Financial History 25th Anniversary Special Edition (104, Fall 2012) | Page 31

While equity markets were suffering the traumas of the Crash of ’87, commodity markets were also undergoing wrenching transformations. Those, however, were not driven by external crisis, or even the concurrent events in the stock exchanges, but rather the need to change or die. “We always talk about the last 30 years as the complete evolution of global commodity markets,” says Richard Baker, CEO of Cleartrade Exchange. “From the beginning to the late 1980s it was all physical real-time trade Repository and four daily China Steel Indices, which are available to clients worldwide. Baker recalls that later contracts, such as dry freight swaps, still took more than a decade from their first introduction to their full adoption. Iron ore contracts, in contrast, were introduced just two or three years ago in various exchanges, and took only about 18 months from their launch to full acceptance. Of course hardware and software were major drivers of that change as the technology itself gained traction. There is a strong correlation between the computers themselves and their usefulness as indexing and trading tools — at first to crunch numbers for traders, and now to operate as electronic exchanges themselves. DAVID BANKS/AFP/Getty Images Left: Traders on the floor of the Chicago Mercantile Exchange trade fiercely in the S&P 500 pit, October 20, 1987. business in the pits. Goods were graded on the floor of the exchanges, traders were in there shouting and waving tickets. Everything was simple, bilateral transactions. The day was over when they stepped out. Then indexation began to appear, and we commenced trading futures. It started with sugar and cocoa and coffee, and they took decades to develop acceptance.” Cleartrade Exchange is itself a product of the shift to electronic trading that began in the late ’80s. It is an electronic global marketplace for over-the-counter commodity derivatives and is regulated by the Monetary Authority of Singapore. The company provides a specialized ordermanagement and processing platform, developed for the freight and commodity derivatives markets. It also provides a Richard Baker, CEO of Cleartrade Exchange. Gavin Lavelle, CEO of Brady plc.  |  Fall 2012  |  FINANCIAL HISTORY  29