Brave new world.

Chicago trader Jack McInerney spent last summer visiting Russia and its plethora of exchanges. He saw opportunity, both in Russia and abroad.

Opportunity is knocking on the door of the former Soviet Union. The collapse of its old economic system has cleared the way for expansion into new

The former Soviet Union, now known as the Commonwealth of Independent States (CIS), is 15 different countries (by last count). Those not in civil wars are giving capitalism a shot.

Russia alone has over 500 cash commodity exchanges. The largest are the Moscow Commodity Exchange (MCE) and the Russian Commodity & Raw Materials Exchange (RC&RME). These exchanges, and many others, want to move to the next stage of trading: futures and options. More than 10 bona fide futures exchanges could be located in Russia within the year.

The cash commodity exchanges look and sound like U.S. futures exchanges; the main difference is how and when they trade. Trading is done by a single seller, somewhat like an art auction at a scheduled time. Brokers and traders wear badges resembling U.S. exchange badges. A trading session may last from 30 seconds to five minutes at most. Delivery usually takes place within 24 hours.

The mission

I was asked to come to the former Soviet Union by Alexander A. Belozertsev, who I describe as "the one-eyed man in the kingdom of the blind."

The former Soviet government had sent Belozertsev to Chicago for TABULAR DATA OMITTED one year in 1991 to learn everything he could about western methods of distribution. He worked at the Chicago Mercantile Exchange (CME) for the first six months of his visit and the Chicago Board of Trade for the last six months.

But what a difference a year makes. He was to bring this knowledge back to the Ministry of Grain Procurement. That Ministry now gone, Belozertsev works with the many quasi-futures exchanges and shares his experience.

The cash exchanges were doing very well in 1991, according to Igor N. Chumachenko, president of the All-Russia Farmers Exchange. But tax laws in Russia change faster than the weather in Chicago.

Because of tax changes in late 1991, most exchanges went flat broke. Priorities being what they are, it seems Russia will need some financial aid from the U.S. government if it wants to set up a futures exchange anytime soon.

Two types of cash exchanges exist: universal and commodity specific. The two largest universal exchanges are the RC&RME and the MCE, both located in Moscow.

The commodity specific cash exchanges trade in only one area of products (oil, metal, agriculture, etc.). The Non-Ferrous Metals Exchange (N-FME), Moscow Petroleum Exchange and the Farmers Grain Exchange are the most likely to begin futures trading.

The managing director of the RC&RME, Alexander V. Deduchenko, expressed great concern about the cost of setting up a futures exchange in as poor a country as Russia. Deduchenko would like the resources of an American exchange. I told him what my grandfather told me a long time ago: "You're never as poor as you feel, and the other guy is never as rich as he looks."

He then said, "Maybe the RC&RME should wait until futures trading would be profitable in Russia." I told him everyone will be trading futures if he waits that long and the time to start was now. In this business, being first can mean everything.

MCE Chairman Yuriy A. Miliukov has sent delegations to Chicago's exchanges on fact-finding missions. The last delegation in February 1991 was lead by Paul Mochalor, vice president of development, Aleksey E. Khaliavin, vice president international, and Vitaly Shorin, a board member.

By far, this exchange has the best trading floor of any of the Russian exchanges. It is about the same size as the CME, but only uses a fraction of the space.

Breaking the path

Already, the MCE has done quite a bit of groundwork for futures trading. MCE president George L. Vasilyev said the exchange has already "designed several contracts, complete with delivery points."

Today, it trades rubles against U.S. dollars and German Deutsche marks once a week on a cash basis.

The RC&RME and the MCE should open universal futures exchanges in late 1993, but they probably won't be the first.

The N-FME may beat them all to the opening bell. Starting from scratch, it created a banking system, wrote the clearing and settlement software and the delivery warehouse receipts. It plans to start with about 125 members. After about six months, non-Russians would be allowed to buy seats.

Most new Russian futures exchanges probably will start this way. Seats no doubt will be a bargain for the first buyers.

Just remember when the International Monetary Market, London International Financial Futures Exchange and Marche a Terme International de France seats were all less than $20,000.

It may take a year or two for futures trading to catch on, but once it does, seatholders will be fortunate people. Of course, keep in mind, V.I. Lenin's first action as leader of the worker's state was to "eliminate" 3 million brokers and traders who he called "parasites of humanity." Let's hope the new economic order has Lenin spinning in his tomb.