CANADIAN, TEXAS One thing he won't trade is small-town life

A top trader does all his work far away from the financial centers.
DALLAS MORNING NEWS
CANADIAN, Texas -- William Rainer had to see it for himself.
The former chairman of the Commodity Futures Trading Commission took the elevator down from his office in a Chicago high-rise, caught a flight to Amarillo, Texas, and rode 100 miles northeast along U.S. Route 60 to this tiny Panhandle town. Then he climbed the stairs of the former hotel above the steakhouse to visit the man who trades 5,000 futures contracts every day.
On the top floor of the only three-story building in town, an array of computers pumps thousands of buy and sell orders into the Chicago Mercantile Exchange at a dizzying pace.
Main Street doesn't attract much attention in this river-valley town of 2,500 people. But the big-city boys can feel the presence of Salem Abraham.
"There have been a few days where we account for 1 percent of the trading volume at the Chicago Mercantile," said Salem Abraham, a multimillionaire arbitrageur who was born and raised in Canadian. "Our average trade is completed in two-tenths of a second. It's like a game of electronic slapjack, but instead of people playing, it's computers."
Abraham, 37, a mathematics and computer whiz, may live in the Texas outback, but he takes considerable pride in putting his talents up against the pit traders in Chicago and other sharpies.
A new generation
Self-assured and driven, he represents the new generation of futures traders who use lightning-fast computer technology and sophisticated trading systems to trade around the clock, from anywhere.
"He is on the cutting edge of electronic trading and knows what he is doing," said Rainer, who's now the chief executive of One Chicago, an electronic stock exchange. "Technology allows him to live anywhere he wants. He can execute trades from Canadian as fast as someone right across the street from the Chicago Mercantile."
Rainer finally visited Abraham last June after hearing so much about his company, whose trading volume soared in 2000 when he got into arbitrage.
"I wanted to see his operation because it's a little unusual. He has managed to create an edge for himself trading electronically," Rainer said. "Canadian is a beautiful place, and I had a great steak dinner."
Abraham, who has eight young children with his wife, Ruth Ann, is the fourth generation of his family to grow up in Canadian. His great-grandfather, who was Lebanese, immigrated to Canadian at the turn of the century.
Dramatic scenery
While much of the Panhandle is flat and featureless, Canadian nestles in a river valley with rolling hills, trees and dramatic mesas. The town boasts a number of well-appointed mansions -- including Abraham's sprawling affair -- legacies of the ranchers and oilmen who once lived here.
Those who visit Abraham encounter the aroma of mesquite-grilled steaks as they take the elevator to the second floor and then walk up a flight of wooden stairs to the trading room.
There the turn-of-the-century feel ends. Packed into a room of about 1,000 square feet are 60 computers and seven or eight traders. Each monitors a handful of terminals that automatically buy and sell stock index futures contracts in the split second that a profit opportunity appears.
Stock index arbitrage seems out of place in Canadian, not just because of its distance from the nation's financial centers, but because it's so intangible. There's not even a physical commodity underlying the trades.
But arbitrage traders serve an important function. They bring more liquidity to the marketplace, helping ensure that millions of investors -- individuals and money managers alike -- get the best prices for their trades.
Their role
Their role is at once obscure and vital: The current price of a stock index and a futures contract on that index should move in tandem. If one gets too high, the arbitrageurs will sell it, and the price drops.
"If you didn't have the arbitrageurs watching for the differences, the prices would get out of line," said Henry Hu, corporate and securities law professor at the University of Texas Law School. "They really make the markets function more efficiently."
For Abraham, though, a role in global capitalism wasn't part of any grand plan. Lifestyle and luck get the credit.
He returned to his hometown in January 1988 after graduating from the University of Notre Dame with a finance degree. "I always planned to come back here," he said. "I married my high-school sweetheart, and I like the quality of life here."
A small town allows him "to be a good dad," and he doesn't have to wait in lines, sit in traffic or worry too much about his children. "If I want to go to the city and enjoy things there, I know the way."
Abraham has three passions -- his family, his trading and his hometown. As he strolls through downtown, everyone seems to recognize him, and many express their appreciation for what he has done to revitalize Main Street. He has purchased several of the town's old buildings and refurbished them, including the Palace theater. He also owns more than 20,000 acres of Panhandle ranch land.