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He'll Silence The Pits


Finance: Futures

He'll Silence the Pits

Gary Kemp's vision of futures trading is 100% electronic

With the flick of a switch on Aug. 27, the Chicago Board of Trade, the world's oldest futures exchange, launched electronic trading in futures and options contracts. In Europe, such trading has already supplanted open outcry, and few doubt the same will happen in the U.S. That's sweet justification for Gary Allan Kemp II. "Three years ago, when I said all trading is going electronic, I was spit at," he says. "Two years ago, I was insulted. This year everybody says, `Yeah, this makes sense."'

Kemp, in fact, could turn out to be the big winner from electronic futures. At 34, he heads the small but fast-growing Trading Technologies, maker of software that allows traders anywhere to connect to and trade on the CBOT's system. "Demand for software is going to be huge," says Carl Short, software analyst at SG Securities in London.PACK LEADER. Competition is intense. More than 70 rival software vendors have opened in Chicago in the past year. But users say they like TT's X_Trader system because of its speed, snazzy visuals, and risk analysis. Big brokers such as Salomon Smith Barney use it.

Because TT is privately held, Kemp won't disclose sales or profits. But the company says users of its system account for 60% of volume on Eurex, the Swiss-German futures exchange, and 40% at the London International Financial Futures Exchange. One big fan: Harris Brumfield, a big-league trader who trades some 80,000 futures contracts a day in German government bonds--as much as 25% of Eurex's turnover. He's so impressed that he took a stake of more than $25 million in TT.

Son of a Denver insurance broker, Kemp built his first PC at age 12 and graduated in business administration from Colorado State University at 20. In his first job at Andersen Consulting, he helped design an electronic trading platform for an upstart that became Eurex.

Eurex drew business from rival exchanges and quickly surpassed the CBOT as the world's largest futures market. Stunned, the CBOT scrambled to ally with Eurex and adopt its electronic system. Kemp got the ball rolling early in 1998 by inviting CBOT and Eurex executives to share cheese and a couple of bottles of Bordeaux in his Evanston (Ill.) living room. Says Clifford M. Lewis, former CBOT senior vice-president: "Gary was among the first to understand what the new world of trading would look like."

Kemp may lead in Europe, but the big opportunity for him is now at home. At an August sales meeting, he bellowed at his charged-up staff: "We want total domination. DOMINATE NOW!" Kemp helped create the U.S. market, and he isn't about to let others swipe it from him.By Pallavi Gogoi in Chicago


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