Chicago | Reuters –– A few dozen Chicago traders donned their multicoloured jackets to trade soybean and Eurodollar futures the old-fashioned way one last time on Monday, marking the end of 167 years of open-outcry trading in the city where it was born.
Barring a last-minute delay by U.S. regulators, CME Group ended most of its open-outcry futures operations in Chicago and New York, concluding a tradition that once epitomized global financial markets but succumbed to the efficiency and speed of machines.
The din of raucous shouting and frenzied hand gestures at the cavernous Chicago Board of Trade and Chicago Mercantile Exchange (CBOT, CME) floors has faded over the years, and made up only one per cent of total volume by this year. The exchange’s more active options pits will remain open for now, although they too are losing ground to electronic dealing.
Veteran traders returned to Chicago’s grain floor for the final minutes of open-outcry futures trading, filled with nostalgia for days when the pits were packed tightly with people and buzzing with energy. Many drifted into the octagonal pits before the closing bell after initially sharing stories on the sidelines.
“It felt like saying goodbye to an old friend, someone who’d been with you most of your adult life,” said John Pietrzak, a corn broker for more than 35 years who was the last person out of the corn futures pit.
The CME is moving ahead with the plan to close futures pits despite resistance from a small group of floor brokers and traders in Chicago, who have argued the closures would hurt end-users in the Treasury and Eurodollar markets. Last month, they asked the U.S. Commodity Futures Trading Commission (CFTC) to open a 90-day review of the plan.
The CFTC had until 5 p.m. ET on Monday to make a decision about a delay, but said late Monday afternoon it will not extend its review of the closures.
“Just close it”
Floor traders said they hoped the CFTC would not keep the futures pits open beyond Monday to extend its review. It is inevitable that the pits will eventually close because of the shift of business to computers, they said.
“I hope it’s over,” said Tom Cashman, who has been on the grains floor in Chicago for more than 50 years. “If it’s gonna happen, it’s gonna happen.”
Since the CME announced in February that it planned to close the futures pits in July, the trading floor has been through “the world’s longest wake” with former traders and their families visiting to say goodbye, said Scott Shellady, who is in his 28th year of trading and wears a cow-patterned jacket on the CME’s agricultural floor.
“Just close it,” he said. “Take the Band-Aid off.”
As the birthplace of futures trading, and with strong ties to the traditions that surround it, the CME held off the shift to an all-digital platform longer than most other exchanges.
In 2012, CME rival IntercontinentalExchange (ICE) silenced 142 years of open-outcry trading in New York when it closed the trading rings for sugar, cocoa and other soft commodities.
They were the last of ICE’s markets to go all-electronic. North America’s first futures pit to go all-electronic was the Winnipeg Commodity Exchange, in 2004, before it was taken over by ICE in 2007.
Last Thursday, floor traders gathered for a final group picture in the soybean futures pit. The photo op was similar to “taking a picture an hour before your execution,” Shellady said.
“I’m not really that emotional,” he said about the closing of the futures pits. “It’s the facts of life.”
— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Christine Stebbins in Chicago; includes files from AGCanada.com Network staff.Tagged cbot, CME, CME Group, electronic trading, futures trading, open outcry, trading pits