From the NYMEX to LAX

I had the pleasure Friday afternoon of visiting the floor of the New York Merchantile Exchange, aka the NYMEX.

The New York Stock Exchange (NYSE) is where shares of companies such as McDonalds, Coca-Cola, IBM and General Motors are traded. The NYMEX is where people trade commodities, also known as futures. Futures can best be described as “stuff.” Tangible physical items are traded here. Crude oil, heating oil, unleaded and natural gasoline, and platinum are traded here. The NYMEX also contains the COMEX, where gold, silver and copper are traded.

(Other commodities such as corn, beef, and pork are traded in Chicago)

Getting on the floor of the exchange is not as easy as it was before 9/11. Luckily, the people I work with had some connections. It was worth the experience.

The NYMEX in some ways is exactly like the Eddie Murphy-Dan Akroyd movie “Trading Places.” There were men yelling, screaming, and gesticulating wildly in a manner that might only be legal on a trading floor.

Some of the images I had were true, and some were completely false.

I showed up wearing a suit and tie. Because I was heading to a Jewish Sabbath dinner after work, I wore my Star of David Israel necktie. Normally I do not wear anything in the office that expresses a political or religious viewpoint, but I did not expect my tie to be a focal point. I also wore my 1940s style black fedora, because it was cold outside.

I was surprised to see that the traders on the NYMEX were dressed in khakis and sneakers, with no neckties. They are not allowed to wear blue jeans, but black jeans are permissible. This is in direct contrast to the NYSE, where strict business attire is required. In fact, the NYSE offered to buy the NYMEX, and one reason the traders are opposed to this is that they refuse to dress up. The NYMEX is in short walking distance to Wall Street, but perhaps the dress code does not cross the divide.

As for the wall, it is adorned with gigantic monitor screens as well. The screens have tons of price quotes on them. Yet the traders also now walk around carrying small devices similar to laptops, and there are tons of computer terminals on the floor. It may seem strange to have computers on the floor when they are all along the wall, but it was explained to me that the computers on the wall, while not completely for show, do not have real time up to the second price quotes. They are 20 minutes behind, which is no different than an average investor checking their positions online at home.

I asked why they do not just update the machines, but apparently the expenditure was not deemed necessary. The screens look pretty on the wall, and that is that. Traders that have worked there a long time still occasionally get confused, and have to remind themselves that the prices on the screens on the wall are wrong.

While some futures trade actively, there are some that have less volume than one would think at certain junctures. This means that for all the screaming, hysteria, and running around, there are periods of calm and quiet where the traders literally just stand around. Everybody stands. For those who have heard the expression of having a “seat” on the exchange, a seat just means a license to trade on the floor. It does not mean anybody has a physical seat to sit down in. Everybody stands.

There is less jostling than one would think. There is plenty of room. Every once in awhile a fistfight might break out, but this is rare because like any office, these people work with each other every day.

Everything is done by “open outcry,” meaning somebody walks into a room, announces they have something available for purchase or sale at a certain price, and the first people to shout that they want it, get it. A fraction of a second in yelling is the difference between transacting or getting left behind.

Yet the free time periods are strange as well. On the Pacific Stock Exchange, which does not exist in Los Angeles anymore, the traders actually did sit down. When they were bored, they would sling rubber bands at each other. They would get fined for that, but would do it anyway. Then they started flicking index cards at each other.

The NYMEX seems even more strange, although perhaps I caught them on a weird day. One of the traders was Jewish, so when everybody saw my hat and tie, they realized another Jewish person was amongst their midst. As for what happened next, if I was not a part of it, I would not have believed it.

Only people who work on the NYMEX are allowed into the pits, also known as the rings. An exception was made for me because of my attire. This Jewish broker led me into the trading pit for crude oil, and he and I started dancing Israeli style as fellow traders sang “Hava Negilah.” They clapped in rhythm as would be done at a Hebrew wedding. For those who wonder how this relates to finance, I am still scratching my head on that one. Nevertheless, they took a liking to me, and said I could come back any time.

The gold traders have their bizarre rituals. Every day, at 13 minutes and 13 seconds after 1pm, or 13:13:13 military time, they cheer and yell “Yay!” for a few seconds. It does not matter what the market is doing, and the traders of other commodities still have no idea why they do this. In fact, it gets frustrating when they are losing money and other guys are cheering in celebration. When asked why they do this, they replied, “We don’t know. We just do.”

No pictures are allowed to be taken on the floor of the NYMEX, which would have been discouraging if the traders actually obeyed rules. Several pictures were snuck in, although after the last one, a very big, burly fellow let me know not to do it again. I did not test him.

As for television, the screens were not fixated on CNBC or Bloomberg Television. Those channels focus more on stocks than commodities, and the quotes at the bottom are stock quotes. The televisions on the NYMEX were tuned in to Fox News. When I inquired as to why, the traders replied that the television was irrelevant, and that they would be happiest if the televisions were tuned in to ESPN or the NFL Network.

The NYMEX was an exciting place to visit, and on busy days, is most likely a thrilling place to work. Nevertheless, everything comes at a price. With all the money the traders make, one would think they could at least have desks with actual chairs and tables.

The last thing I will offer is that unlike airports in the United States, where one passes through a metal detector, the NYMEX has much more stringent security. There are three separate metal detectors, with additional security measures inbetween the checkpoints. With trillions of dollars flowing through financial exchanges, these precautions are necessary. The traders do not mind. All they have to do is walk down the block and see the hole in the ground where the towers once stood.

As for the Tygrrrr Express, this exhausting week in New York has concluded. Saturday morning finds me taking a morning flight home, reaching LAX by noon. This gives me 90 minutes to get to my office, pick up my car, drive home, and be in front of my television for the first NFL Divisional playoff game. The second game will be tivoed due to Saturday night being my birthday party. Sunday will be football, sleep, and nothing else.

Given the pouring rain in New York, I will kiss the sweet ground when I reach LAX.

Yes, seeing the NYMEX allowed me to see what I love most about New York itself, the action packed thrill of high finance. Seeing LAX will allow me to see what I love most about Los Angeles, that being gorgeous weather, and most importantly, my warm comfortable bed. Domicile, sweet domicile. There is nothing like it.


5 Responses to “From the NYMEX to LAX”

  1. Hallowed says:

    You were at the stock exchange? isn’t that where all the rich people get together and still all the poor peoples retirement money and give it to the Republicans?

  2. greg says:

    Apparently it’s also another place where Fox News is considered irrelevant.

    Eric, welcome back to California aka God’s country, and may you have a great birthday party this evening. While you’re at it, have an extra drink for my first grandchild, Joseph Matthew, born this day, doing just fine and cute as can be.

  3. micky2 says:

    “Apparently it’s also another place where Fox News is considered irrelevant.”

    Obviously not as irrelevant as CNN.

    ” welcome back to California aka God’s country,”

    Dont let that be heard by most Californinans. The ACLU will have its plate full.

    Congratulations. :-)

  4. cashman moneymaker says:

    Oh the stock exchange, where the rich get richer and the poor, well the poor dont matter on the stock exchange.

  5. Bruce Anderson says:

    I once read that a lot of the merc brokers are Jewish and Italian

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