The Asylum by Goodman Leah McGrath

Author:Goodman, Leah McGrath
Language: eng
Format: epub
Publisher: HarperCollins
Published: 2011-02-15T05:00:00+00:00

10

Dark Days

Lemme tell you something—you know how our market might be better? If we had a war or a hurricane. People pray for that shit.

—Mark Lichtner

Danny Rappaport should have known better than to bring a former race car driver into the boardroom to try and do a deal with the pit traders.

Jeffrey Sprecher, a tanned, forty-five-year-old chemical engineer and power-plant developer from Beverly Hills, was a virtual unknown to the oil market, but he was an entrepreneur of formidable talent. Physically broad and mentally unflappable, he cut an intimidating figure. He was bald, but bald in that well-scrubbed, authoritative way, not in the scruffy way of the pit trader. A self-described workaholic, Sprecher admitted to thinking about work “even while I’m watching the TV.” He grew up in a middle-class family in Madison, Wisconsin, went to business school at Pepperdine University, and raised $50 million for his first power plant by age twenty-seven, even as he struggled to get approved for the $100,000 mortgage on his first condo. Such were the ironies of raising money on Wall Street.

Approaching Nymex for the first time in 2000, at the height of the dot-com bubble, he floated an unorthodox proposal: why not move the energy market from the trading pits onto the Internet, where it could be accessible to traders around the world twenty-four hours a day?

In the back of their minds, the Nymex directors had known this moment was coming. For years, they’d been hearing about how electronic trading was the wave of the future, how it would revolutionize the business, how they should just embrace it and stop fighting it. But ever since Guttman and Melamed began discussing it in the 1980s, a sense of dread had gripped the pits whenever the topic came up. With the hype over the Internet reaching fever pitch, it seemed that everyone, save the Nymex traders, wanted to ditch the pits for online trading. The overseas oil traders, who phoned in their orders down to the pits every day from Asia, Europe, and the Middle East, were tired of planning their days around when the New York traders felt like coming in. The Nymex traders still only worked four and a half hours a day, beginning at ten A.M. and closing at two thirty P.M. For the traders in other time zones, it was beyond inconvenient. Wall Street’s banks, oil companies, and hedge funds were in perfect agreement. They’d always disliked the Nymex oil monopoly. This was their chance to establish something more modern, more accessible, and, if possible, much more secretive. The Nymex traders, once again, stood in everybody’s way. The pit traders had taken great pains to corner their oil market. If the pits closed, what would happen to them? And who would control the energy market in their place?

The board members had known this moment was coming and they had thought long and hard about it. After Sprecher was finished speaking, they gave their unequivocal answer. Richie Schaeffer, the board’s de facto mouthpiece, was the first to speak up.

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