my brokerage clients at The Price Futures Group [https://www.marketswiki.com/wiki/The_Price_Futures_Group,_Inc.], to raise funds for Defender Capital Management [https://www.marketswiki.com/wiki/Defender_Capital_Management,_Inc.] and Hargrave Financial Group, two CTAs I represented, and to elevate my profile amid industry changes that I felt could undermine my career path. I feared that the introduction of single stock futures [https://www.marketswiki.com/wiki/Single_stock_futures] could change the face of the industry, potentially making standalone introducing brokers [/] like The Price Group obsolete. I wanted to learn as much as possible about SSFs and share this information. I was also concerned about the impact of electronic trading on open outcry trading [https://www.marketswiki.com/wiki/Open_outcry] and its related careers, and I wanted my friends and colleagues in the industry to be aware of the risks they were facing. Additionally, I worried that backlash from competing brokers over my participation in the ‘wild west’ of the internet—Usenet, the Reddit of its day—might damage my reputation. My hope was to address both my goals and my fears in a positive way that would benefit myself and my community. My specific strategy for the newsletter was unique. I wanted to experiment with something called a weblog and a concept called viral marketing. The weblog was created in 1997. By combining these two elements, I aimed to create a publication that would gather all the information I could find about the changes occurring in the industry, compile it into a single email, and send it to clients, colleagues, leads, acquaintances, and others. In the early days of the internet I had seen some incredibly successful examples of viral marketing, including one for the online brokerage firm National Discount Brokers that had involved a quacking duck.  The pace of change in the industry was so rapid in those days that no publication could keep up with the constant flow of news. None of the weekly or biweekly newsletters seemed able to meet the challenge. In the meantime, there was too much risk. My own risk as the head of electronic trading was increasing as well, since I was with an introducing broker outside of our futures commission merchant, Man Financial. Man Financial [https://www.marketswiki.com/wiki/MF_Global_Holdings_Ltd] was mostly staffed with second-in-command executives from acquired firms who lacked a clear vision for handling the industry’s changes. Too often, when memos from the exchanges landed in their inboxes, they simply went unnoticed, rather than being shared with the rest of the firm and its clients. I decided to take a proactive approach and seek out the information myself. I would find, aggregate, and compile it with other relevant news and stories I could gather, and then share it with anyone who signed up for my newsletter. I initially sent out a few proactive emails saying, ‘Hey, I have this newsletter; would you like to see it?’ But soon the newsletter took on a life of its own as the viral marketing aspect kicked in. To differentiate the newsletter from the highly effective spam of the day, I placed my name at the beginning of the subject line, followed by the topic of the first story. The newsletter didn’t have a name initially, but after people began referring to it as The Lothian Report, similar to The Drudge Report, I decided to give it a proper name. Thus, the John Lothian Newsletter [https://www.marketswiki.com/wiki/John_Lothian_Newsletter] was born. This small anti-spam gesture increased the newsletter’s visibility in people’s inboxes and helped turn my name into a brand. Back then, people’s eyeballs were focused on their inboxes. Websites were cool, and various interesting graphics tools were being developed, but you still needed a strategy to drive people to visit a website. This was a time before iPhones and endless social media apps. Your inbox on your BlackBerry was the Facebook and Instagram of its day. The word ‘blog’ didn’t enter our modern lexicon until 2004, when Howard Dean ran for the Democratic Party’s nomination for president. He raised a significant amount of money through blogs, and that achievement landed him on the cover of Time magazine, which was still a big deal back then. When Peter McKay of The Wall Street Journal [https://www.marketswiki.com/wiki/The_Wall_Street_Journal] ran a story about me the day after Christmas in 2002, there was no mention of the word ‘blog’ or even the concept of aggregation. He used the word ‘compendium’ to describe the information in the newsletter. McKay’s article introduced me to a broader audience on Wall Street and to those interested in the growing business of the exchanges.  In the earliest days of the newsletter, I compiled it using Netscape, which served as both my browser and email client. After Netscape crashed for the second time just as I was about to send out the newsletter, I switched to Microsoft Explorer and Outlook. I also began using a text editor or notepad to cut and paste all the stories separately from the email client. This approach allowed me to have a backup of the information and also stripped out any formatting, which proved to be very useful. When I started JLN, Patrick Young [https://www.marketswiki.com/wiki/Patrick_L._Young] had just published his book, Capital Market Revolution, in which my then-colleague at The Price Group, the late Martin Hollander, was acknowledged. I thought that was very cool. At the same time, Young was running two e-zine publications under the name erivatives.com: one was forward-looking, while the other focused on past developments. While Young’s opinions were always verbosely fascinating, he lacked a viable economic model for his business. Many internet businesses of the day had the same problem. He had taken in investor money, including funds from a former Northern Trust [https://www.marketswiki.com/wiki/Northern_Trust_Corp.] executive, hired staff, and yet had no revenue. Additionally, the information in his publication was often redundant for those who were already reading my daily newsletter. Young’s experience taught me an important lesson: make sure you have an economic model and ensure that it works. My model for the newsletter was to generate more commission and fee business for me, and it succeeded. My brokerage and CTA business grew, which was increasingly important since I had a wife and three small children at home. However, over time, as I came to be seen more as a journalist and less as a broker, that dynamic changed. In 2004, for the second year in a row, Patrick Young invited me to the Swiss Futures & Options Association [https://www.marketswiki.com/wiki/Swiss_Futures_and_Options_Association]‘s Burgenstock conference [https://www.marketswiki.com/wiki/B%C3%BCrgenstock] in September. Since it was my 15th wedding anniversary, I thought an overseas trip would be a wonderful way to celebrate with Cheryl. However, I needed money to fund the trip. Anticipating being invited again, I had announced the previous November that the John Lothian Newsletter, which now had a formal name, would be offered on a voluntary pay basis, similar to shareware. If readers found the newsletter valuable, they were asked to pay for it. If multiple people at a firm were reading the newsletter, we assumed it was valuable to the firm and sent an invoice. Banner for the John Lothian Newsletter, featuring a headshot of a man on the left and the JJL logo on the right. Text reads [https://johnlothiannews.com/wp-content/uploads/2024/08/JohnLothianNewsletter2003Masthead.jpg] On the day I announced the new name and pricing, I happened to have a lunch meeting scheduled with then-CME CEO Craig Donohue [https://www.marketswiki.com/wiki/Craig_S._Donohue]. He asked if I had an enterprise pricing schedule for firms with large numbers of subscribers. Bingo! I replied that I would send it over. The revenue from the newsletter covered our trip to Europe and allowed me to attend the FIA conference in Boca Raton again. I also attended the Options Conference [https://www.marketswiki.com/wiki/Options_Industry_Conference]. Those were some heady days. I was frequently asked to moderate panels. When Eurex and Liffe entered the U.S. market to challenge incumbent exchanges, both requested me to moderate their panels. The Options Conference invited me to moderate the exchange leaders panel for two consecutive years. If you wanted to attract people to your event, you asked me to include details in my newsletter. As my former employer, W. Thomas Price III, said at the time, it was his ‘First Read.’ When we redesigned the newsletter, we named the top section ‘First Read.’ I was meeting industry leaders, exchange heads, and influential figures regularly. One day, Jeffrey Sprecher [https://www.marketswiki.com/wiki/Jeffrey_C._Sprecher] recognized me in the lobby of the NYMEX Building and came over to humbly introduce himself. When I met Jack Sandner [https://www.marketswiki.com/wiki/Jack_Sandner] for the first time, he playfully pretended to punch me, apparently not appreciating my writing as much as others did.  Amidst all this attention, I learned the meaning of the word ‘hubris’ and sought to avoid it at all costs. To keep myself grounded, I began teaching Sunday school. It was excellent practice in public speaking, interviewing, and thinking on my feet, as I taught middle schoolers with a friend from church and Scouting. We used an unconventional teaching style: we would just talk to the kids, listen to their stories, and then try to weave the week’s lesson into the conversation. Most of the time, they didn’t even realize what we were doing until they finally asked when we were going to start teaching them Sunday School stuff. Their eyes lit up when we confessed to our strategy. I also volunteered as a Den Leader for Cub Scouts, marking the beginning of my long career in the Scouting movement, which continues to this day, although no longer at the unit level. After missing out on some career opportunities mentioned later in this article that would have taken me away from Chicago, I decided to focus my talents on being the best dad and Scout leader I could be, knowing these years were precious and irreplaceable. At the newsletter, I was a one-man operation. I chose not to take advertising because I served as both the editor and the sales director, among other roles, and there was no one to hold me accountable for business tactics that plagued many industry publications. I wanted to avoid the pay-to-play model entirely and eliminate even the slightest chance of being perceived that way. I wanted to maintain an independent voice because the industry needed it. This independence was rooted in my training as a trader, where thinking for myself was essential. It was also influenced by my background as a journalist. I graduated from Purdue with a Bachelor of Science in General Management/Finance and a Bachelor of Arts in Mass Communications/Journalism. Although firms were interested in advertising in JLN, I kept declining. I finally accepted advertising for the first time when Jim Kharouf [https://www.marketswiki.com/wiki/Jim_Kharouf] and John J. Lothian & Company, Inc. partnered to launch the Environmental Markets Newsletter (EMN). Since Jim had a full-time job as a journalist and needed help with content aggregation, we hired our first assistant editor and offered advertising in EMN. Banner for John Lothian Newsletter focused on Environmental Markets. The banner shows two portraits of individuals and the JJL logo alongside text indicating it's a product of John J. Lothian & Company, Inc. [https://johnlothiannews.com/wp-content/uploads/2024/08/EMNMasthead2007-1024x132.png] In 2007, when John Matte [https://www.marketswiki.com/wiki/Jonathan_Matte] approached me for a job, it marked the beginning of MarketsWiki [https://www.marketswiki.com/wiki/Main_Page] and the transformation of John J. Lothian & Company, Inc. [https://www.marketswiki.com/wiki/John_J._Lothian_%26_Company,_Inc.] into a full-fledged financial news media company. At the same time, mainstream media was collapsing, and a new model for media firms was needed. The Wall Street Journal was sold to Rupert Murdoch, and both the Chicago Sun-Times and the Tribune were in bankruptcy, signaling it was time to try something new. FOW had let all its freelancers go, which allowed Jim Kharouf to join the company as editor-in-chief. Current Editor-in-Chief Sarah Rudolph [https://www.marketswiki.com/wiki/Sarah_Rudolph] and Chief Information Officer Jeff Bergstrom [https://www.marketswiki.com/wiki/Jeffrey_Bergstrom] would join the firm in November 2007. Jon Matte assembled the wiki software, using tools from the open source movement, and we were off to the races with a boatload of sponsors. Trading Technologies was the last to sign on before the launch. MarketsWiki was unveiled on January 11, 2008, at the STAC Winter Meeting, just before I moderated the exchange leader panel. I was able to hire journalists from Dow Jones, Standard & Poor’s, FOW, and the Financial Times, as well as education and marketing professionals from CME Group [https://www.marketswiki.com/wiki/CME_Group,_Inc.] and the Chicago Board of Trade [https://www.marketswiki.com/wiki/Chicago_Board_of_Trade] to work on MarketsWiki. The MarketsWiki Development Team became an ongoing open door for journalists and market professionals who needed a place to work and share their skills while searching for their next job. We attracted original talents like Jessica (Titlebaum) Darmoni [https://www.marketswiki.com/wiki/Jessica_Titlebaum_Darmoni], who was looking for a mentor and found one in me. After the Financial Crisis of 2007-08, Harris Brumfield [https://www.marketswiki.com/wiki/Harris_Brumfield] asked me to go to Washington, D.C., and represent the interests of the futures markets as best I could. With some assistance in the form of introductions from TT-hired lobbyists, I attempted to join the Financial Crisis Inquiry Commission. Unfortunately, it was staffed by career politicians and proved to be a wasted opportunity. I then floated my name for the position of CFTC chairman but lost out to a man named Gary Gensler [https://www.marketswiki.com/wiki/Gary_Gensler]. That effort was to put my name on the radar in Washington. The FIA job that John Damgard [https://www.marketswiki.com/wiki/John_M._Damgard] had once suggested I might be a good candidate for ultimately went to Walt Lukken [https://www.marketswiki.com/wiki/Walter_L._Lukken]. Eventually, I was appointed to the CFTC’s Financial Technology Advisory Committee [https://www.marketswiki.com/wiki/CFTC_Technology_Advisory_Committee], where I served for several years, striving to represent the interests of everyday market participants. The end of the first ten years served as a launch pad for John Lothian News [https://www.marketswiki.com/wiki/John_Lothian_News] and the work that would follow over the next 15 years. The genesis came when NYSE Liffe [https://www.marketswiki.com/wiki/NYSE_Liffe] asked for a proposal for a metals newsletter, having acquired the former CBOT metals complex from CME Group. NYSE Liffe US [https://www.marketswiki.com/wiki/NYSE_Liffe_U.S.] agreed to sponsor JLN Metals exclusively, which provided us with the resources to hire my nephew, Ryan Lothian [https://www.marketswiki.com/wiki/Ryan_S._Lothian], who had been let go by the IP auction investment banking firm Ocean Tomo [https://www.marketswiki.com/wiki/Ocean_Tomo_LLC]. We were also able to bring on Chris McMahon [https://www.marketswiki.com/wiki/Chris_McMahon], a former Futures Magazine [https://www.marketswiki.com/wiki/Futures_Magazine] editor with a strong background in metals. Ryan brought the insights from his new media master’s degree program at DePaul University, where he had developed a marketing plan for Ocean Tomo. We implemented this plan for JLN Metals, then expanded it to create other newsletters and blogs, eventually transitioning JLN to the new platform. Ryan also initiated MarketsWiki.tv as a rogue project, which, in retrospect, might have been his way of facilitating his brother Patrick’s [https://www.marketswiki.com/wiki/Patrick_C._Lothian] involvement in the company. Ryan went on to build JohnLothianNews.com [https://johnlothiannews.com/] and contributed to numerous other projects, including Special Reports, Exploring Financial Technology, and MarketsWiki Education [https://www.marketswiki.com/wiki/MarketsWiki_Education]. People often asked me if I ever imagined the newsletter would grow this big. My honest answer is that I never had the time to stop and think about it. There was always another problem to solve, whether it was a financial crisis, an FCM [https://www.marketswiki.com/wiki/Futures_Commission_Merchant] failure, trading floors closing, or exchanges going public or merging. When you’re drinking from a firehose, all you can focus on is the water. I am deeply grateful to all the people who have helped me build the John Lothian Newsletter into a twenty-five-year institution, starting with Tom Price [https://www.marketswiki.com/wiki/Walter_Thomas_(Tom)_Price,_III]. Tom wisely recognized that my sometimes contentious independent views were not suited to be official Price Group communications. This encouraged me to blaze my own trail, ultimately leading to the creation of John J. Lothian & Company, Inc. Tom’s thriftiness also pushed me to think outside the box to compete in the electronic brokerage space. The late Peter Wind [https://www.marketswiki.com/wiki/Peter_Wind] was an early adopter of JLN, having been referred by his former Cargill partner Bernie Dan [https://www.marketswiki.com/wiki/Bernard_Dan], who was then at the Chicago Board of Trade. Peter used JLN as a calling card during his sales calls, encouraging industry participants to sign up for the newsletter. Then-CME CIO Scott Johnston [https://www.marketswiki.com/wiki/Scott_Johnston] recommended at an all-employee meeting that they subscribe to the newsletter. The late George Gero would forward the newsletter to his friends in the Commodity Floor Brokers and Traders Association [https://www.marketswiki.com/wiki/Commodity_Floor_Brokers_%26_Traders_Association] every day. I could go on, but there are too many stories to tell and people to thank, both inside and outside the company. The newsletter was viral and a must-read because the world was changing rapidly, making it crucial to stay informed if you wanted to still have a seat when the music stopped on open outcry trading or whatever risk came next. And the risks kept coming. The markets continued to evolve. The non-price risk news that we began covering has only multiplied as the number of products, exchanges, trading platforms, and people involved in the markets has increased exponentially. I remain convinced that the need for the John Lothian Newsletter is as strong today as it has been at any time over the past 25 years. The potential audience is larger because the markets are more globally dispersed and dynamic. And there are simply more products than ever before. While the audience of fish-sandwich-eating pit traders has largely disappeared from the CBOT Building [https://www.marketswiki.com/wiki/Chicago_Board_of_Trade_Building] over the last 25 years, and John Lothian News has transitioned into a virtual firm rather than maintaining a daily presence in the iconic 1929 44-story Art Deco building, JLN remains a vital part of the Chicago market landscape and beyond. If the next 25 years are as exciting as the last, they will be amazing!

John Lothian Interviewed by Joanna Clohessy

Prior to his being named to the FIA Hall of Fame in February of 2024, John Lothian was interviewed by John Lothian News intern Joanna Clohessy about his career and being inducted into the hall of fame. He knew before the announcement it was coming and had Clohessy interview him during her one week internship with this firm. The internship was part of a school program for Timothy Christian in Elmhurst, IL. Clohessy is headed to Indiana University in the fall of 2024 to study journalism and she had the chance to write a story about Lothian and conduct and edit this podcast. Here is the interview with John Lothian, the executive chairman and CEO of John J. Lothian & Company, Inc. and publisher of John Lothian News about his career and what it means to him to be named to the FIA Hall of Fame.