An Interview with Charles Carey
By Abdon M. Pallasch
August / September 2007
For a second- or third-generation leader of the Chicago Board of Trade, Charles Carey sure talks like a guy from the neighborhood. His voice is Ditka’s. So is his physique.
“I guess that comes from spending too much time in the pits,” Charles Carey laughed, motioning to the cavernous room down the hall from his ofﬁce where traders still stand in “open outcry” pits shouting out offers to each other.
Even as about 70 percent of business is now done on-line, the chaotic-looking-to-outsiders shouting and ﬂashing of hand signals starts with a bell every morning and still makes up a respectable share of the 4.2 million contracts executed in this building every day.
“The options are still all open outcry — complex transactions need to be bargained for in a face-to-face environment,” Carey said. “I was a pit guy. I came out of the corn pits.”
“A lot of guys are like, ‘This guy’s just a big palooka,’” said playwright Mike Houlihan, a longtime friend of Carey. “But this guy’s very smart. Those seats used to go for $250,000 and now they go for $2 million. He has turned that joint around completely and he’s on the brink of the deal of the century,”
When we spoke, Carey and his friend Terry Duffy, chairman of the Chicago Mercantile Exchange [“The Merc”], were trying to convince the 2,000 Chicago Board of Trade members to approve a $10 billion purchase of the Board of Trade by the Merc in the face of an $11 billion counter-offer by Atlanta upstart InterContinentalExchange Inc.
While the pictures on the wall of his ofﬁce show Carey with President Bush (“Thanks for coming to my birthday dinner,” the president wrote), President Clinton, Mayor Daley, and Carey’s grandfather Peter Carey testifying before Congress, it’s Carey’s rapport with the rank-and-ﬁle board members he was counting on to carry the day.
Harvard and Northwestern MBAs do not dominate the Chicago Board of Trade. Many of these guys worked their way up to millionaires from ground level and they know the bottom line. That’s why they voted in Carey as chairman four years ago — he speaks their language.
“A formal education didn’t do you a bit of good down here — it was just street smarts and common sense,” Carey said. Carey recently served as commencement speaker at his alma mater, Western Illinois University in McComb, Ill.
He grew up on Chicago’s South Side in the bungalow belt but then moved to the west suburbs to attend Fenwick Franciscan High School. He transferred to Oak Park-River Forest High School to play football as a middle guard. After graduating from Western Illinois, he took a union job installing electrical conduit in the underground downtown tunnels that would become the site of the Great Chicago Flood of 1992 — not the typical route for someone aspiring to become chairman of the Chicago Board of Trade.
Carey’s great-grandfather Simon Carey, a blacksmith, came to Chicago from Clare and married Mary O’Brien from Roscommon. On his mother’s side, Patrick J. Callan came from Monaghan to New York in 1979. Carey also has some German and American Indian ancestry.
Simon Carey’s son Peter Carey became chairman of the Board of Trade. His son, Charles (Senior), worked as a lard broker. Charles Sr.’s’ brother Bernard Carey also served as president of the board, and as sheriff of Cook County in the 40’s when wartime restrictions on trading forced him to seek an outside job for a while. Carey proudly displays his grandfather’s badge in his ofﬁce.
It would be years before the current Charles thought about succeeding his father and his uncle. He started out bellowing in the pits, waving hands like the guys still doing that today. He got on the board in 1990. As his business boomed and friendships blossomed with other traders, he decided to make a run for the family ofﬁce in 2003. No one was going to hand it to him.
“It’s a bloodsport ﬁght every few years,” he said. “But you know us Irish — we like a good ﬁght.”
He was re-elected in 2005.
The old-school relic from the corn pits embraced the big change to electronic trading, helped birth an Initial Public Offering and started the negotiations with the Merc’s Terry Duffy. Together, they decided to merge into a Chicago behemoth. The U.S. Justice Dept. has given its O.K. and the body that oversees shareholders’ interests has likewise signed off. The only wrinkle was the last-minute entry of ICE into the mixture.
“Then once we did all the work, this interloper starts coming in here,” Carey said, dismissively, of ICE.
Duffy, as reserved as Carey is uninhibited, just nodded on Carey’s couch.
“We do six times the volume he does,” Carey said of ICE’s chief executive, Jerry Sprecher. “It was an amazing thing to have to address their terms.”
ICE outbid the price-per-share the Merc was offering members of the Board of Trade. The Merc upped its offer to what Carey says is a value of about $7 million to each member — after which they keep their seat at the board and continue doing business just as before. That’s still not as high as the offer ICE is making, but Carey and Duffy hope to convince members that a purchase by the neighboring exchange is better for them in the long run.
“We’re battling — a lot of guys don’t think they’re getting paid enough,” Carey said. “It’s an old-fashioned slugfest — kind of like a union meeting.”
Carey never expected to succeed his grandfather as chairman of the board but he has grown quite attached, he said.
“This has not been work to me,” he said. “It’s more of a pleasure. It’s been something new every day.”
Carey and his wife of 22 years, Linda, live in the suburb of Western Springs with their three sons, Charlie, 16, Matthew, 14 and Jack, 8.
Carey also served as executive director of the Chicago Sports Hall of Fame.
“It’s kind of a Damon Runyon life — all politics, sports, it’s all about the stories,” Mike Houlihan said. “The guy remembers the scores of football games that took place before he was even alive.”
Talking to his Uncle Bernard — the former chairman who’s now 90 and still doing well and keeping his seat on the board — Carey veriﬁed some family history facts with his uncle, then warned him to quickly mail in his vote in favor of the purchase by the Merc and not to worry about the threat from ICE.
“We’ll kick some ass,” Carey told his uncle, smiling.
As we go to press we received the news that the Chicago Board of Trade agreed to the Chicago Mercantile Exchange’s buyout offer. Charles Carey will serve as vice-chairman of the new CME group. ♦