1 00:00:00,320 --> 00:00:02,440 Speaker 1: One of the things we all love about business stories 2 00:00:02,640 --> 00:00:05,800 Speaker 1: are the humble beginnings, like when two buddies go from 3 00:00:05,800 --> 00:00:09,040 Speaker 1: tinkering in their Palo Alto garage to creating the world's 4 00:00:09,080 --> 00:00:14,920 Speaker 1: most valuable company, Apple. Sometimes everyday events even inspire something remarkable, 5 00:00:15,520 --> 00:00:17,600 Speaker 1: like when a Swiss engineer takes a walk in the woods, 6 00:00:18,200 --> 00:00:21,000 Speaker 1: marvels at the seeds that stick to his clothes, and 7 00:00:21,160 --> 00:00:24,160 Speaker 1: ends up inventing velcro. The story we're about to tell 8 00:00:24,200 --> 00:00:26,920 Speaker 1: you is a little bit like those, and it culminates 9 00:00:26,960 --> 00:00:31,280 Speaker 1: with a three trillion dollar industry that's still growing. What's 10 00:00:31,320 --> 00:00:35,559 Speaker 1: this We're talking about the exchange traded fund. We're going 11 00:00:35,600 --> 00:00:37,479 Speaker 1: to trace how it came to be with some of 12 00:00:37,560 --> 00:00:39,519 Speaker 1: the people who made it happen. We'll look at the 13 00:00:39,520 --> 00:00:42,479 Speaker 1: state of things before it existed, find out where the 14 00:00:42,520 --> 00:00:45,800 Speaker 1: spark came from, learn why the idea worked, and what 15 00:00:45,960 --> 00:00:48,240 Speaker 1: it actually took for this financial tool to get where 16 00:00:48,240 --> 00:00:56,440 Speaker 1: it is today. This is Trillions presents the et F story. 17 00:00:57,040 --> 00:00:59,760 Speaker 1: I'm Joel Webber and I'm the editor of Bloomberg Business Week. 18 00:01:00,720 --> 00:01:03,680 Speaker 1: Over the course of the next six episodes, with the 19 00:01:03,720 --> 00:01:06,320 Speaker 1: help of Eric Baltunas, who's an e t F expert, 20 00:01:06,360 --> 00:01:09,560 Speaker 1: and an analyst with Bloomberg Intelligence. We're going to document 21 00:01:09,800 --> 00:01:12,039 Speaker 1: the story of the e t F. We'll hear from 22 00:01:12,040 --> 00:01:14,119 Speaker 1: people who were there at the beginning. Will also take 23 00:01:14,160 --> 00:01:16,720 Speaker 1: you on a few fuel trips, but mostly we'll be 24 00:01:16,760 --> 00:01:20,360 Speaker 1: sharing the human stories behind an industry that's hoovering up 25 00:01:20,400 --> 00:01:26,080 Speaker 1: trillions of dollars every year. So this all really begins 26 00:01:26,400 --> 00:01:41,240 Speaker 1: when the stock market crushes on October nineteenth, Black Monday. 27 00:01:42,120 --> 00:01:44,800 Speaker 1: If you have been away from your television set and 28 00:01:44,880 --> 00:01:47,000 Speaker 1: haven't heard about the stock market, and this was it, 29 00:01:47,200 --> 00:01:55,400 Speaker 1: the market declined to Practimately, I think that everyone, every 30 00:01:55,440 --> 00:01:57,920 Speaker 1: amount and at this stage of the game needs to 31 00:01:58,200 --> 00:02:01,080 Speaker 1: get their house in order, are ready to jump out 32 00:02:01,080 --> 00:02:04,480 Speaker 1: of a window. And it was a pretty pretty sickening experience, 33 00:02:05,160 --> 00:02:08,520 Speaker 1: almost like are we at the apocalypse opprestice right now? 34 00:02:09,000 --> 00:02:11,680 Speaker 1: Being I'm Tom black Monday is now on the books, 35 00:02:11,760 --> 00:02:14,920 Speaker 1: then the question is what will happen Tuesday and beyond? 36 00:02:16,639 --> 00:02:19,040 Speaker 1: Even got a term black Monday, I mean that that 37 00:02:19,120 --> 00:02:21,280 Speaker 1: sounds like a horror movie. This, of course, is our 38 00:02:21,320 --> 00:02:24,240 Speaker 1: resident et F analyst, and for the purposes of the 39 00:02:24,320 --> 00:02:30,600 Speaker 1: show are historian Eric Balt Noises were a great decade 40 00:02:30,600 --> 00:02:33,840 Speaker 1: for the American economy. Modern finance was coming into its own. 41 00:02:34,440 --> 00:02:38,120 Speaker 1: Two cities were especially interesting Chicago, where people who are 42 00:02:38,120 --> 00:02:42,880 Speaker 1: trading futures contracts of commodities like corn or oil, and 43 00:02:43,000 --> 00:02:45,800 Speaker 1: New York, where we've got the stock exchanges and people 44 00:02:45,840 --> 00:02:48,480 Speaker 1: trading equities. Well, the market had been going up for 45 00:02:48,520 --> 00:02:51,760 Speaker 1: a while, nothing goes up forever. There was probably a 46 00:02:51,760 --> 00:02:54,280 Speaker 1: sell off that was gonna happen anyway, So the conditions 47 00:02:54,280 --> 00:02:56,520 Speaker 1: were ripe for a sell off. And at the same 48 00:02:56,600 --> 00:02:59,160 Speaker 1: time you had a build up of this hot thing 49 00:02:59,200 --> 00:03:03,040 Speaker 1: called portfolio insurance, which was to use futures in order 50 00:03:03,080 --> 00:03:05,840 Speaker 1: to heade your stock position. This portfolio insurance was created 51 00:03:05,840 --> 00:03:08,960 Speaker 1: by the firm Leland O'Brien Rubinstein to deal with the 52 00:03:08,960 --> 00:03:11,799 Speaker 1: big crash of the nineteen seventies. John O'Brien, who was 53 00:03:11,840 --> 00:03:14,720 Speaker 1: part of the team that developed it, says portfolio insurance 54 00:03:14,720 --> 00:03:17,680 Speaker 1: really started to take off once JP Morgan started doing it, 55 00:03:18,040 --> 00:03:21,079 Speaker 1: but most people in the Wall street didn't understand what 56 00:03:21,240 --> 00:03:26,960 Speaker 1: that was. Some big asset managers did, some big local 57 00:03:27,000 --> 00:03:30,040 Speaker 1: dealers did, and they realized when the market went down, 58 00:03:30,120 --> 00:03:36,360 Speaker 1: portfolio insurance required selling stock and buying bonds. O'Brien says, 59 00:03:36,360 --> 00:03:39,360 Speaker 1: on the Friday before Black Monday, the market has his 60 00:03:39,440 --> 00:03:45,160 Speaker 1: biggest drop since nine So all about portfolio insurance folks 61 00:03:45,600 --> 00:03:50,880 Speaker 1: difficulty getting off enough sales of futures contracts to get 62 00:03:50,920 --> 00:03:54,160 Speaker 1: down in the equity exposure to the level we should 63 00:03:54,280 --> 00:03:58,119 Speaker 1: have had at the close of business on Friday, Act 64 00:03:58,160 --> 00:04:03,320 Speaker 1: over seventeen. A couple of focus recognized this, so over 65 00:04:03,360 --> 00:04:06,520 Speaker 1: the weekend they went short the US dock market and 66 00:04:06,600 --> 00:04:10,080 Speaker 1: foreign exchanges until in the stock market opened on Monday 67 00:04:10,080 --> 00:04:13,320 Speaker 1: at over nineteen there was a big drop, and right 68 00:04:13,320 --> 00:04:17,839 Speaker 1: away portfolio on jurors had to sell more features contract 69 00:04:18,120 --> 00:04:21,000 Speaker 1: and more of that got transmitted to the New York 70 00:04:21,080 --> 00:04:26,159 Speaker 1: Stock Exchange, and they specialists on the exchange saw every 71 00:04:26,200 --> 00:04:29,279 Speaker 1: major firm spending all of its runs to all of 72 00:04:29,320 --> 00:04:31,960 Speaker 1: the posts, selling all of the docks, and the sci 73 00:04:32,600 --> 00:04:36,280 Speaker 1: and the specialists didn't understand that this was all a 74 00:04:36,320 --> 00:04:39,760 Speaker 1: mechanical things and they thought, you know, World War three 75 00:04:39,760 --> 00:04:41,960 Speaker 1: had broken out somewhere and they didn't know about it. 76 00:04:42,080 --> 00:04:46,200 Speaker 1: So they just dropped all their bids and went to launch. 77 00:04:46,240 --> 00:04:48,279 Speaker 1: You went to the doctor or went to the bedroom 78 00:04:48,320 --> 00:04:53,720 Speaker 1: where just basically wouldn't trade. So the monket just you 79 00:04:53,760 --> 00:05:01,640 Speaker 1: know collapse, Uh, And it was all mistake a big 80 00:05:01,680 --> 00:05:05,039 Speaker 1: mistake that now has to be cleaned up. In terms 81 00:05:05,080 --> 00:05:07,760 Speaker 1: of government official at the time, it was probably the 82 00:05:07,800 --> 00:05:10,359 Speaker 1: scariest time of them in my sixteen years at the SEC. 83 00:05:10,640 --> 00:05:14,520 Speaker 1: That Monday and into Tuesday. This is Howard Kramer. During 84 00:05:14,560 --> 00:05:17,279 Speaker 1: the crash, he was Assistant Director of the Division of 85 00:05:17,320 --> 00:05:20,960 Speaker 1: Market Regulation at the U S Securities and Exchange Commission, 86 00:05:21,440 --> 00:05:25,200 Speaker 1: or the SEC. I had oversight over all of the 87 00:05:25,279 --> 00:05:28,960 Speaker 1: nation's securities exchanges, so that included both the stock exchanges 88 00:05:28,960 --> 00:05:31,400 Speaker 1: and the options exchanges. He says he has a few 89 00:05:31,440 --> 00:05:34,320 Speaker 1: sharp memories from that day. On the afternoon of the crash, 90 00:05:34,520 --> 00:05:37,680 Speaker 1: Kramer went over to the Commodity Futures Trading Commission to 91 00:05:37,760 --> 00:05:40,960 Speaker 1: talk about what was going on. Yeah, pretty distinctly remember 92 00:05:41,080 --> 00:05:43,679 Speaker 1: being in the room and you know, as the stock 93 00:05:43,720 --> 00:05:46,760 Speaker 1: market was tanking and thinking, you know, these these were 94 00:05:46,800 --> 00:05:51,039 Speaker 1: commissioners who have experienced mostly in agricultural products and futures, 95 00:05:51,040 --> 00:05:53,560 Speaker 1: and here we are discussing what's happening with the stock market. 96 00:05:54,440 --> 00:05:58,120 Speaker 1: Another one was being in with some other senior staffers 97 00:05:58,360 --> 00:06:02,240 Speaker 1: and one of them, Shares, coming down and trying to 98 00:06:02,240 --> 00:06:05,719 Speaker 1: find out what was happening and then saying that he 99 00:06:05,880 --> 00:06:07,600 Speaker 1: needed to call the White House. So they needed to 100 00:06:07,600 --> 00:06:11,200 Speaker 1: call the White House. So they basically asked us to 101 00:06:11,240 --> 00:06:15,560 Speaker 1: clear out of the room, and I did. It was 102 00:06:15,640 --> 00:06:19,279 Speaker 1: so bad that the SEC decided to make a task 103 00:06:19,320 --> 00:06:23,120 Speaker 1: force and immediately for the next few months study what happened. 104 00:06:32,160 --> 00:06:34,080 Speaker 1: And that's what they do in the form of a 105 00:06:34,200 --> 00:06:40,240 Speaker 1: massive report called October Market Break. David Ruder, who is 106 00:06:40,240 --> 00:06:42,440 Speaker 1: the chairman of the SEC at the time, says the 107 00:06:42,480 --> 00:06:46,120 Speaker 1: goal of the report was factual. The goal was to 108 00:06:46,480 --> 00:06:49,680 Speaker 1: say what had happened. The goal was not in an 109 00:06:49,720 --> 00:06:54,400 Speaker 1: advance to plan some result from the report. But the 110 00:06:54,480 --> 00:06:57,960 Speaker 1: idea was to create a factual reconstruction of what happened 111 00:06:58,360 --> 00:07:02,920 Speaker 1: and then to make suggestions based upon that report. And 112 00:07:03,520 --> 00:07:06,200 Speaker 1: it was a long, arduous process. I'd say for the 113 00:07:06,240 --> 00:07:10,280 Speaker 1: next three months through early January, a bunch of us 114 00:07:10,320 --> 00:07:13,160 Speaker 1: had two jobs, which was, you know, investigating what happened 115 00:07:13,160 --> 00:07:15,680 Speaker 1: and writing to report up and doing our day job. 116 00:07:15,840 --> 00:07:19,480 Speaker 1: Did you get paid double for that? No, No, we 117 00:07:19,480 --> 00:07:22,880 Speaker 1: didn't get paid double, uh I said. But from Thanksgiving 118 00:07:22,920 --> 00:07:25,000 Speaker 1: a New Years the only day I took off with Christmas. 119 00:07:25,440 --> 00:07:29,160 Speaker 1: Literally my wife still remembers that. Um No, it was. 120 00:07:29,400 --> 00:07:32,280 Speaker 1: It was pretty intense period. So this report ends up 121 00:07:32,320 --> 00:07:35,800 Speaker 1: being eight hundred and forty pages. It was thicker than 122 00:07:35,840 --> 00:07:38,840 Speaker 1: the Manhattan phone Book, for sure, it was. You know, 123 00:07:39,120 --> 00:07:42,240 Speaker 1: obviously we we sent a number of copies off the Congress. 124 00:07:42,800 --> 00:07:45,280 Speaker 1: You know. It was available for a couple more years, 125 00:07:45,280 --> 00:07:48,760 Speaker 1: and eventually it became a collector's item. I have two 126 00:07:48,760 --> 00:07:50,920 Speaker 1: in my office. If anybody wants to bid for it, 127 00:07:50,920 --> 00:07:53,240 Speaker 1: I'm ready to do it on eBay. Before Creamer could 128 00:07:53,280 --> 00:07:55,760 Speaker 1: sell anything on eBay, we borrowed one of his copies 129 00:07:55,800 --> 00:08:02,320 Speaker 1: to see it for ourselves. So it says October market break. 130 00:08:02,720 --> 00:08:04,760 Speaker 1: It really is like a phone book. I mean it's 131 00:08:04,880 --> 00:08:08,080 Speaker 1: that's exactly that. The feel. It's just all right, Joe, 132 00:08:08,120 --> 00:08:09,480 Speaker 1: I'm gonna flip through it, just so you get an 133 00:08:09,520 --> 00:08:11,160 Speaker 1: idea of how big this is. Right, So this may 134 00:08:11,200 --> 00:08:17,160 Speaker 1: take a few seconds hanging there, still going. You're like 135 00:08:17,200 --> 00:08:24,520 Speaker 1: halfway it is going. That was not quite halfway. It 136 00:08:24,560 --> 00:08:31,320 Speaker 1: gets more dramatic as you keep going. Wow, I see 137 00:08:31,360 --> 00:08:40,280 Speaker 1: some shirts. Wow, let's hear it drop. Yeah, take your 138 00:08:40,280 --> 00:08:43,040 Speaker 1: pick of Harry Potter books to Harry Potter books side 139 00:08:43,040 --> 00:08:45,880 Speaker 1: by side. That's about the dimensions. Let me go more 140 00:08:45,960 --> 00:08:50,320 Speaker 1: high brow here. This is Warren Pace Squared. Oh yeah, 141 00:08:50,520 --> 00:08:54,600 Speaker 1: nailed it. This thing. Yeah, Like my mom's five ft 142 00:08:54,679 --> 00:08:56,560 Speaker 1: and she has to use this like little thing in 143 00:08:56,600 --> 00:08:59,360 Speaker 1: the car. This is like what you could use if 144 00:08:59,360 --> 00:09:00,520 Speaker 1: you were like an all even year old and you 145 00:09:00,600 --> 00:09:02,440 Speaker 1: stole your parents car and you need to see you 146 00:09:02,440 --> 00:09:05,440 Speaker 1: over the steering wheel. I mean it literally could be used. 147 00:09:05,440 --> 00:09:08,360 Speaker 1: It's like a booster seat. Yeah. Could you imagine reading this? 148 00:09:08,760 --> 00:09:10,520 Speaker 1: I will say the ends a lot of charts, Like 149 00:09:10,559 --> 00:09:13,120 Speaker 1: I think the last two pages is charts and numbers, 150 00:09:13,840 --> 00:09:17,320 Speaker 1: but I mean there is a lot of stuff, some footnotes, right, Yeah, 151 00:09:17,640 --> 00:09:19,880 Speaker 1: And you're saying like one page of this is a 152 00:09:20,000 --> 00:09:22,760 Speaker 1: huge piece of landscape here, I mean it's a big 153 00:09:22,800 --> 00:09:26,240 Speaker 1: big I'm also thinking somebody was on a typewriter doing this, Yeah, 154 00:09:26,320 --> 00:09:30,040 Speaker 1: I mean they had to be. What would it take Eric, 155 00:09:30,400 --> 00:09:33,320 Speaker 1: This is a huge report. I can't imagine how long 156 00:09:33,360 --> 00:09:34,920 Speaker 1: it would take you to read it. But what would 157 00:09:34,920 --> 00:09:37,280 Speaker 1: it take you to be able to actually, like plat 158 00:09:37,320 --> 00:09:41,040 Speaker 1: through this. I would probably need illegal substances to get 159 00:09:41,080 --> 00:09:43,600 Speaker 1: through this thing. If not, okay on the legal side, 160 00:09:43,840 --> 00:09:47,199 Speaker 1: a lot of coffee, a latte, and some were very 161 00:09:47,280 --> 00:09:52,400 Speaker 1: quiet because the littlest distraction, the milk, anything that a 162 00:09:52,559 --> 00:09:54,559 Speaker 1: noise in the attict would be like oh, let me 163 00:09:54,600 --> 00:10:09,360 Speaker 1: go check that out, because I am not so what 164 00:10:09,400 --> 00:10:11,679 Speaker 1: was in this big report we've been talking over. They 165 00:10:11,720 --> 00:10:14,160 Speaker 1: just broke down what program trading was, They broke down 166 00:10:14,200 --> 00:10:16,600 Speaker 1: what portfolio insurance was, They broke down what happened that day. 167 00:10:16,679 --> 00:10:19,200 Speaker 1: That was the first part of the report. The second 168 00:10:19,240 --> 00:10:22,800 Speaker 1: part gave suggestions about how a future crash could be avoided. 169 00:10:24,600 --> 00:10:27,520 Speaker 1: But meanwhile, in downtown New York, you had the American 170 00:10:27,520 --> 00:10:30,960 Speaker 1: Stock Exchange and this is an exchange that was in 171 00:10:31,120 --> 00:10:34,880 Speaker 1: third place in trading. It had fallen down. The American 172 00:10:34,880 --> 00:10:37,080 Speaker 1: Stock Exchange wee we'll call AMEX from here on out, 173 00:10:37,280 --> 00:10:41,440 Speaker 1: was basically an exchange that was looking for a winner. 174 00:10:42,320 --> 00:10:46,120 Speaker 1: And that's where Nate Most and Steve Bloom we're working together. 175 00:10:47,280 --> 00:10:50,600 Speaker 1: These are market nerds. Okay, these are not like salespeople. 176 00:10:50,800 --> 00:10:55,319 Speaker 1: They're not They're not portfolio managers. They are They're into derivatives, 177 00:10:55,320 --> 00:10:58,560 Speaker 1: they're into data, they're into the exchange. So these market nerds, 178 00:10:58,800 --> 00:11:02,320 Speaker 1: Nathan Most and Stephen Bloom are kind of an unusual pair. 179 00:11:03,160 --> 00:11:05,520 Speaker 1: Most is seventy four years old at the time and 180 00:11:05,559 --> 00:11:09,400 Speaker 1: he's the vice president of new Development at AMS and 181 00:11:09,440 --> 00:11:13,520 Speaker 1: Bloom is just fresh from Harvard with a PhD in economics. 182 00:11:14,240 --> 00:11:16,520 Speaker 1: Nate died in two thousand four, but we found it 183 00:11:16,520 --> 00:11:18,760 Speaker 1: our reporting that he made a big impression on those 184 00:11:18,800 --> 00:11:22,559 Speaker 1: he worked with. Arthur Levitt, who was running Amyx in 185 00:11:22,559 --> 00:11:25,480 Speaker 1: the nineties, says he was blessed to have inherited Nate 186 00:11:25,520 --> 00:11:28,000 Speaker 1: Most who at the time was trying to create products 187 00:11:28,040 --> 00:11:32,040 Speaker 1: and trading mechanisms that would give AMEX a competitive edge, 188 00:11:32,480 --> 00:11:36,839 Speaker 1: and to the extent to which PTS became a reality, 189 00:11:37,440 --> 00:11:41,960 Speaker 1: I give of the credit to Nate. I can remember 190 00:11:42,360 --> 00:11:45,320 Speaker 1: saying to him that if this is something he believes 191 00:11:45,360 --> 00:11:48,520 Speaker 1: and it wants to do, he has my full support 192 00:11:48,720 --> 00:11:50,840 Speaker 1: to go ahead and do it. And Nate Most had 193 00:11:50,880 --> 00:11:53,880 Speaker 1: this eclectic background. He'd served in the Navy as a 194 00:11:53,920 --> 00:11:57,160 Speaker 1: submarine engineer during World War Two, after where he worked 195 00:11:57,200 --> 00:12:00,560 Speaker 1: as a trader for Pacific Vegetable Oil and then became 196 00:12:00,559 --> 00:12:04,000 Speaker 1: president of the Pacific Commodities Exchange for a time. Oh 197 00:12:04,040 --> 00:12:08,480 Speaker 1: he was great, he was wonderful. He was a tall man, 198 00:12:09,200 --> 00:12:12,760 Speaker 1: and he was kind of not very he was kind 199 00:12:12,760 --> 00:12:16,480 Speaker 1: of aw shucks almost. This is Kathleen Moriarty, who played 200 00:12:16,480 --> 00:12:18,520 Speaker 1: a major role on the legal side of the story 201 00:12:18,800 --> 00:12:21,120 Speaker 1: and worked quite a bit with Nate Most. I remember 202 00:12:21,160 --> 00:12:22,960 Speaker 1: one time I was in a meeting with him and 203 00:12:23,040 --> 00:12:26,880 Speaker 1: some Goldman people, and these guys who were probably like 204 00:12:26,880 --> 00:12:29,080 Speaker 1: in their thirties looked at Nate and he had thick 205 00:12:29,120 --> 00:12:32,080 Speaker 1: black glasses, and it was clear that they thought he 206 00:12:32,160 --> 00:12:34,959 Speaker 1: was like somebody who didn't really know much of anything. 207 00:12:35,040 --> 00:12:36,719 Speaker 1: So he went up to go to the men's room 208 00:12:37,080 --> 00:12:39,400 Speaker 1: and they looked at each other and they said, oh, 209 00:12:39,480 --> 00:12:42,040 Speaker 1: he's not a rocket scientist, and I said, actually, he 210 00:12:42,160 --> 00:12:45,760 Speaker 1: is a rocket scientist. Yeah, he was literally a rocket scientist. 211 00:12:45,880 --> 00:12:48,760 Speaker 1: The guy had a PhD in physics. And what's more, 212 00:12:49,080 --> 00:12:51,040 Speaker 1: he's got the help of Stephen Bloom and Steve was 213 00:12:51,080 --> 00:12:53,600 Speaker 1: his assistant. Steve was much, you know, much younger. He 214 00:12:53,679 --> 00:12:56,400 Speaker 1: was probably, you know, somewhere around my age at the time, 215 00:12:56,520 --> 00:12:58,640 Speaker 1: and you know, somebody who was, you know, at a 216 00:12:58,760 --> 00:13:02,079 Speaker 1: very sharp mind for numbers and did a lot of 217 00:13:02,120 --> 00:13:06,480 Speaker 1: the assistance and kind of secondary lifting for Nate. So 218 00:13:06,480 --> 00:13:08,320 Speaker 1: they were a good team. They worked very well together. 219 00:13:10,240 --> 00:13:12,360 Speaker 1: So you've got these two smart guys who have their 220 00:13:12,360 --> 00:13:14,760 Speaker 1: work cut out for them and their roles at Amex, 221 00:13:15,280 --> 00:13:18,160 Speaker 1: which has Levitt puts it, the animates was kind of 222 00:13:18,360 --> 00:13:22,560 Speaker 1: and had been kind of a backwater exchange struggling for 223 00:13:22,679 --> 00:13:27,439 Speaker 1: relevance and gradually losing listings to the New York Stock 224 00:13:27,520 --> 00:13:32,040 Speaker 1: Exchange across the street. And no matter what we tried 225 00:13:32,080 --> 00:13:36,480 Speaker 1: to do to compete against New York, the stature and 226 00:13:36,640 --> 00:13:41,280 Speaker 1: status and prestige of New York managed to whittle away 227 00:13:41,360 --> 00:13:46,280 Speaker 1: the listings that were the lifeblood of exchange. Here's Creamer again. 228 00:13:46,400 --> 00:13:49,800 Speaker 1: To stay relevant, it had to continue to develop new products, 229 00:13:50,200 --> 00:13:54,439 Speaker 1: particularly new options products or or options like products. Steve 230 00:13:54,480 --> 00:13:57,480 Speaker 1: and Nate were behind that development initiative of the AMEX, 231 00:13:58,040 --> 00:14:02,160 Speaker 1: so let's fit in pretty nicely into their sweet spot. 232 00:14:02,360 --> 00:14:04,959 Speaker 1: I trying to come up with a product to stay 233 00:14:05,000 --> 00:14:09,560 Speaker 1: ahead of of their competitors that may have some investor appeal. 234 00:14:09,880 --> 00:14:11,800 Speaker 1: And what Kramer is referring to is a section in 235 00:14:11,880 --> 00:14:15,000 Speaker 1: chapter three of the Market Brake Report with his suggestion 236 00:14:15,360 --> 00:14:18,400 Speaker 1: for a market basket trading instrument that could be used 237 00:14:18,440 --> 00:14:21,480 Speaker 1: instead of the futures to hedge and would be something 238 00:14:21,480 --> 00:14:25,560 Speaker 1: that the SEC could regulate. So the market Brake Report 239 00:14:26,040 --> 00:14:29,280 Speaker 1: makes its way to AMEX, and most in Bloom read 240 00:14:29,320 --> 00:14:33,040 Speaker 1: through the whole thing. Bloom calls it riveting and one 241 00:14:33,120 --> 00:14:37,520 Speaker 1: particular part especially caught his eye. When Bloom read that paragraph, 242 00:14:37,880 --> 00:14:39,480 Speaker 1: you know, it was like a light bulb went off, 243 00:14:39,520 --> 00:14:41,800 Speaker 1: you know. He told me that he ran into natemost 244 00:14:41,840 --> 00:14:45,080 Speaker 1: office immediately and basically said, here's an opening we could 245 00:14:45,120 --> 00:14:47,200 Speaker 1: drive a truck throw. We didn't feel like it was 246 00:14:47,240 --> 00:14:50,400 Speaker 1: a panacea to what we were trying to address, but 247 00:14:50,480 --> 00:14:54,320 Speaker 1: we felt it was. It was a novel idea, a 248 00:14:54,400 --> 00:14:57,480 Speaker 1: panacea or not. Most in bloom go with it, and 249 00:14:57,600 --> 00:14:59,880 Speaker 1: Kramer says, it's best that they or someone in the 250 00:15:00,000 --> 00:15:03,200 Speaker 1: marketplace would take up the idea because it wasn't a 251 00:15:03,240 --> 00:15:07,280 Speaker 1: regulatory proposal, so we were hoping that they would take debate, 252 00:15:07,360 --> 00:15:10,120 Speaker 1: so to speak, and and run with it. And uh 253 00:15:10,360 --> 00:15:27,600 Speaker 1: them X did. Next time, on Trillions Presents, most in 254 00:15:27,640 --> 00:15:32,320 Speaker 1: bloom share their idea with maybe the most influential investor 255 00:15:32,480 --> 00:15:35,680 Speaker 1: of all time, Jack Bogle, and I said, However, Nathan, 256 00:15:36,520 --> 00:15:39,680 Speaker 1: Mr mos Nate, they proposing you sent me last week 257 00:15:39,720 --> 00:15:45,000 Speaker 1: doesn't work. It has these three flaws and you're gonna 258 00:15:45,000 --> 00:15:46,560 Speaker 1: have to get them fixed before you can never do 259 00:15:46,640 --> 00:15:53,280 Speaker 1: anything with it. Thanks for listening to Trillions Presents Until 260 00:15:53,320 --> 00:15:55,760 Speaker 1: next time. You can find us on the Bloomberg Terminal, 261 00:15:56,160 --> 00:16:00,280 Speaker 1: Bloomberg dot com, Apple Podcasts, and whever else you Snip 262 00:16:00,280 --> 00:16:06,360 Speaker 1: podcast Trillians Presents is produced by Jordan Bell. Francesco Levy 263 00:16:06,720 --> 00:16:21,280 Speaker 1: is the head of Bloomberg podcast Back, Oh, one more 264 00:16:21,480 --> 00:16:25,120 Speaker 1: tiny little Thing, here's any strike for you. I have 265 00:16:25,160 --> 00:16:26,800 Speaker 1: a question when we send this back to him, would 266 00:16:26,800 --> 00:16:31,440 Speaker 1: you buy it on e Bay? No, I'm not that 267 00:16:31,680 --> 00:16:33,520 Speaker 1: I'm in deep, but I'm not that in deep.