Leo Melamed - Early Life

Early Life

Melamed was born in Bialystok, Poland. The family name at the time was Melamdovich. In 1939, they were captured by the Nazis at the outbreak of World War II. Their escape took two years and spanned three continents. In 1940, the Japanese consul general to Lithuania, Chiune Sugihara, issued his family a life-saving transit visa, and they made the long trek across Siberia to safe haven in Japan. They crossed the Pacific to the US in spring 1941 and the family settled in Chicago.

In a 1998 interview with Derivatives Strategy magazine, Melamed said that he became involved in futures trading as an accident, "the hand of fate." Melamed said: "I was in law school looking for a law clerk job and answered a want ad. The firm in question, Merrill, Lynch, Pierce, Fenner & Bean, was looking for a 'runner' to work between the hours of 9:00 and 1:00, which was perfect for my class schedule. With that many names, how could this firm be anything but an established law firm looking for a clerk to run to court?" Throughout law school, he worked as a runner in the produce futures markets of the CME, learning about the business. He practiced law until 1965 and was elected to the CME board in 1967. Two years later he became its chairman.

Throughout the next three decades and into the 21st Century, Melamed held many CME titles including: Special Counsel to the Board; Chairman of the Executive Committee; and Senior Policy Advisor, but remained the acknowledged leader of the CME. In 2002, he led the CME membership to become the first U.S. financial exchange to go public.

In a speech in January 2005, Melamed traced the origin of his ideas about finance to his childhood wartime experiences.

In Tokyo in March of 1941, he asked his father, Isaac Melamdovich, a mathematics teacher, to explain how the community of Jewish residents in that city had enough money to support the sudden influx of some 3,000 refugees such as themselves.

"Well, to understand that, my father explained, you have to understand the intricacies of the marketplace."

Specifically, the elder Melamdovich explained, "you must never trust the official rate of currency exchange announced by government." The real value was to be found in the Black Market, which exists anywhere—on any street or in any shop, where no government official is looking.

When a Jewish family in Japan received an exit visa in that period, the Refugee Committee would provide the family with 5,000 yen to deposit in a bank (as allowed by law) and receive US dollars (or the currency of the country to which it planned to travel) at the official rate—say, US$50. That money was quickly and discreetly returned to the Refugee Committee where it was sold on the Black Market for the true yen/dollar exchange rate, which was vastly higher. The outgoing family returned the 5,000 yen, and the Refugee Committee retained the profit to help new arrivals.