Welcome back to Breaking Through: How Three Women Took on the World of Trading, our blog series interviewing female trading pioneers. In our first spotlight, we spoke with Margie Teller, who navigated her way through the CME trading pits to become a floor trading Hall of Famer. If you missed it, see Breaking Through: Margie Teller, Part 1 and Breaking Through: Margie Teller, Part 2.
– Kara Grygotis, VP, Customer Success
Kara: Let’s talk about your history—how you actually got into trading, and the progression of what you were doing from a trading standpoint.
Brynne: People ask me about my background a lot, and I think it’s partly because they are looking for some sort of “recipe”…and yet, if you hear my background, you will find that none of the ingredients seem to make sense, but somehow the end-product works.
I grew up in Minnesota and went to the University of Minnesota. I did a year of my undergraduate studies in England and ultimately graduated with a finance degree. Eventually, I also obtained enough additional accounting credits to qualify to sit for the CPA exam, which I passed.
I have always said over the years that it’s not where you went to school, but what you make of it. I think that’s the unique part—the cumulation of experience that I was fortunate enough to get after I graduated. It’s interesting to people because my experience was rooted in the merchant side of the business, which is less understood than its counterparts like floor trading or hedge funds.
Kara: Can you explain what you mean by merchant?
Brynne: Merchant trading is usually, but not always, embedded into a larger company that owns commodity assets. In my case, I worked for companies that are heavily invested in energy assets and operate those assets as their core business. The reason merchant trading evolves at these companies is, in part, due to their experience and level of comfort with physical commodity logistics. Being involved in moving products from point A to point B in the operation of their assets, they see the opportunity to leverage their knowledge beyond asset operation to a trading business that is unencumbered by the day-to-day operations of their assets. In this way, these trading groups are fundamentally based on logistics.
This isn’t to say that there isn’t a lot of risk involved in that type of trading business. In fact, you could argue that there is more risk, since these trading portfolios usually contain a significant amount of off-hub structured transactions that have the added layer of performance risk. It’s one thing to lay off risk using liquid futures; it’s another thing to preserve margin as you unwind financial hedges into delivery.
But, I digress. These days, when I talk about my experience, I try to think about some of the lessons or themes that have come out of them that might be helpful to someone starting out.
Kara: Can you give some examples of those themes or experiences?
Brynne: Well, to start, I now understand some basic qualities about myself that line up well with the trading profession:
- I am insanely competitive.
- I have always been fascinated with math and the relationship between things.
- I am inherently a risk-taker and don’t do well with structure.
Let me give you an example of how these qualities naturally drove my decisions at the start of my career, before I was even aware of what was specifically driving me.
After I graduated from college, I ended up getting a job at Cargill in Minneapolis—their headquarters. They told me I would be working in their financial markets division, but I had no idea what that was—I was just happy to have a job.
The group I was assigned to in this division was essentially what you would call the middle office today. The group I worked for was a Japanese equity program desk that traded baskets of stock on the Nikkei and the TOPIX. I had never even heard of those!
Kara: That’s funny.
Brynne: I know! Everything was manual back then. Trade information came through via fax, listing all the individual stocks in each basket that was traded—along with their associated volumes and prices. I spent my days hand-writing journal entries for submission to the data-entry group to enter into the corporate system. Everything you can imagine that is automated today wasn’t back then. It was a very labor-intensive job that required journal entry after journal entry to produce reports similar to what we call a trading P&L today.
Of course, the middle office was mostly women and the trade floor was mostly men. And by mostly, I kind of mean all. I remember one day, shortly after I started, one of the traders came over to the middle office area really pissed off and proceeded to scream at the gal that did his P&L. I thought she was going to cry, but she didn’t. After he left, my boss told me that was the measure of success—if you can handle being screamed at without crying. The only thing I remember about that was how insanely competitive it made me feel. Like, for sure I could be tough—that I would make sure I was tough.
It didn’t take me long to get the lay of the land and figure out what this business really was. I saw who was making the money, what the job of a trader meant. And I don’t mean making money as in getting paid. I mean, these are the people who were making the money for the business. There was no grey area regarding performance, it was all in black and white for everyone to see. You either made money or you lost money. Meanwhile, I’m sitting over here in this group where performance is measured in a more esoteric way, as most non-revenue generating jobs are.
It was like a light bulb turning on, that’s how immediate it seemed when suddenly I knew, I just knew that I wanted in on the trading side.
Kara: Is that when you moved into trading?
Brynne: I wish it had been that easy!
It didn’t take long to learn the unwritten rule that, at that time, there was a hierarchy, and that the middle office was not considered a training ground for traders. Forget it, because it was like wearing a scarlet letter or something. But, I guess this is where my competitive nature and willingness to take risks came into play. I knew I had to leave and rebrand myself without that middle-office label in order to be considered.
I made some mistakes in that endeavor, for sure. My only saving grace was that I was young, and when I found a dead end, I was willing to find another avenue. Over the next four years, I made my way through roles at a small investment firm, a large, regional broker/dealer and, ultimately, to Koch Industries in Wichita, KS. While I was learning a lot as I tried to be careful not to get branded with the middle-office label, I was also progressing in my career, which landed me in the role of controller of the Koch Supply and Trading division.
Kara: Were you doing anything on the side to sort of fuel that interest in trading or being on the revenue side, even as a hobby?
Brynne: Well, keep in mind, this was in the early 1990s, and there wasn’t as much clarity into trading as there is today. Sure, I joined an investment club, but it wasn’t very exciting! What I really did was focus on making relationships within the companies I worked for, and participating in any project surrounding trading in the hope of finding an in.
In hindsight, I was very lucky to get the opportunity to understand the trading business from so many different angles. Especially in energy. This gave me a deep understanding of the commodity itself versus the commodity as a number. You know, the logistics, things like demurrage and lifting of crude cargoes. Back when going to delivery on Dated Brent meant you had to stand by the phone, hoping you didn’t get clocked on a cargo before you had time to speed-dial the next person on your list.
Anyway, long story short, it was while I was at Koch that I finally got the opportunity to make the move into trading. I had interviewed at a company in Kansas City called Aquil, that was going to build an electricity trading group, and they made me an offer to trade electricity. It was the mid-90s, and the electricity markets were just being deregulated. At the same time, I finally got the long-awaited green light at Koch. They offered me the chance to move onto the crude trading desk.
Kara: So, which one did you pick and how did you decide?
Brynne: I picked the electricity trading job. I certainly did my research and got some advice that made sense to me. The advice I got was that the crude oil market was a “good-ol’-boys” network, which meant that I’d likely be given a small book with only “politically correct” customers—in other words, I would be an outsider. On the other hand, since electricity was just deregulating, everything was new and people could make their mark and establish themselves from the very beginning. That was reasonable logic. The only downside is that emerging markets always have a risky future, but I was OK with that.
So that was the launch of my trading career. I spent almost seven years at that first job and loved it. I learned so much, yet towards the end, I started to wonder if I was a good trader or just a good trader at that company. I felt like I had to find out, to prove that. Which I went on to do. Leaving that company was one of the more difficult decisions I had made, since a trading desk can become like family, and it’s hard to recreate that. But I did it and went on to work for Sempra, BP, Millennium and a few other smaller shops over the years.
Kara: You have an interesting story—there are a lot of twists and turns in how you got to where you are today.
Brynne: I often wonder now, if I had had a mentor along the way, would I have done it better? Would it all have been easier? Would I have made different choices? If there had been a woman along the way in the business whom I knew or at least could emulate, that would have been nice. But, there wasn’t, and sometimes you just pave your own path—make your own rules.
Kara: You’ve had an amazing career. What would you say was the defining moment or a watershed moment along the way?
Brynne: Hmm. I can think of a couple that come to mind immediately. They certainly have to do with making or losing money. It is a volatile ride when your P&L swings are $5 and $10 million in a day.
One defining time period was when I was trading the electricity markets in 1997. This was still in the early stages of deregulation, and market participants just hadn’t worked out all the kinks. Utilities hadn’t had to really explore their obligations or options as suppliers. The market was full of legacy operators that didn’t understand the impact of market forces on prices. And, that summer, daily power prices went from trading around $30 to over $2,000/MWhr. There were credit defaults because people had been doing sleeve transactions for as little as a penny and exposing themselves to a chain of counterparties in the physical scheduling path. There were prices that were moving thousands of percent within a couple minutes, so the P&L swings were enormous on just a single block, or lot, I guess you could call it.
It was chaotic. There weren’t any screens to look at. You just relied on brokers to call and give you the market—like “next-day TVA is a $2,500 bid, can you show any offer?” And we got it right, and it wasn’t a fluke. For sure, the returns were higher than ever expected, so I can’t take credit for that, but thank God I wasn’t short. It was the first time that I had dealt with that size of P&L swings. The logistics of performing delivery were just as important as the trades themselves. Every single function on the desk was key. Of course, there were also some big down days. But I learned that I could handle them. I remember one of my first bosses calling me into his office, and he said, “You’re amazing under pressure.” I have never forgotten that.
Kara: It’s easy to win. It’s harder to sustain the losses.
Brynne: Yes, and to manage your way out of them when losses are big, and you’re deciding—if you get the opportunity to decide—what your plan is and how to execute it without letting your counterparts see you sweat. Back when deals were all done with brokers over the phone and they knew you, it was a skill to come across as all business-as-usual. On top of that, if you have a team working for you, they’re also experiencing the emotions of it, and you have to manage that side without crippling their confidence and ability. I realized I could do it. That’s when I knew I had what it took.
One of the realities you learn in this business is that luck, skill and timing don’t always work out in your favor. You don’t always get to have the wins before you have the losses, which usually means you’re getting escorted out the door. It’s an adrenaline rollercoaster that isn’t for everyone.
Kara: Did you have any coping mechanisms? How did you deal with the stress and the pressure during the down times? Was there anything you did in particular?
Brynne: The camaraderie on the desk is always a big thing for me. When I have a great team that I can trust, socialize with and blow off steam with, it really helps. It can be so overwhelming in the moment, but a good team helps.
Also, I got an invaluable piece of advice from my first trading boss. He said, “BK, the first time you get a big bonus, pay your mortgage off. Just pay it off.” He said, “I don’t care what anyone tells you about the economics of a mortgage, this business is up and down, and you never know. But as long as you own your house —only own what you can pay for with cash—you’ll have peace of mind.” This was a guy who had lived through the Metallgesellschaft years, so he was speaking from experience. He was right—it’s a powerful coping method!
Look for the second half of this interview here on Trade Talk next month.