For 18 years, J. Michael Gorham jazzed around the world promoting the Chicago Mercantile Exchange. Now, five months after the Merc dumped him in a sweeping revamp, he’s still jazzing around the world.
Life after the Merc has been good so far, said Gorham, 52, a former vice president of international market development whose job was among 133 cut in July. His new career as an independent writer, speaker and consultant is taking off, he said.
But how about life for those remaining at the Merc? The layoffs have prompted many other staffers to move on, exchange sources said.
As many as 95 Merc staffers have left voluntarily since this summer, the sources said. Combined with jobs eliminated in the revamp, that means at least one-fifth of the staff has departed.
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Poor morale might lead to additional departures once the exchange pays out year-end bonuses in January.
Some members say they’re worried that a stripped-down staff will make the exchange less competitive in years ahead. “The Merc is being bled of talent,” said one.
For Gorham, the layoff came almost as a relief. “The first month was like paradise, being away from the politics of the Merc,” he said.
His new job as a consultant has led him to, of all places, Bombay, India–now officially renamed Mumbai.
Under a contract with the U.S. Agency for International Development, Gorham spent October at the National Stock Exchange of India, assisting in its planned introduction of stock-index futures.
The contract launch is being delayed because Indian regulators are taking their time lifting a longstanding ban on financial futures. Gorham said he may need to make another trip.
Meantime, he said, he plans to remain flexible–and layoff-proof: “I want to carve out a life independent of any major corporation.”
Activity aplenty: Despite the griping at the Merc, 1997 is shaping up as a good year, volume-wise.
Although the Chicago Board of Trade and London International Financial Futures Exchange likely will outpace it, the Merc is heading for its second-best year ever.
Through the first 11 months of 1997, the Merc traded 185 million contracts, up from 177 million in all of last year, and 182 million in 1995. In 1994, its top year, it traded 205 million contracts.
Part of the gain has come from contracts based on the Standard & Poor’s 500-stock index. The Merc’s decision to split the contract has nearly doubled volume, while the new electronic, or “E-mini,” S&P 500 is contributing more than 10,000 contracts a day.
Even the Eurodollar, hampered by the lack of volatility in short-term interest rates, is up 13 percent for the first 11 months.
Derivative: With roughly $2 trillion in equity-based mutual funds in the hands of investors, it was only a matter of time before Chicagoans figured out how to trade derivatives on them.
On Monday, the Chicago Board Options Exchange launched contracts on the Lipper/Salomon growth funds index, and the Lipper/Salomon growth and income funds index–baskets of the 30 largest actively managed funds in each category.
But with so many other liquid stock-index contracts around, why trade these?
One reason: Actively managed equity mutual funds won’t correlate with the standard stock indexes. In fact, A. Michael Lipper of Lipper Analytical Services said Monday he expects the funds to do better than the indexes for a change.
A focus on mid-capitalization stocks and emerging technology issues will help propel equity fund performance well beyond the S&P 500 benchmark, he predicted.
Meantime, CBOE Chairman William Brodsky tapped Robert J. Birnbaum, former president of the New York Stock Exchange and American Stock Exchange, as a public director. Birnbaum’s term as a public director of the Merc, Brodsky’s former employer, expires in January.