The Derivative - This City Trades Different: Yogi, the Floor, and Building RCM

Episode Date: June 25, 2026

Former CME floor trader and RCM co-founder Bobby “Yogi” Schwartz joins Jeff to close out our Chicago month and walks through a wild career arc: from generational hog pit roots to dominating the Nasdaq futures pit during the dot-com bubble, then building prop firms, arbing minis vs. big contracts, and eventually stepping into Hollywood film finance before returning to launch RCM. Bobby shares vivid floor stories: badges, hand signals, full-contact fights, and multi-million-dollar errors, while explaining how open outcry actually worked, why Chicago produced so many elite prop traders, and how the e‑mini revolution rewired the futures landscape. He breaks down building and backing 100+ traders, deploying early “gray box” tech, and structuring option and index arb trades that bridged futures, ETFs, and cash baskets.The conversation then shifts to what RCM does today: multi-FCM clearing, outsourced trading, ETF and mutual fund infrastructure, ag and global trade finance, and navigating the explosion of new DCMs, prediction markets, and perps. Along the way, Bobby drops Hollywood war stories, Chicago steakhouse lore, and a candid look at where derivatives trading is headed next.Chapters:00:00-01:12=Intro01:13-10:06=From Yogi’s Jacket to a Generational Life on the CME Floor10:07–20:20 = Inside the Nasdaq Pit: Dot‑Com Vol, E‑Mini Arbs, and Human Algos20:21–31:36 = From Floor to Screens: Building Prop Firms and Hollywood Film Arbs31:37–41:42 = Hollywood Trades: Indie Film, Oscar Winners, and Risk Like a Trader41:43–58:06 = Building RCM: Clearing, Outsourced Trading, ETFs, Ag, and China58:07–01:10:47 = Chicago War Stories: Pit Fights, Steakhouse Nights, and Trader Royalty01:10:48-01:17:51 =  Life After the Pit: Chicago NightsHow Chicago Became the World’s Options, Vol, and Derivatives Capital (with Cboe’s Rob Hocking & Mandy Xu)Inside $2B of Chicago Real Estate: Tommy Choi on Housing, Migration, and Millennialsrcmalternatives.comDon't forget to subscribe to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Derivative⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, follow us on Twitter at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@rcmAlts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠sign-up for our blog digest⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.rcmalternatives.com/disclaimer⁠⁠⁠⁠

Welcome to the derivative by RCM Alternatives. Send it. Hello, that. Welcome back to the derivative, brought to you by RCM Alternatives, where we've done it. We launched the new website. Go check it out, RCMaltz.com, which works, or RCMaltteratives.com, whatever you want. Go check it out. Let us know your thoughts.

Send us an email, invest at RCMAM.com. Let us know what you like. Also, while there, tell us what kind of guests you want to hear. We want to hear from you. So shoot us a note. On to this pod, where I reached far to go across the hall from my office to Bobby Schwartz, partner, founder of RCM, got into his floor trading days, how it runs in the family, some good Chicago stories, and basically what RCM does.

We do way more than just bring you this pod. So Bobby dives into all that, gives us a little insight into what's next in the futures industry and all that. Send it. All right, we're here with Bobby Schwartz, whose office is right next to mine. I'm at home here, but it's a little weird to be looking at you in your office, and I'm not sitting there next to you. How are you? I'm doing well. I'm doing well.

So I know the story, because I've sat in there many times, but tell us the painting in your jacket there. Oh, so that is a Leonard Neiman painting of the trade. floor back in the day on the CME which shows how vibrant the trading floors were here in Chicago. And it's a very, it's unique. There's not tons of them out there. And everybody that walks in that was on the floor says, how can I get one? Exactly. And I think the pod we just did with CBO, I think he had one in his office.

I don't know if it was exact same, but it was similar. It might have been a knockoff. There's a couple versions. that this guy did. Yeah. So and yeah, it's a really popular piece. To me, it's nostalgic. Obviously being,

haven't been on the floor for many, many years. And it's great. And actually, that's my jacket over there from the floor. At least my last one where I didn't get crushed. And I didn't throw it away. But,

but yeah. So I keep it around to keep the memories and, you know, remember how great. it was and how anxious it was and how volatile and how nerve-wracking and all the above. Yeah. We'll dig into that in a sec. So the badge was what?

My badge is Yogi, which is on there somewhere. Yeah, I can see him. You can see it? It's Yogi, which was given to me because people said I was cuddly like a bear, but I had a temper like a bear. And when I was in the pits, I took no prisoners. I didn't care if we were friends or not. When I was representing customer flow or I was trading for my own account in the spools,

I was a no BS guy and would run you over if I had to. I love it. And I remember from the floor, some guys like, oh, did you know so-and-so on the floor? I'm like, no idea of that name. And then they'd say his badge. I'm like, oh, yeah, that guy. Still happened. Yeah.

It was a weird. I mean, I was in Hong Kong about six years ago, and I'm sitting at a bar at a park high. I think it was a park high. And across, I recognize this guy, but I don't know from what part of my life. And he goes, yogi. And I'm like, ah, what's going on? And next thing you know, you're drinking for four hours telling war stories. So.

And so tell us a little bit. this you didn't just start on the pit you came from the pit right like your father was on the pit your brother went into the pit so it was kind of a family affair absolutely which by the way like if you look at the chicago exchanges right board of trade c m options maybe not as much because it came later uh it's a very at least it used to be a very generational business uh my father started there he was on the floor for close to 50 years and he started went to law school and at night came from New York. We're all from the York in New Jersey and said, I'm going to be a lawyer. He got into Chicago Kent and went at night and was a pick reporter during the day. And he said I can make more

money trading than I could as a lawyer. And so that's how we all got starting the industry and sure enough when I was in high school we would go down there all the time and when my father's clerk who was in the hogs he traded and brokered hogs uh lean hogs he would pull me into the pit and this is when you were holding paper decks he taught me how to calculate spreads and I would run the order into him if it was there or about to go through the market and he would execute it hand it back to me and I'd give it to a runner who would bring it back to whatever house it was whether be Goldman or someone like that. And then I specifically remember a story where I was 16 years old, pulled me out of school

to clerk, and the spread was off, came in the pit, and he physically took me and said, get the fuck out here. And I didn't talk to him for two weeks. But you know, many, many years from then. My brother was on his honeymoon. And this was in the NASDAQ pit. And it was like the movie Top Gun. and where the scene was where all the planes were fighting each other towards the end.

It was a full contact sport. And somebody said, Yogi needs your help. Can you go up there and help him, Phil? And he had a $30,000 error in about two seconds. And I said, give me that get up. I'm happy. So it was pretty fun. When was the first time you think you learned about futures?

Were you like five or six and your dad sitting at the kitchen table, like showing you how it works? No, I don't, you know, that's a great question. I, to me, it was a stock. I didn't understand anything else about it. You know, I didn't understand the concept of futures. I thought he was just trading stocks. And I would say when I got on the floor, when I was 15, 16, he would start explaining, hey, we're trading three months out or six months out on a curve.

And I'm like, I don't get it. He goes, well, we're predicting where we think the market's going to be based on, you know, what's going, is the disease in the hog world, right? Or that could affect hogs and that's going to affect prices and supply and demand. But I really didn't get it until I started taking classes as soon as I graduated. And I said, I don't know if I want to do this. He said, just come down and try it. And then within weeks, I just was like, I'm not leaving.

So I learned it. I took every class that was offered at the CME so I could learn. because he said a couple things to me that were really relevant. First thing he said is you're a Schwartz. People are going to open the door for you and you'll probably get some good interviews. But you're a Schwartz. They hate nepotism and they're going to want to see you fall flat on your face. And he goes, I'll help you get your first job as a runner.

You're on your own after that. He goes, you'll never work for one of my companies. And that was it. So besides the high school, you were never a clerk for him. No, never worked for him. He wouldn't hire me other than, you know, in high school. that was his, that was his, he'll be supportive any way he can.

And that was his thing, but he's like, you have to, I'm going to help you do whatever you can, but you're going to have to do it on your own here because that's how you're going to earn respect. And so my brother and I were the same way. Was there an unwritten rule? You couldn't go in the hog pant?

So you're like, you can't work for him, but don't work against me either. Well, yeah, I mean, plus I just didn't understand, you know, agriculture. It just wasn't my thing, right? We traded equity indices primarily. and then some Euro dollars and whatnot, but,

and then crude and some of the energy quadrants. But through carrying brokers while we were on the floor, through Comer's Bank of Germany, who was then sending the flow to the NYMEX floor, which is a whole other story. But, yeah, no, we didn't cross paths. He was on the same floor, but about, you know, a couple hundred yards away.

And I'd see him, I'd say, hey, what's going on? You know, obviously had great responsibility. He was like the mayor of the floor. He's helped. He's just a phenomenal man. I mean, he's created thousands of jobs for people and his reputation was great. He sat on the board for, I think, 16 years. He was vice chairman of the exchange. So I, you know, for Benji and I, we are very fortunate to have such a role model and someone we respected who had a tremendous amount of integrity. And every time now I go elsewhere throughout this world, even in a China to a certain sense or Leo Malamad who's a fantastic guy you know everybody respect to my father and everybody asks how's he doing he helped me out so much here he helped me out so much there and i think one of the reasons why benjy and i've had success down there benj's your brother benj's my brother who was also a traitor and granted we were lunatics in our

own way uh but we never wanted to mess with his reputation that was the biggest thing we never got in the drugs we never did anything stupid um because his reputation was more important than ours. And something you said, he started as a pit reporter. Like people probably don't even know what that is. What was a pit reporter? Well, so nowadays, when you make a trade electronically, the market is instantly reported globally and it's happening split seconds.

Back in the day, you had people that were writing on trades that were on chalkboards. And then there'd be somebody on the phone with Japan, somebody on the phone with, you know, banks, depending on what market it was. And that's how it would get reported. And so it was happening over minutes versus now it's, it's real time, instant gratification type quotes. And were you, were you ever sitting there when you were trading and like, this needs to go electronic? This is messy. This is or you were so in the flow and you're like, it worked at the time for what it was.

At the time. You know, so when we, when we, there was only a couple markets that were still chalkboard when I started back in 97, 98. And that was the milk and dairy. pit and eggs. That was insane to me. But we had pit reporters in our in our pit and every time you'd make a trade, you would sit there and let's say you did seven on 10, you know, you'd go seven, seven trade like that. That was seven for ARB. And they would immediately click it and it would go global. And the pit was very efficient. There was a tremendous amount of integrity. But just like any publicly traded company or a company that's going to be going public,

you have to figure out how to bring in the masses and get more access and create more efficiency. And so CME was really a leader in that in creating the mini contract. But the mini contract at the time when it came, it made a lot of sense, but it had some outlying issues that they had to work through for several years. And could you have ever seen that the mini would kill the, big S&P, right? That seemed like no way that would ever have. Never. I mean, the first, the first couple years, like, it just, we were like the mini-contracts a joke. When, you know, I mean, we're talking about the NASDAQ was in the 2000 handle, right?

Yeah. 2,200, 2,500, you know, it wasn't even close to where we were today. And back then it was, you know, the, I mean, you talk about the top five, 10 stocks, kind of like now represented, you know, 90% in the index. I, and I can get in the style of trade that we did, and I know you want to talk about that, but you never, when the mini came out, it was five minnies to one. The biggest challenge was it was supposed to make it efficient for people to be able to trade it.

And because the margins got higher, because the, you know, the price of NASDAQ 100 went up, people couldn't trade it as effectively if they needed to get. get something so they created the mini contract, which was five times at brokerage for CME, FCM is the whole deal. The problem was the mini was off by the pit price. If the pit price was paying, you know, trading at 40, the mini was trading at 90. And what year are we talking here roughly? Like 98?

No, probably 2000. Mm. So still even into 2000. Yeah. And, and, you know, so you had all that inefficiency plus the contracts weren't fungible. which happened when oil e-minis came out as well. So you had the post margin for minis and the outrights in the pit.

And it became very expensive. And even though synthetically you were hedged, right, you have one NASDAQ in the pit, you have five minis. You're there. You've locked it in. But you have to unwind it. And so it was really, it wasn't effective. But because the spreads were so massive, it was worth the trade. And so we saw a lot of people that were on the floor also get on headsets and have these younger guys that were computer savvy.

When I say computer savvy, they knew how to email, right? In Project keyboard back then. And so they were trading the minis versus the pit. And that's how that big art came. And I saw guys that were smart that, you know, if trend was your friend, you made a million bucks, going to making $25 million a year. Of doing that arm. doing just that ARB. And then obviously there's larger ARBs that came in the play with some of the bigger groups,

which we did. But so you're big and. Yeah. But so you were in the NASDAQ when the bubble burst, when it all went crazy in that pit. I would. And two questions. One, they tried to launch the NASDAQ, make it a thing. In the beginning, it was very thinly traded and nobody really wanted to do it, right?

So were you alone in there? No, there was probably about 10 guys. I mean, we were in the right place at the right time, right? They were just building a bigger pit because, you know, the tech stocks were coming out. And it was becoming a little. I remember it was like up to the left there, right? It was like raised up. If you, it was right above the S&P pit.

The Niki was next to us there, which was about three people. And, uh, and so our pit wanted to be coming because of volatility became the most popular pit. People were flying in all over the world trying to become members and would wait in line to get in the pit, one in one out. But my brother and I represented 80% of all the institutional order flow. So we were talking with, I mean, the household names now as well as all the major banks and everything like that way. Retail wasn't a thing. And so that market was intense when you had errors.

They weren't $5,000 errors. You were talking about you were hung for hundreds of thousands because the market movement was so volatile. They go to up to $6,000 maybe. then down to 4,000 or something? I mean, as we grew, yeah, but, you know, if you had a 300-handle market move, yeah, that was insane. Greenspan would talk. The market would just collapse or go up, right?

And it was a vacuum, so you couldn't get out of it. So if you were trading and you were on the wrong side, you either just blew out or, you know, or have a big problem or you made money. I mean, a 10 lot on 100 contracts, you know, on 100-handle-man. move, you're losing a million bucks, right? So in the big pit. And take it through like as a local, right? So Goldman's saying, hey, we need to buy 200 NASDAQ futures. You're filling that order. That's how it used to work. The banks, all those traders would call in need to get something done. So just give people who don't know how that all worked, how that worked. Sure. So, you know,

a pit, hopefully most people understand what the pit looks like. Yeah, it's in the picture behind you. Go to YouTube and see the picture. Exactly. So on the outlining part of the pit, there would be clerks. And those are what I was in the bond pit. Yeah. Everybody in the yellow jacket on the CME floor was a clerk. Anybody in another colored jacket was a member of the exchange. And that can mean many things you're a trader, your broker, you're both. So the banks were all on the phone. And let's say Goldman or Deutsche or UBS, they would sit there and let's say they had. You know, they wanted to work an order at $70 on 20 or $20 at 70. They was flashing the order, um, to my clerk say, okay, I want to pay $70 on 20. And, uh, the clerk would come in and give me the order. And if it were on the market, I would put it out in the marketplace.

I'd go, what's here, you know, to the overall pit. And they'd be like 65, 75 and I'd go 70 bit on 20, you know, something as simple as that. But sometimes when you have orders of like 2,000 contracts, you knew you were moving billions and billions of dollars right there. And if people got in front of you and they said, buy 50, like, if you love them there, you're going to really like them down here because we're going to write you over. Yeah. So. So you were like a human algo back in the day, right? Like you were doing your own iceberg orders and whatnot. Like you couldn't show too much. Right. You had to for the customer like, hey, I'm going to work this order to get the best price for you.

Well, they either would say get it done now, right? And or like, you know, they'd say buy 50 at the market. Or they go like this, you have DRT five minutes. And I have five minutes yet to get the order, which is equivalent of, you know, some sort of, you know, VWOP, TWB, you know, iceberg, whatever it may be. And at four and a half minutes, you're freaking out because you still have 90% of it to do. Like, correct. Yeah, but I mean, as soon as you know that, you know, you're looking at synthetic cash baskets,

you're looking at certain stocks, you're looking at news based on what time of the day is. You're seeing what the S&P market's doing. You know, usually we were an indicator for them, but we would see them moving. And you have these cash rubber bands models that you would look at. And if you saw it kind of getting away from you, you know, and it was 70 bit at, you know, 80, I would immediately go to Susquebana or Timber Hill, which was Petterfries Company. And I'd go make a market size up. And they'd be like 60 bit on 500.

and I just go whack and I just start whacking, you know, getting this, getting the orders done. And then the market would fall apart because they would be hedging against options and the out of cash baskets and whatnot. I'll reiterate. For those of you listening, go over to YouTube because we're seeing all the good hand signals. Touching the ear, DRT, some wiggly fingers is what's there. You always knew like what banks were doing what? Because everybody like Prubesh, face, face, you know, Goldman Sachs, you know.

What was Goldman, like a ring? Goldman was touching the ring. And Deutsche, should we say that? No, Deutsche wasn't that. Deutsche was this. Because they were lunatics. Real quick, you mentioned the guys in other colors are members. Yeah.

I don't think most people know. Talk about you actually trade the membership like any other market, right? You buy a membership, there's a bid, there's an offer. Still, as of today, I think it trades. As of today, yeah, it was a commodity. I mean, you know, you, there's different, levels of membership that allowed you to trade different types of products. There was one membership called CMEE that gave you global access. And this is before a CME group bought NYMEX and so on

boards rate. But just for simplicity purposes, and then there was IOMs that allowed you to trade equity indices and then options across the floor and then IMM that international markets, currencies and whatnot. So yeah, I mean, there are a commodity based on what was happening. And as more prop firms came into play that were becoming. members that wanted to get smaller fees for, you know, clearing fees or exchange fees, they would start bidding up the seats. And that's how seats kind of went super bid. And then obviously we went public and they did A shares, B shares.

But, but yeah. So I was in the NASDAQ, brokered NASDAQ, traded Spooze. And I would flash in my orders to a broker, just like how I. I was in the NASDAQ into the S&P bit. So you were trading S&P for your own account and filling orders in NASDAQ? But that's weird. So you were trading S&P from outside the S&P bit. Right.

But that's no different how the banks were calling it in and everything like that, right? So I was flashing into a clerk who was giving it to a broker. So you were more taking positions. You weren't necessarily scalping in the S&P? No, we were, we would scalp. I mean, I was probably trading anywhere from 50 to 250 contracts at a pop. And this is when it was one. worth, you know, a 10 lot was 25 grand. So if we were able to get five, six handles out of it,

and then, you know, you'd lighten up and try to take any, and, you know, more, but we also would then be able to mitigate some of the exposure. But yeah, we would trade spous. My brother and I were a deep. My brother was a bigger trader than I was for sure. But yeah, we traded spous. We traded energies. So crack pipes, red, stuff like that. And then it all, you said, I've had enough. Why and how'd you leave? So simultaneously, Benji and I, my brother started a prop firm trading the minis when the minis really started coming out. We had no one on the floor.

We're like, we're going to go build an electronic business and we built it up to about 40 guys trading all futures products and then we sold part of it. And I think Benji and I were just like great. You know, we've had our heyday. I was 20-something years old and thought this was, you know, know, this change. It wasn't starting to look like it's all going electronic? Everything started looking, was going electronic.

I left the floor in really 05, but was there until 08, and was really focused on the electronic trading part of things. And then I wanted to get other markets that I thought weren't efficient, which were equity option markets. And back then, the equity option markets were wide. So you could sit there and buy an option on, you know, current day in the video, right? And it was a dime wide.

And we had built gray box type technology. Think about black box, but allows human interaction to get in the orders. And then the trader would get out of the orders. And so that was me, and I brought Ed into a couple of years later. But we wound up backing close to 120 guys to trade for us between Chicago, New York, and Philly. And we called it edge and head. and built a pretty good business out of it for about seven years. And then we were regulated out of that.

And that's kind of when I started RCM. I had a little diversion after one of the businesses where I left, didn't leave the industry, but I left Chicago. And go back to the prop firm days. So these guys were just salary. Are they putting up their own capital and getting a share of their profits? Nobody put up their own capital. They would get a share of the profits.

And usually they'd get 40% and it level up to maybe 60% at the highest. But usually we never went above 50. But we had different types of traders treating different products, right? We had guys trading energies, primarily, you know, equities, but some doing it more high frequency, capitalizing on fundamental news. And our trade would be intraday or before the open when certain Bloomberg consumer sentiment numbers came out, which was a really relevant number back then. And we would just be trading those.

And the spreads and the way we were doing it, we were getting back then, you could pay Bloomberg, I don't know, it was like 15,000 a month to get the news five seconds before or three seconds before. And it was us. It was Citadel. It was Peak Six, Cessalon, that were all doing it. And so we did well.

We were very fortunate. So we had different people training options across, you know, certain verticals and time horizon. So we had about, you know, what you'd see is a modern day pod shop, let's say a millennium, but public facing. We had different pods on the trading the futures. And then ultimately, we traded synthetic cash baskets against it at the MX, the CBO, and then the NASDAQ futures.

And what I mean by that, it was Sesquihana and Timber Hill, and then we were the other big player in it. you would trade the futures markets just like I'm saying, but we knew that that top 10% of those stocks were really about 80 plus percent of the overall index. And so we would trade the futures and see where the options price were or the Amex price on the Q's. And if we would immediately hedge out there and we knew we were making a spread, one way or the other, or we had a synthetic cash basket where we'd buy and sell these top stocks. to lock in our profit.

Like a dirty dispersion trade, they call it these days. What are your thoughts? Did you see back in the day there were a bunch of prop firms all over the country or were they mainly in Chicago? Chicago. Prop has always been Chicago. Which is why? Do you think that is? I think because a lot of these groups came off the floor.

You know, I mean. But you could have had like come off the New York Stock Exchange. And it's just weird that it became a Chicago thing. The New York Stock Exchange, that mentality of New York was completely different than the mentality of Chicago. Chicago were much bigger risk takers. Do tell, yeah. You know, and I was in New York for a while and back and forth from New York and Chicago. Chicago prop, everybody came out of programs, right?

I'm not talking about the bank programs. You came out of O'Connor, which was where our other partner, Ed Sweeney came out of. We're talking about the most elite traders out there. They're like the Navy SEALs of trading. People think turtles are, yeah, they're great for hedge funds and whatnot. But the real traders from O'Connor have gone on to build the biggest prompt firms in the world. Yeah, I want to write a book someday about that before all those people die, right? There's tens of billions, if not hundreds of billions, being traded by alums of O'Connor.

Oh, absolutely. I mean, some have gone on to run massive global banks. Yeah. I, you know, massive private equity. They've, you know, I mean, if you talk about the biggest prop firms that you know about, they're all former O'Connor guys. It's just the reality of it. And it's the brilliant ones.

Do you think the New York for Chicago was New York, they had IV education and whatever happens, they can fall back and they'll get a good job? And the Chicago guys were more like, I got no education. I got to make this work or else, right? Or else. I think we run a pretty sophisticated company at this point. When I was on the floor, there were people that could barely tie their shoes making millions of dollars. I mean, if you were on the street, you'd think they were homeless.

And you would think they're one of the biggest bumbling morons you've ever come across. But they were great traders. And they saw office clerks and runners and somebody wound up badging them up. And they've gone on to make a lot of money. And most people, when the floor is closed, were not able to do that. and convert. So now they're all working union gigs for the city. So, but yeah, I would say the big difference with Chicago is that the education was a big thing, but also, we were bigger risk takers, right? In New York, you're working for really institutions and you were trading stocks. They didn't know

futures. Nimex was kind of, you know, a rare thing out there, even though it was growing. It just wasn't the same thing as really Chicago because Chicago was home to anything and everything futures. All the FCMs were based out of Chicago, you know, you name it. It was here. Investment banking was New York, trading was Chicago. And then we can get to that later, but I've always argued, I feel like with a lot of the products that New York's coming out, they're kind of like taking that from Chicago, right? Like, we're going to wrap this future trading inside an ETF and now you don't have to go to Chicago to get your futures exposure. You can just do it through this ETA.

You can do it through a spot. I mean, hopefully the underlying still trading the futures, right? And central and career and whatnot. But yeah, I mean, there's a lot of different ways to get exposure. You know, back in the day, if you wanted to trade S&P, you were trading it on the CME, right? You wanted to trade off. There was no other routes to trade this. even the indicators were very different when I was on the floor as to what they're now.

There's a thousand indicators first back then. There were like three or four that you really focused on because you didn't have global markets back then. It wasn't really part of the thing. You might have had fundamental news that was global, but everything else was really a couple different indicators. But, you know, I would, when I was in New York, you know, as a young guy doing okay, you always knew the New York trader that worked at a bank versus a Chicago guy because or when we'd be out in Vegas or Atlantic City, we would be playing X amount of money at the tables. They'd be playing a little bit less. We're talking ticks.

We're like, ah, that's a, that's a tick. You know, you lose 10 grand. That's a tick. You know, and they're kind of like they got the penny loafers on, you know, just a different type of group, right? I mean, they were all Ivy League and working for the banks and they've gone through programs and that was their destiny. So you left the floor, you're doing the prop firm somewhere between there and RCM. You were in LA for a bit. Give us the quick.

We had a bit of an exit on some of the stuff and then we let the prop room kind of run itself. And some of the guys from Ninja were working there and, you know, ultimately went on to Ninja and creating their own IV. but yeah so Goldman's special situation group I wound up going out there always wanted to get in Hollywood when I used to get smoked trading in a day I'd go to a movie by myself for two hours and that was my escape so I always wanted to do this and I always was going to live regret and then if I hadn't done it and then some guy came out to me who used to be a bond dream but you thought you wanted to be an actor no no no I didn't know what I wanted to do but I wanted to be in the business and so some guy came out to me he knew Jamie Lynn Sigler he

He was managing her from the Sopranos at the time. Supranos were the biggest thing in the world. So I backed him on his management company. And then it kind of spiraled from there. I got to meet more people. And then somebody said, some young guys from USC, like, we want to go to this. And there was like 10 of them trying to do a production company. And I said, I'll finance it.

But I want him, everybody else aspired. And I want nothing to do with these other people. don't bring on any value. And I came at it with a trading mentality, like a zero-sum game and put a factor model together. And then ultimately did some consulting for Goldman Sachs on their special situation group, which was a multi- Which they were essentially funding movies? They were looking to fund and put a billion-dollar co-financing slate together. And then also looking at independent film and seeing where the edge was. And there was edge back then.

And that was kind of like the roaring 20s and the golden age of Hollywood. It was back. with independent film. And to me, it was a trade. That's all it was. It was an arm. Like Blair Witch Project we're talking? Like that was an anomaly, right? And that was, by the way, produced in finance by Chicago Floor Trader.

Oh, right. But it was more so, let's say you did a movie, like my thing was taking a movie like a movie called Unknown that I did. It was a contained thriller. You know, you're not moving around. teamsters and stuff like that. Everything is kind of within the warehouse. There's some outdoor seas.

And we could, based on the names that were in the movie, I was using a foreign sales agent to sell different territories inside of all of Europe and Latt I am and Asia. And if I knew the movie was costing me $10 million, for example, I could pretty much mitigate 85% of my exposure in Europe and Asia. and leave 25% of the market still open for my upside. And then I would have my domestic sale as well. So, and then I would usually do it in a state, make the movie in a state where I'd get subsidies.

So where if I spent $10 million in that state, they'd give us $2.5 million back. So already I'm net net positive on the movie. It's just a matter of how much, you know, we're going to wind up making. And where the studios were just like, we're going with this vision and they can spend up to whatever. Yeah, they would have a tent pole type movie or they were doing 50, 60 million dollars movies. They weren't interested in the small movies, although they would buy our movies, right, because they wanted the content and if they thought it was a breakout movie.

Sadly, I did a bunch with a person who was very bad who's now in prison. and but you know we were we knew that in foreign sales everybody understood bang bang shoot them up type mentality thrillers if you came with a comedy which I did a couple it's you can even big names they don't understand the American sense of humor so we created a factor model it worked but during that time I started my equity option firm put up money and And next see, you know, I'm putting up more money, more money. It meant a lot of money. And we have 60 guys.

And I couldn't manage risk from Beverly Hills. So you were going back and forth for a bit? I was going back and forth. It got to the point where I was going to New York on a Sunday landing, landing on a Monday morning. Red Eye. Spending four hours in New York. Our office was at 2 Rector, taking the bullet to Philly.

spending the clothes there, going to Chicago for a day, and then flying back. So, and I did that every week for probably about a year. And then it just, I'm like, I've got a bigger chance of trying to build a citadel and convincing myself I can make a billion dollars with my equity option firm and always get back in the movie business. But I did a bunch of stuff in Hollywood. I'm very kind of proud as to what I did there. I worked with every major actor, writer, director in town.

Yeah, right. Right to your left off cameras, your whole reel of the big, what are those called? The 35 millimeter prints. Yeah, the 35 millimeter reels. Yeah, yeah. What was, were they like, who is this crazy Chicago guy? Like, were they hadn't seen a traitor personality like yours? I definitely not.

I mean, but I also knew my edge wasn't coming in there as a creative person, right? If I said, I've got this vision for a movie, they would say, get the hell out of here, who the hell are you? I came in and said, hey, I've got a big wallet behind me, which I didn't necessarily have back then. And I said, I'm going to be making movies and I have a model and I'm going to fit in that model. And I had a very, very famous family out in New York who everybody would know their name, who I knew very well. And this person had said, hey, I'll introduce this guy named Ari Emanuel at WME. at that time his endeavor and came in and you know got into it with him straight away because he's a lunatic and he's like I like this guy let's sign him and I said essentially listen if you don't want to work with me that's fine I'm going to rate to CIA and I'm going to spend my money there

so let's figure this out or not and that's when he said I like this guy but I worked with every major agency anyways you had to But my edge was I hired the right attorney straight away that could get me in the door and help me find scripts that represented writers and actors. You were almost doing a little Netflix-y model before Netflix, right? Like, hey, we're just trying to get content and make money versus

artistic vision or whatnot. Yeah, I mean, you know, what blew my mind out there was that everybody was creative. And when you'd walk in a room with a guy like David Ward who'd done the sting and, you know, I mean, just massive movies, French connection, won an Oscar.

It was probably 60 years old. He had written a script called The Boys of Summer. And it was a phenomenal movie. Essentially, you ever seen the movie The Replacements with Keanu Reeves? It was conceptually that was about the Chicago Cup, so I was interested. Where the farm team had to come up and play the World Series

and they wound up coming in and winning. And I was all about the money and he was like well we can creatively do this when i go no we're not doing that like we're not filling wrigley field with you know 25 000 people because i knew the cost of extras whatever else and uh you just had creative differences but you get these younger people that were so you know writer you know directors that just you knew not take advantage of but you can control your own destiny with them uh and and figure out a better way to deal with it and same thing with actors You know, you'd get big actors that would try to get something made like Forrest Whitaker,

who had just won the Oscar for Idi Amin and his agent put him in touch with me. And I was at Warner Brothers at the time and drove on the lot. People were star-shruck because he just won the Oscar. And I decided to do a script just because it was Forrest Whitaker and he just won the Oscar. And I thought it was pretty cool, even though it was probably one of the worst movies I had made. but and I made a lot of bad movies so that's saying something but it's uh he was in it what's that he was in it yeah he was the star it was my producing partner you know i jessica beel raleigh leota Patrick suazy's last movie Lisa kudrow Chris Christopperson Eddie redmayne who's got

on the win multiple Oscars yeah it was a great cast uh just our director turns out was doing heroin and you know but we we wound up doing okay on it and uh you know jesscobiles a big actress then obviously ray leota would call me an asshole every day and i gave up you know the departed for this and i said ray if you gave up the departed you're an idiot i don't know we're we're uh you know a 12 million dollar little independent movie and you know but he was a lunatic like you got to know all these personalities right you know hanging out with patrick suzweasy for eight months was just one of the cool things in the world, you know, going over to Prince's house and you'd be like, this is insane.

But it kind of became the norm. But, you know, listen, I got to know Cluny very well, went to his house in Como many times. I'm going to be out there in a bit. I'll give him a call. You got to travel around with these people. And, you know, when you're on locations somewhere, it was just the greatest because they were normal people, you know. Yeah, that's the takeaway, right? They're just normal people doing a job. So somewhere in there you said, hey, I need to get into the managed futures business. No.

I didn't understand what the managed futures business was. I said let's create an IB. And because I was part of the prop firm. Yeah, it's kind of like a broker dealer, which we had had. And so we're like, let's see what it happens here. It was 08. There was a lot of problems with. people getting clearing and access and, you know, the services that the banks would provide now

were totally gone as far as because of compliance and costs and whatnot. We said, okay, maybe we can step in and try to do this. So we got the license and all of a sudden, you know, MF Global blows up. And it was like right out of the movie. And I'd met a couple of the people here like Paul Rieger, who was a partner now. And they were lost. They didn't want to go another FCN. They took a stab on me, and I took a stab on them, and we've successfully built a pretty good business over the years.

But I would have to go to your website at Attain, and that's how I educated myself on managed futures. And I would sit there, and to me, they were hedge funds. Soros was a hedge fund. You know, I used to talk to them on the floor. And really, there's CTAs. They're registered across the board, but I didn't know what a CTA was. That was foreign to me. I was a trader and ran a prop desk.

And so I had to learn the industry. And luckily the people that came over to RCM really gave me a good education. And that was 2010. 2010. 2010. And we've been consistently building since. And, you know, I understood. I'm a strategic thinker of figuring out how to build and where I think there's

edge and looking at competition and doing SWAT analysis. What are the banks, non-banks doing? What are other groups doing? What is it a need in the industry? And surrounding myself with everybody at this company allows us to be entrepreneurial with calculated risk. And that's how collectively we've built the firm. So we don't, a lot of guests, we'll talk about it in passing, but we never really get to hear what RCM does, which is more my job to tell people what it does. You're on the hot seat today. So give what does RCM do? Why is it important?

And how is, you talked a little bit how it's grown into that. But as of today, maybe contrast that. Like in 2010, what was it doing? As of today, what is it doing? 2010, we are simply a broker, right? We are trying to get CTAs to clear us or via one of our FCM partners or execute. It was very simple. That was it.

It was a relationship-based game. as we've grown and acquired a couple companies selling one of them, we realized our niche was serving two different clients. And it took us a long time to figure out how to navigate this. One being all things traders, which is what we are now. Because we have multiple clearing solutions across 10 plus FCMs, we're able to facilitate whether it be proprietary trading groups, high-frequency PTG groups, CTAs, hedge funds, commercial hedgers, ETFs, mutual funds,

USITs on all their clearing needs and making sure they have the right clearing firm based on what their style of trade is, whether that be just general risk, margin, technology, it could mean many, many things. And we've done a big topic. Asset managers mostly, but then also some prop firm traders. Correct. Which is what I used to do back in the day. Yeah.

So, yeah, so figure asset managers, let's just, we can stick to that, like CTAs, CPO's, hedge funds, mutual funds, ETFs. And so they're utilizing us for their clearing needs across redundant FCMs. But they also, many of them use our 24-hour desk, six days a week, which is very unique and very rare and provides a tremendous amount of value. The banks and non-clearing FCMs, or non-bank FCMs, I should say, don't really provide this service anymore. And so when we started this, it was a loss leader. And it was something I wanted to get rid of so much. And I've based a few meetings saying, hey, if they're all trying to get out of it, why are we leaning into it? Right. And it turned

out to be a really good thing for us. Financially, yes, it worked out, but also we provided a service and an expertise and built our own order management system and execution system into all the exchanges, including China, which we can get into. And the street term for that now is outsource trading. Like we never really caught it that. We said we have a desk, but really it's outsource trading. Correct. So now we, so we run this 24-6 outsource trading. which allows ETFs, hedge funds, mutual funds, whatever else, to reduce their headcount and offset that risk by passing it onto us to manage and execute their flow

based on what the criteria that they gave us is. And we can do that in many ways, whether it be voice or files that they send us. It's a pretty great system. And so therefore, that helped us keep and retain clients. And I think that's that's a very great system. And I think that's kind of the story of RCM is as we've grown, we try to figure out how to add more services to help facilitate clients' needs.

And as different clients and segments of clients such as ETS or mutual funds have come into play, their needs are different than, let's say, CTAs or hedge funds. And so we've had to adapt. And that's one thing we've done that no one else has been able to do, is that we adapt very well to provide that value to our different clients. And that could include like clearing, execution, back and middle office support, marketing help, helping define what they want to do when they launch an ETF, working with the entire ecosystem of an ETF mutual fund, auditors, you know, legal,

whatever it is, to help them come together and create a successful vehicle for the trade and ultimately make money, which allows us to make money as well. The other side of the equation is that... Real quick, before you go on the other side, talk a minute on the, right? People think a clearing's just whatever, that's easy. These groups do it. But as clients get bigger, the needs change, right? So talk for a minute about capacity and risk and, like, you can't just go on to

interact with brokers and buy 100,000 VIX futures. Right. That's a big misnomer, right? So as you become larger, let's say you go from a million bucks to $100 million, the clearing firms only have a certain amount of money to offer out to all their clients. And so there's capacity issues. And it's all going to come down to how much are they going to make off any individual client and what is the risk associated with that client.

And that's going to determine how much capacity of their money they're going to give you. And that's all part of the how the system works. The clearing rooms have to post capital the exchange as a backstop in case someone blows out. Right. So that every trade is guaranteed for like every trade is guaranteed. And it actually starts with us because we guarantee the trades and the FCMs lean on us. And then the FCMs then guarantee the trades. And then the exchanges and default funds guarantee those trades. So it's worked for north of 100 years. It's a great system. And fortunately, we've never had any. major, major issues with that. Now, when there's capacity issues, now you're getting into billions

of dollars potentially. They need access to margin or potentially different product suites at different FCMs. The benefit of RCM is that we will manage that entire process for you. We will set up the paperwork. We have all the information. And because we have the relationships with the different FCMs and the amount of business we do at these FCMs, we have the ability to get stuff done fast, effective, and very efficient to make sure that there's no downtime. We have the proper redundancy. And the FCMs know that because of our size of our FCM,

our risk group internally at RCM, we're a pretty well-oiled machine. So they really rely on us to do 95% of that. heavy lifting and they just then get it done based on what we're looking to do. So, and that's a big benefit for these clients. And it's a real problem in the industry right now is that capital is scarce. The banks are either wanting to be in the FCM in the futures business or not. They'll facilitate it with their huge clients that are, you know, 25, you know, like a

citadel. They'll facilitate that you decide or a big pension or a big pension because they're making money across four other areas at the bank versus a lot of these middle market groups where I think we try to focus on, although we've had clients start with 10 million that have now gone up to 60 billion, having multiple ETFs and whatnot, they need guidance, they need expertise and futures and in derives like what we do is very niche and a very specialized expertise and that's what we focus on. And so we're able to really help out in every aspect of it. Certainly on the ETF mutual fund side where there's such a massive ecosystem that we help navigate and drive

that on behalf of our clients. Right. It's almost that the ETF space is bigger than the future space, but they need the future. So how do you navigate that? How do you get that big square peg into that small futures round hole is what we're solving for? Exactly. And you obviously, there's more ETFs. I don't know how many there are. I think there's 12,000 or something now. I think there's more than securities, right? Yeah, more than securities, more than words that you can put together with the output. It's a lot of people are coming out and launching ETFs. They don't understand necessarily how much it's going to cost, how to do it and whatnot.

And they really do rely on us to help them navigate that in some cases, or I would say in most. We're telling them you don't stay in a chance because of X, Y, and Z don't waste your time and money, which is equally important. And then if we think they have a fighting chance, then we'll help navigate the best way for them to do it. And once again, that's one of the value as. I mean, we look at a couple of the strategies that we have now that we've converted that we're trading long-only equities, but traded the futures because of certain efficiencies. And we help them create the strategies and figure out the position limits and how to do it, set up the multi-redunda-Ridoneptia. Work with all the different fund administrators and so on and really are the connective. tissue, making sure that all the connective tissue works together.

So that's side one, asset managers, everything you do. And then I cut you out side two. Side two is really working with investors. And investors could be ultra high net worth, looking to invest part of their portfolio into futures because they like leverage, they like SMA, separately managed accounts. And we help put their portfolio together. And once again, set up the clearing and the POA accounts with the different CTAs and do all the due diligence for them based on what the risk tolerance is.

And then we deal with family offices, some pensions, endowments, some sovereign funds, all looking to us to help create that due diligence process because of we manage all these. We're always constantly doing due diligence on all the major CTAs, hedge funds and whatnot that are out there. And so when you're a family office and you have $5 billion or your, you know, a pension endowment insurance or whatever may be, you're not going to invest more than 5% of your allocation in the futures. Even though if you're putting $25 million in it, it's probably going to be trading like 50, which is a big benefit of futures,

assuming that you're comfortable with the risk, sometimes even more. But you're going to depend on us to do that research. You're not going to spend 50% of your time doing due diligence and research on what ultimately is going to be your 5% allocation. And we have a phenomenal team that does it. Also, one of the things which obviously you run, you know better than me, is that we have APA funds, which when Attaining came over to us at RCM, they had a fun platform.

And that allows us to create fun-to-fund models for different investors that just want to sit there and plug and play and get access to certain exposure, whether it be on the offensive side, the defensive side, and then different types of products, and it will fit into, once again, their portfolio based on what they're trying to accomplish. I want to ask you, which side do you like better?

You like the managers or the investors better? You know, I'm not good at dealing with investors. So I can't ask anyone for money unless I'm putting money in myself. So I like dealing with more the strategy, dealing with managers, helping them understand the nuances, dealing with the FCMs, the banks.

I'm not good with sales. It's never been my role. My role is to help salespeople make sure they get what they need done operationally, same thing, and then really negotiate out the deals for any type of M&A business that we're doing or creating strategy and then working with our highest-level clients. Which is weird. You'd think he'd be great at sales.

You'd like to talk. You've got stories. I've got great stories. I mean, listen, there's a reason why, you know, Paul and some of these other guys pull me into dinners with some of our large, because they love the stories. And also, you know, they also know I can be very serious and get the stuff done as well. But yeah, I can't get money. And then who's your favorite partner? At RCN?

Yeah. You, obviously, yeah. You know, the one thing I would say about RCN, you. which is really rare is that our retention rate at the firm is unparalleled to anybody else on the street, right? Well, I mean, what are we? 90 plus percent retention since we started a firm. So that could swing both ways. One, to me, it's like it's a testament to our culture, which sometimes works, sometimes doesn't, doesn't always gel. But we have a phenomenal group of people here. I don't have to look over my shoulder, which is great, which obviously,

As a trader, you always have to do that. We built a really good team. And once again, entrepreneurial, we support our people and we can get into China, ag, whatever it is, to go off and build different business units based on, you know, coming up with a case study in a thesis. And then we back into a compliance, legal risk, money, you know, women. And then we back these guys. And we back everybody to try to go off and let them make more money as well as us make more money.

So we have a really great team that's been here. But, you know, I tell people we have a 90 plus percent retention rate. And they're like, well, you're not managing these people. You should be firing X amount of people every year. And so on. So it kind of swings both way. So talk quickly. So outside those two main pieces of the business, managers, investors,

dealing with futures, we have two kind of side types of the business, ag and China. So talk about those two quickly. Sure. Once again, ag run by Jeff Eisenberg inside the firm, was a managed futures broker essentially and came up with this idea that, hey, we want to get in this part of the business. We have some people that are ag brokers. And so we said, okay, how much is going to cost? And we just got behind it. And we said, great, let's go build it. And ultimately now, what do we have 40 people on that? Roughly, yeah. Roughly 40 people in several different states.

And we've been able to build a good business, not just on brokerage or crop marketing, but now trading the different verticals and working with massive financing companies, some of the largest in the world that are taking clients that we have, whether be producers or buyers, whatever, you know, in last. Adam, Indonesia, whatever it is. And we help the entire process of the value chain from, you know, the crop, figuring out the financing to logistics all the way across as well as traditional hedging and whatnot. So I think it's a good example of the ethos of the whole business, right? Of like, hey, what do you need?

And someone's like, I need financing because I have this, I need to buy this grain at a Suriname or something. And I need the financing to get it on a boat. and we're like, well, that's not really what we do, but let's figure it out. Yeah. So I think that permeates through the whole company. Yeah, it's allowed us to grow. I mean, you know, you throw a little bit of shit against the wall and you see what sticks, right? I think we've been good at saying, great, let's go and then realizing this is not going to work pretty quick and just cutting it off, which is equally as important.

You know, but we do take stabs and we've built the 24-hour desk, right? We bought out attain. We bought out the Algo group, which was called RCMX, where we saw that there was a need for Algo execution in the business. And there was one player. Everybody was paying through the nose. And we're like, great. Ed and I knew the technology. We knew the people that were running it because we all traded the other back in the day.

We bought it out from Webbush. And ultimately, we built this Algo company. And we sold it to private equity three years ago and still own a piece of it. and, you know, get a exclusive license and whatnot. So we've done some really interesting things, but it all comes back to, like you're saying, how do you service the clients? Like, what are their needs?

What are the biggest pain points? And how do we solve for it? And fortunately, we're well financed, right? We've never taken out outside dinner or anything like that. And we're able to take some risk that no one else has. I mean, you look at different IBs. They're kind of mom and pop shops versus us where really the size of, FCMs and we provide almost more services than FCMs, certainly as it pertains to marketing and

cap intro and the 3.4R desk. Yeah, remember, we have four FCMs that utilize our 24 hour execution desk for their clients. So. And you've thrown around before like a mini prime we kind of act as, right? It's like we need a new category basically. Like we're not really an introducing broker. Right. I mean, we also still have, we have a broker dealer, we have an RIA. There's a lot of different components of RCM that a lot of people don't realize. But yes, when I go out there and I'm at an ETF event in Omaha, Nebraska last week with a bunch of different issuers and RIAs, I say we're a mini prime on the future side, because that's really what we do.

So what's next? What's on the future board? Where do you see the industry going? What's RCM going to do about it? That's a good question. It's moving fast, right? You know, we've seen that obviously more and more products are coming out, more and more exchanges are what we call DCMs, have been approved by the CFTC. There's 27 more on the hopper to get approved.

And essentially what these exchanges are, you think a CME group, you think of ICE, you think of UREX, they offer their products. But we're getting into prediction markets, right? Sports betting, you know, betting on different events, whether we're going to go hit Venezuela where there's been a lot of controversy around. And there's Cal She that's done a great job on that, that's now become a regulated unit. You have polymarketers become regulated. Well, those are the two most well-known. But you have some of these, you have, you know, 30-plus entrants that are coming into the space that are trying to do something like that or a derivative of it, as well as different clearing

organizations. But putting those pieces together and then taking in perpetual contracts, which CME is now suing the CFTC for approving it. the game is changing very fast. As soon as crypto came out over a couple years ago, next CNO, we're talking about stable coins. We're talking about, you know, all these different products, which enabled the universe of what we do to become more globalized

and also move in different directions and more creative directions than the way we've always done things. it's good for the industry, but I also think there's challenges, right? Because everybody's talking about 24-7 trading and some of the things that are going on in perps and perpetuals and what are the benefits of those? Are there going to be institutional flair for it? Cal She is in Polly Market are just kind of crazy, no-brainers. You know, I was betting on the Super Bowl. That took five minutes and I had 30 bets. My wife, who is English, who could care less about the Super Bowl, put in all the bets into chatGBT, and she crushed it, and I got crushed.

So, you know, it's pretty interesting where it's going. It just came out. Polymarket was paying content people to, like, put fake trades on their screens that I made all this money on PolyMont. So there's a little dark underbelly to some of it, too, but. But, you know, the thing is, like, that all came out of Chicago, right? Polymarket, the guy who owns it is the nephew of one of the biggest prop groups out in Chicago, which here we all know the name.

And Kalshi came out of, you know, they were a DCM at Ledger X, which was owned by FTX, which was out of Chicago. So there's a lot of things here that we're well aware of, or at least I was aware of what was going on, didn't understand it and didn't think it was going anywhere. I thought it was ludicrous. Like when I met with the Calci guys where we looked to buy Ledger X, uh, now it's just become insane, right?

You know, people are building these different exchanges and they think, okay, I'm going to be able to go off and now put a S&P lookalike product on there or something like that or create betting. And because Bitcoin or Coinbase bought a new exchange called Fairex, probably five years ago or so for $300 million, it was doing no volume but had the license. Now it's created this craziness where if you are able to get the license,

you have massive firms like Crackin and, you know, Ripple and who are else buying all these different companies, which has now made prices go up. And they have to justify that. And if they have all those retail client bases, they're going to create these products. sell them internally at their clients. And there's a, there's a demand for it.

And a DCM is essentially a derivatives exchange, right? Correct. So, you know, in layman's terms, it's Chicago market in the CME group. It's right. It's your ex, right? They have the same concepts. But I would sit there and go, who in the world can compete with CME? But polymarket, Cal Sheade proved like there, you can.

If you build a platform and get enough retail probably in there. I mean, you know, you look at, uh, a couple of these look at ninja right ninja trader which got bought by cracking and they also crackin also bought bitnomial which is another DCM and DCO so clearing and and exchange exchange essentially is where you offer products clearing is who clears those products for traders it's similar but different and so CME has a Exchange, they also have a clearing outfit. But Ninja was an FCM.

They sold for $1 billion. Now, the guys that ran that, one of them was my assistant at the pro firm. The other one was my CTO that came out of Petterfries Company, Timber Hill. And now they're looking to me like, hey, son, where's my coffee? You know? No, but they're great guys. I'm happy for them. But that just goes to show you that if you have a retail client base,

that's worth a certain amount of money because, you know, look at Robin. All of a sudden now you can start offering wealth management. You could offer all, you know, Coinbase is 60 million or maybe a six billion users or some crazy number. It's just some bizarre number. And they're trading just their, if they were all of a sudden saying, okay, we're going to have CME products. We're going to offer stocks or equities.

Think how much wallet share they can get. Yeah. You know, and that's kind of the way these other groups are looking at it. So the main thing to me is like the lines are blurring, right? Like we were talking the other day. I was just thought like Kansas City Board of Trade, Minneapolis wheat exchange. Like those just were came with the earth. Like they just existed for all time.

But like no, someone back then said like I'm going to go compete with the board trade and started up some upstart exchange. Yeah. And it makes sense. It makes sense. But I can tell you sitting here as we speak. 98% of the people that are on CaliShee or Polymarket don't understand it's a regulated entity

as a DCM or a DCO or an FCM. That is foreign to them. It's absolutely foreign because they can open it up with their credit card in five minutes or an ACH. Versus like institutionally you want to trade spools or, you know, your X, you know, or any of these other products. I mean, we trade 300 markets globally. And that's without all these prediction markets.

Right. You got to, it's a process. Any thoughts? Does you think anyone will like lose sight of, like, lose track of the ball? Like they're so focused on getting a new DCM and all this retail that they kind of ignore what's happening in the core institutional services, right? We can, RCM can kind of fit right in there like, hey, you go ahead and do all this retail stuff. Yeah, we love it, right?

I mean, they, we know different FCMs that they're saying, okay, we're focusing. on that, we're cutting back risk on clients because we're going to put money and capital towards this. They don't really have any edge. They don't have their own DCM. They don't have their own DCO, right? So what happens to them? I think we're in a great position at RCM, knowing that we have the multi-clearing relationships and the execution and everything else that we do to really focus on that middle market business. And that's what we do well. That's what we do well, because all these other groups, there's so much noise. I'm not saying that noise is irrelevant. It's very relevant, but it's not what really the institutional world really does. And so, yeah, I think people are

overlooking that, and that's where, you know, we've seen it. We step in and we're able to solve for those problems and utilize our services to get them to where they need to be. Those FCMs and some these other groups, they don't even, they're not involved in anymore. They don't have the capital to deal with AMA. So. And maybe they become the winners in their eyes, but like not for those types of clients. Like, hey. Listen, we can't, you know, we can't be everything to everybody, but what we do well, we do, you know, what we do, we do it well.

And we're able really service our clients. And that's not going to change. All right. We'll finish up. Give me four, this is Chicago Month. So four Chicago-themed trader stories. Gibson's-ish type stuff, whatever you got. So I'll tell you a couple floor stories first.

So I was clerking on the floor my second week and I was doing the ARB. And my broker was again. Second week. What's that? Second week. Your second week. So you're 20-some. Yeah.

But I would go on my elevator every day. I lived on 36th floor. I'd go one, two, three, four, five, six. And that's how I was able to quickly do the ARB signals. But I remember turning around to my broker, Joe Santoro, two and a half, three minutes left in the day. And this guy from Deutsche Bank, this Danny, who's a complete, utter scary lunatic gives me,

flashes being in order. I give it to Joe. He's on the floor having a grip or a heart attack. And I'm going, help me. Oh my God. Holy shit, help me. And the guy from Deutsche Bank goes, fuck you, you're out.

And he gives it to the floor. And then it wasn't until the bell. And everybody was really close that somebody came. and started working on them. Oh, my God. Yeah. That was my first thing. And then I remember seeing somebody OD and I'm like, holy shit.

You know, another guy went crazy, took his pants off and started running around. And that were often fist fights, all that stuff. I mean, I was one of the best cases when I was getting doing, you know, Goldman was doing due diligence on me for the entertainment business. they said, what is this infraction that you had where you had to go in front of the board of directors for this fight? And I said, well, I was a top step trader. There was a local in front. And we were playing for a lot of money. And he tried to get in front of my way.

And I grabbed them. He called me a dirty Jew or a couple other words. And I grabbed them. And the pit reporter said, Yogi, don't do it. It's a $10,000 fine. And I go, boom, boom. I said, bill me. And then, you know, two days later, we're in front of a board.

They've got seats out both directions. So we're not sitting there. We move the seats together and be like, this is common day practice. Like, you know, it's not a big deal. We went out for beers afterwards. It's, you know, when you're, when you're, it's a full contact sport down there. And you're, you're playing for big money. But yeah, we used to, you know, our team, we had 80 people on the floor, whatnot.

And all these guys were enormous. They were linemen, you know. And we would travel in packs. And when we went out, man, we, Chicago traders ran Chicago. Now it's lawyers and PE and whatever else and the floors are irrelevant. But we would go out and just clean house. Walk into Gibson's, there'd be 15 of us. And, you know, we're just taking it over.

And we were spending a lot of money. Like they would literally move people out of tables. We would move. We had, you know, we had Gibson's. We had this place called Jilies, which was a big mob hangout, Snatchezer's bodyguards place. And Rosebud, which was a big deal here, who now has gone on the Chicago cut. He owned Chicago cut. Yeah, we'd be like, they're in our table.

They need to move. I remember John Cusack was at the table. We'll buy him dinner, get him away, you know. And they would do it because we were just, you know, just completely. He's a Chicago guy too, right? Yeah, I used to live on the top floor of a building, and he was my neighbor. He was a. And we're talking like tens of thousands of dollar meals and whatnot, right?

Oh, yeah. I mean, this is back in the day where you would have banks that were in New York or London, and they were coming out from Thanksgiving to like the second week of December was when everybody's coming out. And you're putting them up at the peninsula. You're getting a lot of other things for them that they wanted. And they'd whack you on dinner and you'd be spending $30, $40, which back then in the late 90s, early 2000. was a tremendous amount of money, right? Yeah. Which is still a stake was only $40 back then, not $110 like it is today. But we, I mean, they were hitting you for Chateau Lafitte, right? Any of the best wine out there. And so we had some clouded these different restaurants because they knew we rolled big and

but we demanded certain things. I mean, it was, but that's the way it was. Traders really ran the city. And then CME traders specifically. NASDAQ where I was always on the cover of Wall Street Journal or, you know, FT, overseas, whatever it was because I was so animated on the floor and I was a lunatic and they had me grabbing people or, you know, when the bear shows his hands because my acronym was yogi, everybody knew who I was. And so I remember, you know, I go on a date to Jocestone grab

with this girl that was a knockout. And she's like, what do you do? I go, I do this. I didn't really explain it. Next of you know, the matriety comes over. Bobby, we have your corner table running for you. Mayor Daly's over there. He wants to say hello. You know, I mean, just crazy shit. And it was a blast.

We'll leave it there and tell people we launched a new website that has all this. If Bobby didn't explain it well, go check out the new website. RCMaltz.com. And you can learn more. Thank you. All right. That's it for the pod. Thanks to Bobby, thanks to RCM for supporting.

Thanks, Jeff Berger for producing. We'll be off next week for the 4th of July, 250th birthday, Go USA. And Go USA and The Soccer 2. It's been fun watching. We'll be back the week after that with someone good. I don't know exactly who it is yet. Peace. You've been listening to The Deriviviviv.

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