Tom Barry: Deep Throat on the CBOT Floor?

An Overdue Eulogy

I had a lot of great sources in the markets. One of the first guys I often went to when I wanted an idea of what was going on in the CBOT’s Treasury bond futures was Tom Barry. 

In an industry full of brash, big personalities, Tom was a modest larger-than-life character. He showed few of the signs of the fast and loose wild trader. I believe he caught the train to the western suburbs every afternoon to get home to his wife and kids. 

He was a barrel-chested, curly haired, smiling, funny guy. He had a ready laugh and lots of great stories. He was well-informed and gave good quote.

Normally, I would not reveal a source without their permission. In this case, this blog is more of a eulogy. Tom (Thomas O. Barry) died in early 2004, which means that I can’t include his pithy comments or indignant retorts.

Our first face-to-face meeting set the tone for our six-year relationship. .

I had been hired in June 1992 to work as an interest rate futures reporter for Dow Jones’ Capital Markets Report. In this new job, I’d be covering Eurodollar futures and options at the Chicago Mercantile Exchange (CME) and Treasury bond, note and bill  futures and options at the Chicago Board of Trade (CBOT).

I spent three weeks training in the Jersey City, NJ offices. I was replacing Rob Sherman, who was moving on to a new assignment. Rob brought me up to speed on the markets, coached me on writing and introduced me to his sources in Chicago, who he dealt with on the phone. Upon my return home, one of my first tasks was meeting them in person. 

While I had worked in Chicago’s futures industry since 1989, the CBOT’s bond room was not familiar territory to me. My earlier two jobs had been centered on the CME. At the Board of Trade, I knew the difference between the grain room and the bond room and where the bathrooms were located.

One of the best parts of being a trading-floor-based markets reporter was source access. I couldn’t go into the pits. Instead, I roamed the place visiting order desks, break rooms or outside the pits catching up with sources. We’d chat about news, gossip, family stuff and the markets.

So I’m just back in Chicago and call Tom, wanting to meet. We set up a time and he arranged to have someone meet me at the trading floor security desk.

I was dressed in nice trading floor attire: blue sports coat, dress shirt, tie, nice slacks, etc. This garb was acceptable, but not regularly worn on the floor. It marked me as an outsider. (I had decided first impressions might count for something and this was not the time to show up in the polyester plaid sports coat that had opened doors for me with the CME’s livestock futures trading crowd.) A young clerk greeted me wearing a Sanwa Futures trading floor coat and took me into the bond room.

The CBOT’s Treasury futures and options trading room is hallowed ground for the futures markets. That was where grain futures, the earliest commodity contracts traded in Chicago were exchanged. The exchange in the 1980s built an annex on the back of the building and the grain pits moved into new quarters. The old space was given to the financial contracts.

The bond room, as it was known, had dark wood paneling, high ceilings, and tall windows that once looked out on LaSalle Street. They had since been blacked out due to glare making it hard to read quotation. boards. Jutting out from the walls were catwalks. Price reporters once paced up and down them as they marked deals on now old dusty chalkboards. Higher up on the walls were mounted huge electronic quotation boards with day-glo green numbers. 

The bond futures pit was a massive edifice in the middle of the room. The top step stood about six-feet above the floor. Another lower step ringed the top step. That level was encircled by a railing. The railing held in the brokers and the clerks. The middle of the pit was filled with local traders. It was hard to catch a glimpse of them through all the broker’s assistants and brokers. You could hear them, however. 

The 10-year, five-year and two-year Treasury note futures and options pits were scattered around the room. Wedged in between the pits were rows and rows of phone desks handling customer orders coming in from off the trading floor.

Tom worked for Sanwa, manning their bond futures order desk. My escort brought me in where I found a man crouched under the desk top, a phone in one ear, his finger stuck in the other. He was yelling at (talking to) a customer. Without looking up, he growled, “I don’t have time to talk to any of your friends about a job. Get going.” 

The clerk backed off, but I just stood there. 

Moment later, Tom stood up and spat out, “what do you want?”

“I’m Clif Linton and I work for Dow Jones,” I said.

Whoops!  

“I’m sorry. I didn’t realize who you were,” he quickly recovered. Referring to the clerk he said, “That guy is always bugging me to hire his friends.”

Anyway, we got down to business. Maybe I should have tried the other sports coat.

Tom had some frenetic traits that fit in with this chaotic work environment. In that first 15-minute conversation, he must have gone through three pieces of chewing gum. He’d spit out an old piece of gum into a scrap of paper, throw that on the floor and pull out a fresh piece and chew on it madly. Five to six minutes later after chewing the flavor out of it, the process repeated. 

As we got to know each other, his lively sense of humor became apparent. He’d come up with funny ways to describe market activity. I realized he was baiting me to see if his comments would be included in my articles. Eventually, I bit the hook.

Keeping market updates interesting was always a challenge. Why not take on an ally? To be clear, our agreement was that he would be an unnamed source. The goal was to see what we could get past Dow Jones’ fussy copy editors in Jersey City.

One victory was the day that his description of market activity as “Way bad bongos,” made it into publication. 

He had many funny or insightful stories about the Board and trading. He was the source of the story about the trader who ran around the floor hiring clerks to load his silver futures delivery of bullion into the trunk of his car.

He had a great description of what he thought really went on when rogue trader Nick Leeson took Barings Bank down in 1995. Tom called it a tuna-fish-sandwich back-of-the-drawer trade. In other words, Leeson had put on a trade that was not a winner. Rather than get out right away and take the loss, he shoves the order slip, like a half-eaten tuna sandwich into his desk drawer. Over days more and more stuff gets shoved into the drawer pushing the sandwich further back. Eventually the bad trade, like a rotting tuna sandwich starts to stink and can’t be ignored. In Leeson’s case, the sandwich’s stink was so bad it took down Barings Bank, one of the U.K.’s oldest and most distinguished financial institutions. 

Tom’s assessment gave great insight into trader behavior, but it was not exactly what happened. That’s another story.

One of the biggest assists he gave was with an article for the Wall Street Journal about the hand signals used on the trading floor. He had good stuff to say including the mention that he sometimes woke his wife, Sara, up in the middle of the night, as he made hand signals in his sleep. This needed to be followed up. I asked if she would be willing to talk. She was.

In our chat she said the hand signals were a mystery. If only she knew what they meant, maybe she’d have an upper hand in the marriage. For all of our combined efforts to get him quoted in publications, his wife upstaged him. Her quotes ran on the front page of the paper.  He was a good sport about it.

A good market reporter understood that it was a transactional job. I could not just ask for quotes day in and day out without giving anything in return. Tom would call me when he had something he wanted checked out. I’d help him out.

Every once in a while he’d just call with a tip. It was in the fall of 1995 when he gave a great tip. The phone rang and Tom’s at the other end saying, “you’ll never guess what’s going on down here today.”

It was a quiet day. He had my full attention. 

“Everyone’s buying Playboy magazine!”

“Why?” I asked.

“Pat Arbor’s daughter is posing in it!” Patrick Arbor was the chairman of the Chicago Board of Trade, at the time.

 “Are you serious?’

“Yep, get down to the newsstand and pick up a copy. Better not come here, they’re all sold out.”

WOW! What a great story. I hustled down to the newsstand at 1 South Wacker Drive, where the Dow Jones offices were located and bought a copy. Sure enough, there was a small photo of her and her futures-market familial connection was mentioned. 

I spent a couple of hours writing about this “bare market”. My efforts were in vain. None of my editors were willing to run it. Dow Jones is a family publication. Even so, thanks to Tom’s tip, this was the first and only time I was ever able to legitimately expense the purchase of Playboy.

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This blog is about more than my experiences. It is intended to be a collective experience of working on the commodity markets physical trading floor. If you or someone you know has a story please let me know I’d like to include it in this ongoing chronicle. I can be reached at linton122@gmail.com

© Clifton Linton 2024