June 6, 2000

Chicago Tribune

MILLER'S DEATH `HUGE LOSS'
FOR FUTURES MARKETS 

By George Gunset 
Tribune Staff Writer 


The Chicago futures markets have lost their most
eloquent and influential academic defender.

Merton Miller, who died Saturday at 77, was a Nobel
Prize winning economist at the University of Chicago's
Graduate School of Business who was counted on by
the futures industry to make the best case in the face of
criticism for floor-trading practices, big derivatives
scandals and the stock market crash.

"He was premier in his role," said Robert Hamada, dean
of the U. of C. business school. "This is a huge loss to
the markets."

Over the years, Miller, who won the Nobel in 1990,
emerged as one of the most important allies of the
Chicago exchanges, supplying them and their leaders
with the intellectual grist to fight off regulators proposing
rules the exchanges considered burdensome and
congressmen seeking fresh tax-revenue sources.

Miller not only wrote, spoke and testified about his
belief in limiting regulatory restrictions for the markets,
but gained experience and respect as a public director at
the Chicago Board of Trade and then at the Chicago
Mercantile Exchange.

"A Nobel Prize gets peoples' attention," said Richard
Sandor, an architect of financial futures at the CBOT.
"Merton's clarity, knowledge, and communications skills
gave the industry a voice that will be sorely missed and
hard to replace."

Sandor said Miller could describe complex markets and
bridge the gap between the theoretical and the "real
world."

Miller was the premier interpreter of the futures markets
to the academic community, businesses, and even
regulators, Hamada said.

"While other academics study and write about these
markets and market participants speak about them, only
he had the respect, the ability to meld the academic and
practical aspects in an articulate way for various
audiences," said Hamada, a public director of the Board
of Trade for 12 years.

Miller's work was "monumental" for the futures markets,
according to Leo Melamed, chairman emeritus at the
Merc and chairman of Sakura Dellsher.

"His work showed that no business can ignore using
futures in the region of risk management," Melamed said.

When the Chicago markets were being
blamed--particularly by Wall Street leaders--for the
1987 stock market plunge, Miller worked behind the
scenes to defend futures from harsh regulations.

By pointing to studies put together by Miller, the
Chicago exchanges were able to deflect Wall Street
claims that volatility in the futures markets had caused
the 1987 crash.

Miller contended the dispute between securities and
futures markets wasn't the crash but the realization by
Wall Street that Chicago exchanges had taken business
from them. He criticized securities industry leaders for
seeking government help: "You don't go to Washington
and say `kill my competition so we will all be better off.'"

In a 1992 interview, perhaps anticipating the challenge
of electronic trading, he said that "if these markets don't
remain fast and cheap, lean without all the bells and
whistles, then they risk losing their discount chain status,
becoming instead a fancy department store, and that
would make them uncompetitive."