For Chicago futures traders, one final round in the ringCHICAGO - A few dozen Chicago traders donned their multicolored 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.
By: Tom Polansek, Reuters
CHICAGO - A few dozen Chicago traders donned their multicolored 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 Inc will end most of its open-outcry futures operations in Chicago and New York after the closing bell on Monday, 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 floors has faded over the years, and now makes up only 1 percent of total volume. The exchange's more active options pits will remain open for now, although they too are losing ground to electronic dealing.
Veteran traders gathered on Monday morning for breakfast at Ceres Cafe, a restaurant and watering hole in the historic CBOT building, to reminisce about their lives in the pits.
Patrick Hillegass, who has been on the floor for more than 30 years, recalled that baseball great Joe DiMaggio, former U.S. President Jimmy Carter and former Soviet leader Mikhail Gorbachev made separate visits to the floor over the years.
"It was always fun to come to work," Hillegass said.
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 has until close of business on Monday to make a decision about whether to delay the closures. An agency spokeswoman said in midmorning that there was nothing to announce yet.
Long-time floor traders said they hope the CFTC does 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 Inc 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.
More than a decade earlier, the London International Financial Futures Exchange became the first major futures house to abandon open-outcry when it switched abruptly to all-electronic trading.
Last Thursday, traders remaining on the CME's grain and financial floors in Chicago 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."