To Recent News & Publications Index
Pensions & Investments
- October 27, 2003
Reprinted with permission.
Chairman and chief executive officer, Melamed & Associates
Melamed, who had no formal financial training, created
the market for financial futures at the Chicago Merc.
Melamed, widely considered the father of financial futures,
fell in love with the chaos and brashness of life in the
trading pits while in law school, when he worked as a runner
for Merrill, Lynch, Pierce, Fenner and Smith, Chicago. In
1965, after practicing law for 10 years, trading commodities
part-time, Mr. Melamed chose to concentrate on futures trading
at the Chicago Mercantile Exchange, where -- despite having
no formal training in finance and economics -- he conceived
of a futures market in financial instruments.
to Mr. Melamed's invention, futures markets were limited
to pork bellies, onions, eggs and other agricultural products.
But in 1972, the International Monetary Market debuted on
system started with currency futures and went on to encompass
the Treasury bill, Eurodollar and other interest rate futures,
the Standard & Poor's 500 index futures and other stock
to Mr. Melamed's website, his idea got the backing of none
other than Milton Friedman, the 1976 Nobel laureate in economics,
in a 1976 feasibility study by Mr. Friedman that endorsed
the acceptance of currency futures. Merton Miller, the 1990
Nobel laureate in economics, called the introduction of financial
futures "the most significant financial innovation of
the last 20 years."
Melamed was also one of the earliest supporters of electronic
trading. Under his leadership, the CME sought electronic
links with other international exchanges, beginning in 1984
with a link to the Singapore International Monetary Exchange.
The CME debuted Globex, the world's first automated trading
platform for derivatives contracts, in 1987 in the United
Melamed remained chairman of Globex until 1993.
was elected to the CME's board of directors in 1967 and made
chairman in 1969, a role he held for 27 years. In 1979, the
University of Chicago Graduate School of Business established
the Leo Melamed Prize for works of outstanding scholarship
by business school professors; and in 1991, the university
established the Leo Melamed endowed chair for the study of
Melamed also backed the creation of the Commodities Futures
Trading Commission, Washington, and the industry credits
his political skills with saving financial futures after
they were widely blamed for causing the 1987 market crash.
is also a science fiction writer, with one published novel,
The Tenth Planet (1987), and a sequel in the works. Mr. Melamed
also published his memoirs, Escape to the Futures, in 1996.