An interview with former Managing Director at the Chicago Board of Trade and author of Zero-Sum Game, Erika Olson.

Erika Olson was a newly hired managing director at the Chicago Board of Trade (CBOT) when the Chicago Mercantile Exchange (CME) made an $8 billion offer to buy the company in October 2006. Her book, Zero-Sum Game: The Rise of the World’s Largest Derivatives Exchange, is based on detailed notes she took over the course of a year as a bidding war between CME and IntercontinentalExchange (ICE) erupted for CBOT. 

Now that the same futures executives in Olson’s book are helping to shape the derivatives-related Dodd-Frank financial reform laws, the story of how and why the exchanges came to be in such an influential position couldn’t be timelier. 

Shane Stiles: What was your motivation for writing Zero-Sum Game?

Erika Olson: Within days of joining CBOT—even before I learned about the Merc’s offer—I began wondering why no financial journalist had ever written a book about the men and women running our country’s futures exchanges. These were fun, engaging, and incredibly smart people—to me it was like they were meant to be characters in a story. Almost every major Wall Street executive has been immortalized on the page over the past few decades, even though investment banks don’t affect business operations and the daily lives of consumers around the world even remotely as much as the futures industry does. So the idea for a book started brewing in the back of my mind. 

The moment I learned about CME's proposal and was asked to be on the merger team, I realized I had a unique vantage point for what would surely be one of the biggest deals in the history of not only the industry, but also Chicago. I thought, "Here are two companies that have been notorious crosstown rivals for over a hundred years—it’s like trying to bring the Cubs and Sox together. How could this NOT be a great story?" I set out to capture as many details and conversations as possible during the integration process. Things got even crazier, of course, when the ICE team revealed their $1 billion higher offer for CBOT at the FIA Boca conference a few months later and ignited a bidding war. That’s when it dawned on me that I truly might have book material on my hands. I immediately called a lawyer!

Shane Stiles: Did you intentionally wait three years after the close of the CME/CBOT merger to publish Zero-Sum Game?

Erika Olson: No, but now I’m glad it worked out that way. I don’t think any of the people I interviewed for the book would have been as keen to participate if they hadn’t had a chance to reflect on (and, in some cases, recover from) that incredible—but draining—year. 

What’s more, shortly after the CME/CBOT deal closed, over-the-counter (OTC) derivatives were forced into the spotlight thanks to the financial crisis that started in 2008. Because of the ensuing curiosity (and confusion) about the exchange-traded versus OTC markets that persists to this day, my publisher advised me to work some very basic education about the derivatives industry into my manuscript wherever it made sense—to put the scope of the CME/CBOT merger into a larger context. I hoped to do for the world of futures exchanges what Michael Lewis did for bond trading in the '80s through Liar’s Poker: Give readers a behind-the-scenes look at a historic turning point in the life of a powerful, fascinating—and, to most people, completely foreign—industry, while providing insight into the personalities of several of the executives in power. 

Shane Stiles: That’s a perfect segue into my next question. Executives from CME, CBOT, CBOE and ICE, as well as several senior managers at the exchanges, are in Zero-Sum Game. But none of them knew you were taking notes during your time in the industry and planned to publish a book. What kind of reactions have you received?

Erika Olson: The best part of this experience has been reconnecting with my old co-workers and hearing from others, both inside and outside of the industry, who’ve read Zero-Sum Game. As is evident in the Acknowledgments section of my book, almost everyone who plays a major role in the story agreed to be interviewed in order to give me his or her perspective on the bidding war and help me fill in gaps regarding conversations and meetings for which I wasn’t present. 

While it’s fair to say that some people were apprehensive about being "characters" in a book, now that everyone’s had a chance to read Zero-Sum Game, I believe most are pleased that I was able to recreate that tumultuous year in such detail. I’ve gotten a huge kick out of hearing from not only those who are in the book, but also their spouses and children (usually just the college-aged ones, as there’s a lot of swearing packed into 240 pages!), as well as exchange members, traders, and others I’ve never met from all sides of the industry. The feedback I’ve heard most often is that I really nailed the descriptions, mannerisms, and personalities of the people featured in the story, and that I accurately reflected the high-energy spirit of the industry. To me that means I achieved what I set out to do!

The Zero-Sum Game: The Rise of the World’s Largest Derivatives Exchange by Erika Olson is available at Amazon in hardback and Kindle Editions.

Shane Stiles is the President of gate39media a web development and marketing firm for the financial industry, and NIBA Board Advisor.