Hot Commodity

So who is Steven Greenberg, and why has he bought so many seats on the Minneapolis Grain Exchange?

Greenberg has played at least a small role in pushing seat prices on the exchange up to $50,000 a pop. Since early July, Greenberg has bought at least nine of the 400 seats on the exchange, essentially establishing the market for seats that just a few years ago could have been had for a fraction of the cost.

The venerable exchange—Minnesota’s only remaining commodities exchange—celebrated its 125th birthday in October. Originally called the Minneapolis Chamber of Commerce (a confusing name it jettisoned in 1947), the exchange was established as a regional centralized marketplace for grain farmers so they could get the best prices for their crops. Because most farmers harvested and sold crops at the same time, the subsequent market glut typically threw off supply and demand curves. In 1883, in order to make the process more rational and less risky, the exchange set up its first futures contract, for hard red spring wheat. It remains the exchange’s signature contract—and it’s traded only at the Minneapolis Grain Exchange. 

The word “venerable” is often code for “old and tired.” But that’s hardly the situation here. In the past couple of years, the Grain Exchange has been on a bit of a tear. Consider the following:

•“Open interest,” the floating net number of contracts a trader keeps without selling, hit more than 66,000 futures and options contracts in July, up 99 percent over the same point in 2005. This means that the exchange’s market has good liquidity.

•Trading volume in 2006 is up 17 percent as of the end of October, with more than 1.4 million futures and options contracts traded versus 1.2 million in the same period last year.

•On October 18, a seat on the exchange was sold for $65,000—breaking a record set just one day earlier by a thousand bucks.

All this brings us back to Greenberg, the president and CEO of Alaron Trading Corporation, a Chicago-based futures trading firm. Greenberg and other Chicago traders collectively have purchased at least 15 of the exchange’s seats since July. Greenberg himself remained unavailable to comment on the exchange’s newfound popularity after repeated attempts to reach him. But the exchange has certainly taken note.

“In a normal market environment, we would be happy with just 10 percent or 15 percent growth of our open interest,” says Mark Bagan, the exchange’s president and CEO. “But that it has developed this quickly is just incredible.”