An empire built on derivatives

From yesterday's WSJ: LONDON -- As a young broker in London in the early 1980s, Michael Spencer was fired from one job for making a bad bet on gold and another for trying to hide losses on futures contracts. His career in tatters, he scraped together $60,000 with three partners to play another hunch: There was money to be made acting as middleman between big banks trading complex financial instruments. That wager has turned Mr. Spencer into one of Britain's richest men. As more banks, corporations, and big investors began using derivatives to hedge risk, Mr. Spencer, 51 years old, built his company, ICAP PLC, into a derivatives-industry giant. Today, ICAP is one of the world's largest brokers of the complex financial instruments. Mr. Spencer's stake in the publicly traded company is valued at about $1.1 billion. Now, big change is sweeping through this arcane corner of the financial markets. Operators of traditional stock and commodities exchanges -- many of them newly public companies -- are searching for new sources of revenue, and the booming derivatives market looks like fertile ground...Read the whole article HERE