How did Nick Kokonas's ETF arbitrage between New York and Chicago work?

Nick Kokonas says New York traders in early ETFs such as the QQQs hedged with Nasdaq futures in Chicago, but orders crossed by phone and a paper ticket that took about 30 seconds. After reading the CFTC rules in full and finding nothing that barred one firm talking to itself across both cities, he set up a dedicated line straight into the pit. He says the business reached a couple percent of American Stock Exchange volume within six months and made over $100 million that year.

• Kokonas says the first trade on the line made a couple hundred thousand dollars almost instantly at no risk.
• Fearing a backlash from the big banks, he shut it down and applied for an exchange pilot program to run it in the open.
• Kokonas was 31 and owned only a small share of the firm at the time.

▸In their words

“And if I could just talk directly to New York from inside the pit, I've got a 20-second time window on Goldman Sachs.” Nick Kokonas · at 26:56 — open in the transcript →

Source: our own transcription of the episode. The full conversation is on My First Million (2026-10-26). Read the whole episode summary →

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