Leo Melamed
Encyclopedia
Leo Melamed is a former chairman of the Chicago Mercantile Exchange
(CME), current board member of CME Group
and chairman of the CME Group Foundation. He is a longtime executive in the field of global derivatives
.
Melamed, an attorney by trade, was named chairman of the Chicago Mercantile Exchange in 1969. In 1972, the CME under his leadership launched currency future
s and created the International Monetary Market
(IMM). During his time as chairman, the CME introduced a number of financial instruments, including futures on US Treasury Bills and Eurodollars. In 1982, the CME introduced the first stock index futures.
In 1991 he founded his own consulting firm, Melamed & Associates, of which he is chairman and chief executive officer
. He formerly was a member of the global markets advisory committee of the U.S. Commodity Futures Trading Commission
and he previously served on the board of directors of OneChicago
, an exchange for single-stock futures
.
in 1932. The family name at the time was Melamdovich. In 1939, the Japanese consul general to Lithuania, Chiune Sugihara
, issued his family a life-saving transit visa, and they made the long trek across Siberia
to safe haven in Japan
. They crossed the Pacific to the US in spring 1941 and the family settled in Chicago
.
In a 1998 interview with Derivatives Strategy magazine, Melamed said that he became involved in futures trading as an accident, "the hand of fate." Melamed said: "I was in law school looking for a law clerk job and answered a want ad. The firm in question, Merrill, Lynch, Pierce, Fenner & Bean, was looking for a 'runner' to work between the hours of 9:00 and 1:00, which was perfect for my class schedule. With that many names, how could this firm be anything but an established law firm looking for a clerk to run to court?" Throughout law school, he worked as a runner in the produce futures markets, learning about the business. He went on to work as a lawyer and became chairman of the exchange in 1967.
In a speech in January 2005, Melamed traced the origin of his ideas about finance to his childhood wartime experiences.
In Tokyo
in April 1941, he asked his father, Isaac Melamdovich, a mathematics teacher, to explain how the community of Jewish residents in that city had enough money to support the sudden influx of some 3,000 refugees such as themselves.
"Well, to understand that, my father explained, you have to understand the intricacies of the marketplace."
Specifically, the elder Melamdovich explained, "you must never trust the official rate of currency exchange announced by government." The real value was to be found in the black market, which exists anywhere—on any street or in any shop, where no government official is looking.
When a Jewish family in Japan received an exit visa in that period, it would deposit 5,000 yen
in a bank and receive US dollars (or the currency of the country to which it planned to travel) at the official rate—say, US$50. That money was quickly and discreetly returned to the Refugee Committee where it was sold on the Black Market for the true exchange rate. The outgoing family received 5,000 yen back, and the Refugee Committee retained the profit to help new arrivals.
Chicago Mercantile Exchange
The Chicago Mercantile Exchange is an American financial and commodity derivative exchange based in Chicago. The CME was founded in 1898 as the Chicago Butter and Egg Board. Originally, the exchange was a non-profit organization...
(CME), current board member of CME Group
CME Group
The CME Group bases prices for US gasoline on Brent Crude rather than West Texas Intermediate Crude , which many believe is responsible for artificially high gas prices for US consumers...
and chairman of the CME Group Foundation. He is a longtime executive in the field of global derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
.
Melamed, an attorney by trade, was named chairman of the Chicago Mercantile Exchange in 1969. In 1972, the CME under his leadership launched currency future
Currency future
A currency future, also FX future or foreign exchange future, is a futures contract to exchange one currency for another at a specified date in the future at a price that is fixed on the purchase date; see Foreign exchange derivative. Typically, one of the currencies is the US dollar...
s and created the International Monetary Market
International Monetary Market
The International Monetary Market , a spin-off from the old Chicago Mercantile Exchange and largely the creation of Leo Melamed, is today one of three divisions of the Chicago Mercantile Exchange , the largest futures exchange in the United States and the second largest in the world after Eurex,...
(IMM). During his time as chairman, the CME introduced a number of financial instruments, including futures on US Treasury Bills and Eurodollars. In 1982, the CME introduced the first stock index futures.
In 1991 he founded his own consulting firm, Melamed & Associates, of which he is chairman and chief executive officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
. He formerly was a member of the global markets advisory committee of the U.S. Commodity Futures Trading Commission
Commodity Futures Trading Commission
The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....
and he previously served on the board of directors of OneChicago
OneChicago, LLC
OneChicago is an all-electronic exchange owned jointly by IB Exchange Group , Chicago Board Options Exchange , and CME Group. It is a privately held company that is regulated by both the Securities and Exchange Commission and the Commodity Futures Trading Commission...
, an exchange for single-stock futures
Single-stock futures
Single-stock futuresIn finance, a single-stock futures is a type of futures contracts between two parties to exchange a specified number of stocks in company for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
.
Early life
Melamed was born in PolandPoland
Poland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...
in 1932. The family name at the time was Melamdovich. In 1939, the Japanese consul general to Lithuania, Chiune Sugihara
Chiune Sugihara
was a Japanese diplomat who served as Vice-Consul for the Japanese Empire in Lithuania. During World War II, he helped several thousand Jews leave the country by issuing transit visas to Jewish refugees so that they could travel to Japan. Most of the Jews who escaped were refugees from...
, issued his family a life-saving transit visa, and they made the long trek across Siberia
Siberia
Siberia is an extensive region constituting almost all of Northern Asia. Comprising the central and eastern portion of the Russian Federation, it was part of the Soviet Union from its beginning, as its predecessor states, the Tsardom of Russia and the Russian Empire, conquered it during the 16th...
to safe haven in Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
. They crossed the Pacific to the US in spring 1941 and the family settled in Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
.
In a 1998 interview with Derivatives Strategy magazine, Melamed said that he became involved in futures trading as an accident, "the hand of fate." Melamed said: "I was in law school looking for a law clerk job and answered a want ad. The firm in question, Merrill, Lynch, Pierce, Fenner & Bean, was looking for a 'runner' to work between the hours of 9:00 and 1:00, which was perfect for my class schedule. With that many names, how could this firm be anything but an established law firm looking for a clerk to run to court?" Throughout law school, he worked as a runner in the produce futures markets, learning about the business. He went on to work as a lawyer and became chairman of the exchange in 1967.
In a speech in January 2005, Melamed traced the origin of his ideas about finance to his childhood wartime experiences.
In Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
in April 1941, he asked his father, Isaac Melamdovich, a mathematics teacher, to explain how the community of Jewish residents in that city had enough money to support the sudden influx of some 3,000 refugees such as themselves.
"Well, to understand that, my father explained, you have to understand the intricacies of the marketplace."
Specifically, the elder Melamdovich explained, "you must never trust the official rate of currency exchange announced by government." The real value was to be found in the black market, which exists anywhere—on any street or in any shop, where no government official is looking.
When a Jewish family in Japan received an exit visa in that period, it would deposit 5,000 yen
Japanese yen
The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...
in a bank and receive US dollars (or the currency of the country to which it planned to travel) at the official rate—say, US$50. That money was quickly and discreetly returned to the Refugee Committee where it was sold on the Black Market for the true exchange rate. The outgoing family received 5,000 yen back, and the Refugee Committee retained the profit to help new arrivals.
Published works
Melamed has lectured and written extensively on the markets. His published works include:- An Anthology: The Merits of Flexible Exchange Rates, (George Mason University Press:1988), Editor
- Leo Melamed on the Markets: twenty years of financial history as seen by the man who revolutionized the markets, (John Wiley & Sons: 1992)
- Escape to the Futures, (John Wiley & Sons: 1996)
- The Tenth Planet (Science fictionScience fictionScience fiction is a genre of fiction dealing with imaginary but more or less plausible content such as future settings, futuristic science and technology, space travel, aliens, and paranormal abilities...
) - Essays and speeches
External links and sources
- Chiune SugiharaChiune Sugiharawas a Japanese diplomat who served as Vice-Consul for the Japanese Empire in Lithuania. During World War II, he helped several thousand Jews leave the country by issuing transit visas to Jewish refugees so that they could travel to Japan. Most of the Jews who escaped were refugees from...
- "A Titan Returns to Shake Up CME's Executive Committee, The Wall Street Journal, Feb. 10, 1997
- "The World According to Leo Melamed," interview with Leo Melamed, Derivatives Strategy, April 1998
- http://www.tradersnation.com/player/?id=448 Kurt Schemers interview on Traders NationTM of Leo Melamed, For Crying Out Loud, Sept. 2009