A Forgotten Rogue CBOT Chairman - This is John Lothian EP8

In the late 1960s, there were two rogue candidates who ran for the role of chairman of Chicago's leading futures exchanges. One was Leo Melamed, head of the "Young Turks" at the Chicago Mercantile Exchange and the other was William Mallers, Sr. the youngest man ever elected chairman of the Chicago Board of Trade.

This infusion of young blood into these stodgy organizations would transform Chicago's financial markets and change the course of its place in the global financial markets. Melamed would lead the creation of the International Monetary Market, a separate exchange that would later be rolled back into the CME. Melamed's accomplishments during his career are legendary. 

Mallers would lead the committee at the CBOT that led to the creation of the Chicago Board Options Exchange. Both Mallers and Melamed would play a part in the creation of the National Futures Association, with Mallers finding CBOT President Robert Wilmouth a new job as NFA president. 

Melamed's story is well known via the multiple books he has written about his experiences and his long tenure on the board of the CME, which only ended a few years ago.

Mallers would step aside after one term as CBOT chairman and slate the man he had run against as a rogue candidate as chairman to replace him. Mallers would wield power behind the scenes at the CBOT for the next fifteen years without any official title. OK, maybe he was the unofficial godfather of CBOT politics at the time. 

Melamed would serve multiple terms as chairman of the CME before finally stepping aside for his protege Jack Sandner, though Melamed still wielded power from the CME executive committee he chaired for many years.  

Joe Sullivan talks about Mallers in his paper about his career and the beginning of the CBOE, noting it was Mallers who resurfaced after leaving the limelight of the chairman's position to weigh in on the question of which members of the CBOT should be able to trade on the CBOE. Mallers said that "the purpose of the undertaking had been to provide trading opportunities for all members whether or not they chose to use them at any given time." Sullivan noted that giving CBOT members this perpetual right would bite CBOE in the butt later. 

The story I was told by Mallers, whom I worked for in the 1980s at First American Discount, was that Eddie O'Connor had proposed creating an exchange to trade stock options at a dinner and outlined the plans on a cocktail napkin. Mallers took that idea as chairman and drove it to reality, along with O'Connor, Paul Maguire and several other key players at the CBOT.

The first board of directors of the CBOE did not have Mallers on it, but it did have Pat Hennessy, from Hennessy & Associates, the firm that Mallers was the president of when he was chairman. You can see how Mallers worked, having key allies in positions of power at the CBOT and also at the CBOT Clearing Corporation.

I met Mallers after he had fallen out of favor at the CBOT, and Tom Donovan as a strong CBOT president had changed the power dynamics of the exchange. 

As we celebrate the 50th anniversary of the CBOE, now Cboe Global Markets, I wanted to remember William Mallers, Sr., a man largely forgotten to history. Mallers died in 2006 at the age of 77. He had been gone from the industry since 2000 when First American was sold to ED&F Man, Inc.

Mallers is someone who I think belongs in the FIA Futures Hall of Fame. His political leadership at the CBOT allowed the CBOE to become a reality, helping members find new trading opportunities. Those trading opportunities created a whole new industry. 

In baseball, some veterans get into the Hall of Fame via the Veterans Committee. The people who were in the room where it happened, where the plan for the CBOE was outlined on the cocktail napkin, are all gone. Those who saw Maller's leadership first hand in helping start the CBOE are all departed, including his good friend and business partner in FADC Leslie Rosenthal. There are just a few of us left who know his story and his contributions to the CBOT member opportunities and to all our futures. 

Mallers was not without his faults. I am not without mine. But Mallers' contributions for me are pure Hall of Fame material and I wonder if we would be celebrating today's anniversary if not for his leadership.