Advantage Futures

Managing Your Execution Risk

Interview with Michael McLaughlin, President, Institutional Sales, Advantage Futures

June 2010

Standing in the Eurodollar options pit at the Chicago Mercantile Exchange, you wouldn’t think that over 90% of futures trading has moved away from open outcry to electronic execution. In fact, the CME Group recently reported that the majority of options-on-futures trading is still conducted in the pits. Michael McLaughlin – known on the floor as “Mac” — has been on the CME trading floor for almost 25 years and he does not see open outcry going away any time soon. Mac manages the Advantage Futures Institutional Sales Team. This team consists of 13 floor brokers and 6 brokers on the 24-hour Global Execution Desk. “The options markets are thriving on the trading floor. Many large institutional clients who need access to liquidity still prefer going through a floor broker. Our Team provides access to open outcry via the pits as well as the electronic market- place through TT screens. Whether on the screen or in the pits, we find the liquidity to ensure the best possible execution. Our institutional clients prefer to transfer their execution risk to an expert,” notes Mac.

Mac, a 1986 finance graduate from the University of Iowa, began his career in the S&P quadrant working for Merrill Lynch. After the 1987 stock market crash, he transferred to the short-term interest rates desk and became manager in 1993. Two years later Mac and his team moved to Fuji, later Mizuho, where he managed the floor group for eight years. In January 2004 they moved to Advantage Futures. He points to experience, relationships, integrity, idea generation and execution expertise as the key reasons why Advantage Futures clients rely on his desk to execute their trades.


When asked why his desk has a com- petitive advantage over others, Mac first highlights experience. Most of his team members have over 20 years of coverage experience. “We’ve helped clients navigate major market moving events. From the 1987 stock market crash to the S&L crisis, the Orange County bankruptcy in 1994, the Russian Ruble crisis and resulting Long Term Capital collapse in 1998, non-events like Y2K, tragic events such as 9/11.” The perspective gained from these experiences keeps him calm during periods of intense market volatility. He shrugs off May’s “Flash Crash” noting that it did not result in a sustained market panic as did the events surrounding the collapse of Lehman Brothers. Clients of Advantage Futures count on such time-tested experience when they utilize Mac’s desk for their information flow, market knowledge and execution services.

Relationships and Integrity

“We have a diverse client base, including primary dealers, hedge funds, money managers and commercial banks, with many relationships dating back to the early 90’s,” says Mac. Cli- ents demand the very best and years of exceptional, trusted service have forged these solid relationships. “Our clients count on us to relay the sentiment on the floor, something that is impossible to gauge through electronic trading.” Institutional clients enjoy anonymity and professional trade execution marked by the highest level of integrity. “Simply put, we are nothing without our clients – the relationships we develop drive our success.”

Idea Generation and Execution Expertise

Beyond experience and relationships, Mac points to idea generation and the transfer of execution risk as key components of their business. “Our brokers have a view, whether at the point of execution or over the long-term trend, and we pride ourselves on well thought out ideas. We collaborate with each other as well as our client base to formulate thorough opinions on short-, medium- and long-term strategies.” Managing a successful execution services business can be difficult in an era of electronic self-execution, but lean trading desks and an ever-expanding array of financial products make liquidity transfer all the more important. Traders are happy to download trade execution to specialists and welcome thoughts on relative value, market direction and trends.

Looking Forward

In this electronic age, will floor execution and the trading pits be going away anytime soon? Mac doesn’t think so. “Looking out, I think there will always be a demand for execution services. Markets are perpetually evolving, and our experience, integrity, product knowledge and relationships will continue to afford us a competitive advantage.”

For those interested in learning more about the services provided by the Advantage Futures Execution Teams, please email us at or call 312.347.4800.

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