CME's Terry Duffy on the Disconcerting State of Finance Regulation

The Commodity Futures Trading Commission was practically brand new when Terry Duffy started working at CME Gropu almost five decades ago, and over the course of his career at the exchange, this legend of the trading world has seen an enormous amount of change when it comes to finance regulation, including the rise of prediction markets, 24/7 trading and perpetual futures. Duffy is set to transition out of his current position as CEO next year, and this conversation, recorded live at City Winery in Chicago, is a sort of exit interview. He tells us how regulation has evolved since the start of his time at the CME. We also talk about why he is against perps, the credibility issues prediction markets face, his definition of spreads versus futures, and what he wishes he knew at the start of his career, now that he is nearing retirement. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee. So, search Barclays Brief wherever you get your podcasts.

• 0:24Speaker 01

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• 1:45Speaker 01

  Bloomberg Audio Studios, podcasts, radio, news.

• 2:00Tracy Alloway?

  Hello and welcome to a very special live taped episode of the Odd Lots Podcast. I'm Tracy Alloway.

• 2:07Joe Weisenthal?

  And I'm Joe Weisenthal.

• 2:08Tracy Alloway?

  Joe, we are here in Chicago.

• 2:09Joe Weisenthal?

  Great city.

• 2:10Tracy Alloway?

  A very special show. It's a beautiful city and a huge trading capital in the world as well.

• 2:15Joe Weisenthal?

  That's why we love coming back here year after year to do shows here.

• 2:19Tracy Alloway?

  That's right. So, I'm very happy to say we do in fact have the perfect guest. We're going to be speaking with Terry Duffy. He is of course the CEO and Chairman of the CME Group.

• 2:27Joe Weisenthal?

  That's right. Longtime Chairman and CEO. Markets have changed so much since the start of his tenure. So, looking forward to learning what he's learned throughout his career.

• 2:37Tracy Alloway?

  All right. So, take a listen. Terry, thank you so much for coming back on Odd Lots.

• 2:41Speaker 04

  Thank you. Thank you for having me.

• 2:42Tracy Alloway?

  Really appreciate it.

• 2:43Speaker 04

  Nice to see you both.

• 2:44Tracy Alloway?

  You know, I mentioned you are of course CEO and Chairman of the CME, but you're about to transition to a new position next year. You're going to become Executive Chairman of the Board. Sort of a retirement? How should we think about this?

• 2:58Speaker 04

  A retirement.

• 2:59Tracy Alloway?

  A retirement. Okay.

• 3:01Speaker 04

  I'm a big believer in that. I think that you need to make sure you have good, smooth transition. I've been at CME for 46 years, got my first job for $56 a week. I've been the Chairman since 2002 when I took CME public. And I've been doing this an awful long time and now being CEO for all these years. So, I think it's really important to have a good, smooth transition. I'll stay on as Executive Chairman to help Lynn Fitzpatrick through the initial phase of it. And if needed, I'll be there, but if not, she'll run the firm.

• 3:31Tracy Alloway?

  All right. Well, we're going to frame this then as a sort of exit interview for you. And we expect you to tell us all the really good war stories before you leave.

• 3:39Speaker 04

  I can't yet. I'm still CEO, so I gotta be somewhat careful. I'm a public company.

• 3:43Tracy Alloway?

  All right. Let me put it a different way. So, you've been at the CME since I think 1980. So, you've been working for five decades. You've been in markets regulated by the CFTC. For those five decades, how has regulation changed for you? How would you characterize the evolution?

• 4:01Speaker 04

  It's amazing. I was just talking to my friend, Don Wilson, who will be out here shortly, and talking about the early days of when we both joined. Donnie was 21, I was 22, but I'm 10 years older than Don. So, anyway, when we look at the regulation and what it was, I mean, the CFTC was basically brand new. It was 1973, 72 area came in, in the play. And it was basically a principles-based oversight agency for agricultural products. And then all these new innovations come along the way, you know, from financial futures to stock equity indexes, then now the cryptocurrency and everything else that's going on. So, it's changed dramatically throughout the years. And then, of course, we've had some situations with bad behavior in 2008 and the financial crisis

• 4:46Speaker 04

  due to the leverage issue on the housing market. And you go through a whole iteration of change again through Dodd-Frank. And now, we are still, even 16 years later, still trying to figure out parts of Dodd-Frank. So, it's pretty amazing how parts come.

• 5:01Joe Weisenthal?

  I was trying to workshop this question with Tracy earlier and come up with a polite or sort of politic way to put it. But you know, we live in a, we're in a time where like an agency that used to regulate agriculture futures is now nominally regulating what a lot of people would say is like sports betting, but they call it trading and so forth. And you know, there's all these new instruments, offshore instruments that people can access via crypto and so forth. The impolite, impolitic question is like, are there any laws anymore? Because it feels like that. It feels, it really feels like that. Are there still financial regulations and laws?

• 5:43Tracy Alloway?

  It's worrying that was the workshop.

• 5:45Joe Weisenthal?

  Yeah, yeah.

• 5:47Speaker 04

  It does feel a bit of a ready, fire-aimed strategy going on right now where anything can go. And so, it's very disconcerting. I'll give you a couple of statistics which really trouble me. Since the second Trump administrations come into place, there's been 2,500 self-certifications that have been submitted into the Commodity Futures Trading Commission. Not one of them has been denied. Now, how can it be that not one of them's been denied? So, when you look at somebody's prediction markets, I've made fun of them and people say, will you please stop bringing this up? I bring up they approved a contract on predictions on Nathan's hot dogs. How many hot dogs did Joey Chestnut eat? I have to ask, what's the economic impact of that contract being out there?

• 6:31Speaker 04

  And how is it not in violation of Core Principle 3, which is susceptible, readily susceptible to manipulation? George Santos, is he going to show up at the State of the Union address when President Trump was there, the former disgraced Congressman in New York? Well, he bet against himself and didn't show. So, how is that not a susceptibility? I mean, the teleprompter for President Trump, you know, I mean, think about all these things that are susceptible to manipulation. So, to answer your question is, is there any regulation? Yes, there's regulation, and it's extremely important. The way we grow good, strong, competent markets is to have a good balance of regulation, not to have no regulation. No regulations on borrowed time. There's no question about it. Always has been, always will be.

• 7:16Speaker 04

  So, you know, what's going on right now at the agency, they are circumventing basically acts of Congress. And they are making rules and regs that are associated, whether it's at the CFTC or SEC. Well, I remind market participants, those are rules and regs of the agency that can be easily swiped away by a wipe of a pen when the next administration comes in. We all remember when President Trump came into office this last time, and he had a big show about how his executive orders were getting rid of everything that Joe Biden did. Well, the next president can do the same exact thing. So, these are not sustainable. Good, smart regulation. Well, you need to make sure it can withstand any administration.

• 7:58Speaker 04

  So, I think to answer your question, is there any regulation? Yes. Is some of it ridiculous? Yes. But it doesn't mean there's no regulation. Okay.

• 8:08Tracy Alloway?

  Devil's advocate question, but the prediction markets would respond that like, well, you know, insider trading on the platforms, maybe it's a good thing because you get informational value from it and everyone benefits from having this informational value. I'm not sure there's much informational value embedded in knowing how many hot dogs a contestant is going to eat. But that's the typical response. What do you say to that?

• 8:28Speaker 04

  Well, I think if I heard your question right, insider information is good. Is that what you said? I have a hard time believing that for the average participant, especially that doesn't have that information, they would agree with you. And to think that certain people have, this is what we've all been fighting for through technology, is they have the ability for all of us to have the information at the same time so we can participate. I don't have as much money as my dear friend, Don Wilson, who's coming out here, but I might have the same information he gets. I just don't, can't deploy it in the same way, but I should have a level playing field on the information. So, to say that insider information could be a good thing on anything is offendable to me

• 9:12Speaker 04

  as a guy who's traded markets and run markets for the last 25 years. I just don't see any place in credibility, if you're going to grow anything, by saying, you get to know, you get to know, but I don't get to know. And it's not too dissimilar than the President of the United States with Truth Social today, charging $100,000 to give information faster. I mean, you're the President of the United States. You're supposed to give information to all of us at the same time, not, not have a feed to get your information quicker so others can act on it. So, I have a real problem with some of this stuff.

• 9:43Joe Weisenthal?

  The guests in our live show tonight get information before the people who have to listen to our recording. So, they pay for the, but.

• 9:50Tracy Alloway?

  Did anyone sign up?

• 9:51Speaker 04

  I didn't give them any. I gave them an opinion.

• 9:53Joe Weisenthal?

  Yeah, it's not market-moving hours yet currently. But another thing that they would say. That if we were to have a prediction markets person, they would say you have a legacy business to protect. And they say, well, you they would say, yeah, he talks about the importance of good durable rules. But you know, prediction markets in theory could cut into CME business. How do you think about like, what do we? Okay, sure, CME has a business. What do we lose in the investor community and the financial community more broadly? If there's continues to be this degradation of regulation?

• 10:30Speaker 04

  Well, I mean, you lose a lot of things, but you talk. Are you talking about prediction markets in general?

• 10:35Joe Weisenthal?

  I'm talking about like, all of it. And like, beyond, like, what are the costs that the public is going to pay?

• 10:41Speaker 04

  First of all.

• 10:41Joe Weisenthal?

  If like, these sort of CFTC rules.

• 10:44Speaker 04

  I'm not opposing some of these markets. I'm opposing the ones that violate the commodity exchange act or core principle, which is core principle three, which is susceptible, at least susceptible to manipulation. You cannot list those contracts. And I just gave you a few examples of that.

• 10:59Joe Weisenthal?

  Yeah.

• 10:59Speaker 04

  It doesn't mean that I'm against all prediction markets. If you look at sports, I believe sports predictions is gambling. I don't think there's anywhere around it.

• 11:09Joe Weisenthal?

  Almost everyone agrees with you.

• 11:10Speaker 04

  Well, they didn't for a long time. But from my standpoint, if LeBron James gets two or three rebounds, again, what's the economic impact to the three of us on this stage or the folks sitting here in your audience tonight? They have none unless they're on the yes or no side of that trade. That's it. And most contracts need to have a natural buyer, a natural seller, a commercial, and a producer of that product in order to facilitate a contract. And that's how it traditionally, most contracts get approved. Otherwise, they should not be approved. So I think that the credibility of the marketplace is is really important. Now, we started something with a company called Future Sports. Future Sports out of Australia, it's a great firm. And they're they're doing amazing things. And

• 11:52Speaker 04

  someone says, Well, you're being a little, you know, two sided if you're saying that you don't like, you think these are not regulated and they should be regulated by the federal government, not the states. What about Future Sports? Well, Future Sports is an index. It's very similar to the S and P 500. Every team starts out at 7,500, and you go up and down there depending on performance. But at the same time, it helps people who own these teams monetize the value of their teams without selling them. So a great example, Chicago White Sox, we were fortunate enough to be a sponsor of the Chicago White Sox this year. And they had an amazing year that no one thought they were going to have. But my dear friend, Jerry Reinsdorf, probably could have charged me a lot more if I would

• 12:35Speaker 04

  have had a vehicle to lay off some of that risk to put a patch on his sleeve. But that market wasn't there. So there's ways to do that. And you can take that through the economic system of sports. And now we just did a deal with the NBA. We've done a deal with MLB. And these guys have done an amazing job. So there's a value there to the ecosystem. It's just not a value to you and I. And that's the music.

• 13:15Speaker 05

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee. So search Barclays Brief wherever you get your podcasts.

• 13:39Speaker 01

  Some people treat Chat GPT like some kind of smart search engine, and some use it to get work done. Chat GPT work is a new way of working in Chat GPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put Chat GPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting work mode, available on plus and pro plans.

• 14:22Speaker 05

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• 15:20Speaker 06

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• 16:24Tracy Alloway?

  Can we talk about perpetual futures in addition to prediction markets?

• 16:29Speaker 04

  Sure.

• 16:29Tracy Alloway?

  I know we're going to have Don Wilson on next. He has a slightly different, slightly different opinion to you when it comes to perps.

• 16:35Speaker 04

  He's wrong, though.

• 16:36Joe Weisenthal?

  We got to bring him out here. That's it. Anyway.

• 16:39Tracy Alloway?

  All right. Well, I mean, talk.

• 16:41Speaker 04

  And Jason, Don.

• 16:42Tracy Alloway?

  Why is he wrong? And also, I think I just saw that CME decided to shell plans for a 24 seven oil perp contract due to industry pushback. What was the pushback?

• 16:53Speaker 04

  Well, we didn't list the 24 seven perp contract because perps are swaps. They're not futures. And that's the whole premise behind our litigation with the CFTC. So the CFTC approved the contract for Calci Trading to list Bitcoin as perpetual futures, which futures, as some of your audience may or may not know, get what's called 1256 tax treatment, which is 60 long term, 40 short terms on gains because there's no capital gains in futures contracts. Swaps are done at ordinary, ordinary, taxed at ordinary income. Swaps also comes with five days margin to clear. And if you don't clear, it's a 10 day requirement. You also have requirements as a swap dealer to register with the government.

• 17:34Speaker 04

  There's there's other things that you need to do to be in compliance with that. Why is that? Because in Dodd-Frank in 2010, I testified over 30 times of what a swap is and what a future is. And what perpetuals have is what's called a funding rate. I'll get to my 24 seven oil, but I did not list the perp. I didn't put for the perp. I just put for 24 seven oil on a 10 barrel contract, very small contract, just to compete with some of the platforms that are being traded overseas, which are supposed to be illegal for US participants. But if you have a telephone with a VPN on it, you have access to the market.

• 18:10Joe Weisenthal?

  Yeah.

• 18:11Speaker 04

  And no one's, to your earlier point, who's policing that? Nobody. So anyway, the funding rate of a perpetual is when two parties pay each other. That's how that's all perpetual works. If you're long and the market goes down, the shorts are to be paying the longs. And if you're long and the market goes up, the shorts are vice versa.

• 18:35Joe Weisenthal?

  Yeah.

• 18:36Speaker 04

  So that's how they keep the market tied to the spot trade. In the definition of a swap, anytime two parties pay each other, it's deemed a swap. So they circumvented Congress. That's why I have a problem with perpetuals. It's everybody thinks, well, they have no expiration date. That's a that's a whole other story that people can't manage risk with no expiration dates. There's, in today's world, we have $40 trillion of debt. There's corporations that have massive loans against futures positions, cash positions with their customers. In order to do that, they need to have a date certain when they're going to do it. And a funding rate, the way it works to to mark the funding rate, it

• 19:18Speaker 04

  can happen either at one time a day, twice a day, every hour. Who makes that decision? So institutions go, this is impossible for us to trade. So I'm not a supporter of the perpetual market, the way it's drafted today. And if they want to list them as swaps, then so be it. But then there's a whole different set of qualifications you have to have to participate in the swap market. Because that's what happened after the 2008 crash.

• 19:44Joe Weisenthal?

  Speaking of overseas platforms that people access with a VPN, incidentally, and if you haven't listened today, we did have an episode out with Jeff Yan, the founder of Hyperliquid, which is the elephant in the room here. So people can check that out. President Trump specifically said, like, oh, we're going to bring Hyperliquid to the US. Like, what? Do you have a theory for what's going on? I mean, for those listening to recording?

• 20:14Speaker 04

  You think, you think, you think President Trump knows a lot about Hyperliquid?

• 20:20Speaker 04

  Just curious.

• 20:21Joe Weisenthal?

  I'm a, I'm an unbiased journalist. I don't say things without the fact.

• 20:25Speaker 04

  I'm just an unbiased CEO. I hear you, but come on.

• 20:29Joe Weisenthal?

  Well, do you have a theory for what's going on? Why, why do you think the president is like actively courting this overseas blockchain-based perps platform?

• 20:39Speaker 04

  Well, here, I, I did hear what Jeff had made some comments on your program.

• 20:44Joe Weisenthal?

  Yeah.

• 20:44Speaker 04

  Essentially saying he does not need to be regulated, that the users need to be regulated.

• 20:49Tracy Alloway?

  The deployers.

• 20:50Speaker 04

  The deployers. So if you're Trade XYZ, which is one of the, ninety-eight percent of Hyperliquid's business is done by Trade XYZ. The other is on their crypto franchise. That's the only thing that they list at Hyperliquid is crypto. And then Trade XYZ lists the other products on the platform. So they're basically, the plumbing is what Jeff's um, argument is. I've talked to Jeff about this. Um, I actually like him. I think he's a brilliant, brilliant guy. Um, but at the same time, you know, there's no KYC or no your client. That's an issue. There is situations on the blockchain where there's auto liquidation, which is also a situ, uh, problem. There's highly leveraged products.

• 21:34Speaker 04

  These things can cascade and create market-moving events because of the high leverage and the small amount of dollars in there. So when you look at some of the leveraged products being traded on Hyperliquid's platform, their leverage can go anywhere from, say, ten to fifteen percent to two hundred and fifty percent. So you think about two hundred and fifty percent leverage on certain products. I mean, it doesn't take more than a tick or two to start to get somebody out one way or the other. And if they take you out, they might take the next guy out and you have a cascading up or a down. That's not a good marketplace. I think Jeff needs to understand if he's going to compete and wants to compete in the United States and he's got the president suggesting he should, then he's going to have to understand how to compete under US law, because what he's saying does not comply with US law.

• 22:17Speaker 04

  It's actually in violation of court principle nine, and I can go through all the nuances of court principle nine. But it's basically fair and, and ready market access to all, but you have an obligation to make certain that you're policing these markets as an institution, not just as the user. So we have no KYC, so we don't even know who's on the platform. But at the same time, he's saying, I'm not responsible. You can trade on it. So you're trading with people that maybe shouldn't even be participating. And they're affecting that market outcome. Which way? I don't know, because there's no KYC. We don't know who they are. So there, there's a lot of violation of US law for him to deploy what he was suggesting on your show.

• 23:00Tracy Alloway?

  So I'm going to ask another devil's advocate question. I want to make clear, devil's advocate, please don't come at me. But just on the leverage point.

• 23:06Speaker 04

  Don't say perp.

• 23:10Tracy Alloway?

  Just on the leverage point. I mean, Kalshi says they limit leverage to like six times on their platform. The CFTC chairman has talked about if they do it in the US, they will also have leverage limits. And so as to gradually introduce them to a US audience, I guess. Is, is a leverage limit not a good enough safeguard in your mind?

• 23:28Speaker 04

  I don't know what it is. I mean, you can say that you'll have limits, but I don't know what they are. So um, there's certain limits. I mean, when you look at what Bitcoin is being traded on Kalshi, they've kept the leverage basically where CME is at on their leverage for their Bitcoin, our Bitcoin. So not too dissimilar. I, I don't think that was a mistake. So perpetuals, as they know them, were not, are not being introduced to the United States because there's no expiration date. Or because people understand the funding rate. They're, they're, they're trying to be brought here for leverage and leverage only. And, and if that's not the case, can you tell me why firms are trying to get leverage on prediction markets on SportsNow? That's the next thing they want to do. And if you get into single stock perpetuals,

• 24:10Joe Weisenthal?

  Yeah.

• 24:11Speaker 04

  like we have single stock futures, they want to have single stock perps. So the thing what they want is the leverage on those products. And to me, that, that could be very catastrophic from a risk management standpoint, if you don't know what the leverage is. So I think it's just trying to open the door to bring them in for leverage, because I don't know a retail participant that says, I really am not going to get in this trade because I'm worried about the expiration or the roll date. I don't, retail participants, with all due respect, that's me as well. We don't trade futures for six months, even three months at a time or a month at a time. We're probably in and we're out more than not.

• 24:51Speaker 04

  It doesn't make any sense to me that the funding rate associated with that is also tied just to the spot price. It doesn't, it's not tied to the future price. So there, there's a lot of problems with what they are saying here as it relates to this product. So I, I think it's an issue.

• 25:25Speaker 01

  Some people treat ChatGPT like some kind of smart search engine. And some use it to get work done. ChatGPT work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting work mode, available on Plus and Pro plans.

• 26:07Speaker 05

  For big business, AI opened up a world of promise, but that world of promise turned into a world of pain. Costs spiraling, data scattered across disconnected systems, security and governance increasingly complex. AI initiatives struggling to scale, and ROI that remains frustratingly out of reach. The challenge isn't AI itself, it's having the infrastructure AI needs to succeed, which is right where Boomi says, we got you. Tens of thousands of enterprises trust Boomi to connect data, applications, processes and AI. With Boomi, businesses can eliminate silos, automate workflows, strengthen governance and create the foundation AI needs to perform at scale.

• 26:48Speaker 05

  The result? Faster innovation, more efficiency, better business outcomes. Boomi turns a world of AI pain into a world of AI gain. As Boomi says, we got you. Head to boomi.com to learn more. That's B-O-O-M-I dot com.

• 27:05Speaker 06

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• 27:50Speaker 06

  And when a bad day does come, Cincinnati Insurance has real people there to help make things right. Because planning for the future isn't only about knowing what's next, it's about making sure you're ready for what you can't predict. Let Cincinnati Insurance make your bad day better. Find an independent agent at C-I-N-F-I-N dot com.

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• 29:01Joe Weisenthal?

  qualification requirements must be met additional restrictions may apply please speak with a business banker for more information JP Morgan Chase Bank NA member FDIC when we bring on Don we're going to talk about GPU futures and all this stuff which haven't I'm partners with them I know so I'm curious like over the years you know various futures get launched and some become very successful and active and others never really they kind of become a ghost town like I don't think there's a lot of activity on like case shiller housing futures or the cheese futures or the uranium futures do you have you built up a good intuition for like you know what this future is going to be a ghost town or this future is gonna like this

• 29:46Joe Weisenthal?

  is really going to attract like do you have a good feel for that

• 29:48Speaker 04

  you know you try to think you do and sometimes what's old is new what's new is old so I'll give you an example when we had treasury bills at the CME back in the 80s and they fizzled out because it just the way the rate market traded and they became almost a useless product but as the overnight lending rates started to get more and more active especially during covid I said we should probably trot these back out right now and they became quite successful for a while again so we brought out that product again when you talk about GPU futures when Don originally introduced me to this product I mean there's people saying that well we're not quite sure it's an asset class well it's already over a trillion dollars crypto is deemed an asset class and that's less than three trillion and that's over a projected period of time the GPU you uh market will be

• 30:33Speaker 04

  multiples of the size of crypto by 2030 and for that industry and for the administration to be holding this back right now they're saying is for the national security issues which I have no idea what they're referring to why is it national security if the president truly wants to be have artificial intelligence we want to be the leader in it we want to be the leader of data uh data centers we need to have a risk offset for these GPUs and other components this makes no sense to me why they're holding these products

• 31:03Joe Weisenthal?

  this is the funny thing like Kelsey you mentioned it's like oh they allow the hot dog contract and they allow the uh you know speech thing but then they nixed the uh they're like no

• 31:13Speaker 04

  but what they didn't do at Kelsey is Kelsey has a prediction market on compute and they didn't make them take that down

• 31:20Joe Weisenthal?

  I thought they did make them

• 31:21Speaker 04

  no

• 31:21Joe Weisenthal?

  okay

• 31:23Tracy Alloway?

  um can we go back to 24/7 trading for a second because this came up on our hyper liquid episode and I think I said something like it feels kind of inevitable at this point there seems to be a lot of demand out there a lot of guys in their basement I guess who want to trade stuff at 2am in the morning

• 31:40Joe Weisenthal?

  guys and girls

• 31:41Tracy Alloway?

  guys and girls sorry

• 31:44Tracy Alloway?

  my question is like who else other than the guys and girls in the basement and the exchange has to stay awake all weekend to make this actually happen

• 31:53Speaker 04

  I believe to be honest with you and I've been saying this for quite some time 24/7 is inevitable and you can fight it you can say I don't like it I don't want to stay up at a desk I I don't want to stay up at 2 in the morning but risk doesn't know what time a day it is risk doesn't happen every day ends in a why I mean we don't know when it's going to come the biggest problem with 24/7 is the banking system the banking system needs to be available 24/7 we're talking about an equity market in the United States alone is 76 trillion dollar market there's nobody on the planet that could fund pre-fund on a Friday a 76 trillion dollar market as a banking system is

• 32:36Speaker 04

  closed now that's an extreme I can pre-fund a crypto market a crypto market's small so we do and we trade at 24/7 but there's a lot of products that you cannot trade rates and probably um for sure equities until the banking system decides to go 24/7 now there's real time payments there's some other things that the Fed is doing I spent an hour and a half with Chair Atkins on Tuesday talking about a couple of these things but it's just not enough unless we have a true 24/7 banking system then we will have 24/7 markets and we may not like it and we're going to have to be careful because there will be pockets of illiquidity but there's pockets of illiquidity

• 33:16Speaker 04

  today intraday as well so that's nothing new that our industry is not used to so I think that's what we're going to see we're going to see 23.5 on the equity markets coming up by the end of the year so we'll see how that goes forward it'll be the first time that you'll see cash equities trading 23.5 I think Nasdaq's getting ready to go wow so we're going to see some of these things that um we've never seen before but it's really important for people to understand that markets are going 24/7 but the infrastructure has to support it

• 33:45Joe Weisenthal?

  what's one thing if you could go back and talk to yourself at the start of your career piece of advice you'd give to yourself based on what you know now

• 33:53Speaker 04

  um you know what I've been pretty fortunate I when you go broke when you're a kid at in 1981 you know I lost a hundred and fifty thousand dollars and I didn't have a dollar and that was borrowed so you taught me a lot of discipline and it's helped me deploy uh what I I've done today in my trading career and as an executive running a company like CME Group and I've been blessed so what would I tell myself I I would say you know don't lose your moral compass and be a little bit patient and you know everybody can get into a trade but it's really hard to get out so I like to tell young people I spoke at Georgetown the other day too and I like to say there's a sign up there it says exit I said it's a really important sign for a lot of reasons and the the exit sign's important because anybody can get in but before you get into something you should know how to get

• 34:38Speaker 04

  out of it whatever you're doing in life if you can have an exit strategy you will be more successful as you enter into anything so I think a lot of people forget that because and so I would tell my younger self is uh don't forget that you it's okay to be wrong and human instinct does not like to be wrong so it's really hard to accept when you're wrong so I think if you understand the exit strategy you'll be successful going forward

• 35:07Tracy Alloway?

  I know the buzzer went off but I'm going to squeeze in one more question just because we teased war stories with Terry Duffy if you look back over your career I can think of so many crisis moments I mean really just in the past 20 years or so we had 2008 obviously 2020 negative oil all that stuff what was the most fraught or scariest moment of your career

• 35:28Speaker 04

  you know it's funny because in the crisis of 2008 I was you know I started uh I became chairman in 02 and that was frightening to me just to begin that but the OA crisis was something that you kept thinking this can't be real and but I really believed in my heart of hearts that no matter how bad this is the United States government had to step in and and I think we all knew that the question is how many dominos would fall first so that didn't scare me as much I think that the pandemic would be one of the things that scared me the most because I think when you yell fire in a crowded theater that's what it felt like to me and I was on TV I'll never forget April 20th of

• 36:13Speaker 04

  2020 defending minus 3750 of oil and I was being crucified why we let oil go to a negative amount well what we did was we had our options priced at negative strikes because we could kind of see this coming and not that we knew it was going negative that far but we had to make sure we had price discovery whatever it was New York Harbor's full there's nowhere to put the oil there's no demand it dried up in a nanosecond and to me that was frightening because you didn't know how long that was going to last so that was probably the biggest uh biggest scare I've ever had is even bigger than the OA crisis

• 36:49Tracy Alloway?

  all right Terry Duffy a man who knows how and when to exit we appreciate you coming on

• 36:54Speaker 04

  thank you very much

• 37:08Tracy Alloway?

  that was another episode of the odd lots podcast recorded live in Chicago I'm Tracy Alloway you can follow me at Tracy Alloway

• 37:15Joe Weisenthal?

  and I'm Joe Weisenthal you can follow me at the stalwart follow our producers Carmen Rodriguez at Carmen Armin Dashel Bennett at Dashbot Kale Brooks at Kale Brooks and Kevin Lozano at Kevin Lloyd Lozano for more odd lots content go to Bloomberg.com slash odd lot for the daily news letter and all of our episodes and you can chat about all these topics 24/7 in our discord discord dot GG slash online

• 37:38Tracy Alloway?

  and if you enjoyed this conversation then please leave us a positive review on your favorite podcast platform if you're watching the video then please like or leave a comment or better yet subscribe

• 37:48Joe Weisenthal?

  thanks for watching and listening

• 38:22Speaker 06

  if you enjoy Bloomberg podcasts you'll love listening to Bloomberg 991 FM in the DMV hi this is Joe Matthew here in the DC area the story is always changing from the White House Capitol Hill to K Street Wall Street and the Fed Bloomberg 991 keeps you connected to the news that's driving decisions in the nation's capital and around the globe check us out at 991 FM or stream us anytime on the Bloomberg Business app