Financier Leo Melamed. The Trader Who Changed the Stock Market Forever
In the process of studying the success stories of various traders, it is impossible to ignore the legend of trader Leo Melamed.
Thanks to his efforts, the stock exchange forever changed its appearance, moving away from trading in a huge hall to global network trading.
However, Leo Melamed not only changed the appearance of the exchange, but its very essence, creating derivatives or in more accessible language derivatives.
The contribution of this man to the development of the stock exchange world is simply enormous, but this would never have happened if he had not had to go through the most difficult life path, which we want to introduce you to.
Leo Melamed was born in Poland on May 20, 1932. When the boy was only seven years old, the world was overwhelmed by the Second World War, and Hitler’s troops at that time entered Poland.
However, the family didn't feel safe in Lithuania, so they continued to flee east to Siberia. After living in Siberia for some time, the family repeatedly faced starvation and was on the brink of death.
The Melamed family then decided to flee to the only country not engulfed in flames, where freedom and democracy reigned—the United States. To do so, they had to first move to Japan and then to the United States.
It is worth noting that at that time Japan had not yet attacked the United States, so there were no problems with the move.
Having gone through this difficult school of survival, Leo Melamed understood the power that a simple piece of paper can have—namely, various documents and the money used to obtain them.
Education and career
Having achieved their goal, Leo's family settled in Chicago. His parents quickly found work as teachers at a Jewish school, bringing stability to the family.
After graduating from high school, Leo Melamed entered the University of Illinois at Urbana-Champaign to study medicine.
However, during his studies, Leo realized that without a legal education, it would be quite difficult to find a job with a decent salary. Therefore, he enrolled at hn Marshall Law School and successfully completed the bar course.
After graduating, Leo Melamed looked for a job but couldn't find anything in his field. So he decided to find temporary work and landed a job as a paperwork delivery boy at Merrill, Lynch, Pierce, Fenner & Bean.
Everything would be fine, it was just a job, but he was delivering documents at the Chicago Mercantile Exchange in the very center of the stock exchange world.
Naturally, seeing how much and how much traders were earning, Leo Melamed became very interested in this business, so in 1960 he borrowed 3 thousand dollars from his father and bought his place on the stock exchange.
The first asset he traded was pork, and quite successfully. However, Leo Melamed knew how dangerous the stock market was, so alongside his trading, he ran a successful law practice.
Ten years of successful trading on the floor allowed him to earn a good reputation among exchange participants, so in 1967 he was elected to the exchange's board of directors.
Creation of derivatives
Leo Melamed was motivated to create derivative instruments by the unpegging of the dollar from the gold and foreign exchange reserves, which would naturally lead to changes in the price of the dollar around the world.
Realizing that investors would be looking for possible ways to diversify, he decided to create currency futures.
Initially, Melamed introduced futures trading in currencies, and as its popularity grew, exchanges began to actively implement futures on government bonds, indices and other financial instruments.
Recognizing that the rapid development of derivatives needed to be regulated, Leo Melamed founded the National Futures Association, which he personally chaired. In 1987, Leo Melamed co-founded the GLOBEX electronic exchange.
At that time, all traders were hostile to electronic trading, as they were simply deprived of a piece of bread, since at that moment only they had a monopoly on making transactions.
However, an active advertising campaign and a series of negotiations gave life to these platforms, and now electronic trading ranks first in terms of turnover. Attracting small and medium-sized investors worldwide has led to an increase market liquidity, and changed him forever.
