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 The world's largest futures exchange operator ended most of its
open-outcry futures operations in Chicago and New York without an
extended review from U.S. regulators, 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 CME's
cavernous Chicago Board of Trade and Chicago Mercantile Exchange
floors has faded over the years, and made up only 1 percent of total
volume by this year. The exchanges' more active options pits will
remain open for now, although they too are losing ground to
electronic dealing.
Veteran traders returned to the grain floor in Chicago to witness
the end of 167 years of open-outcry trading in the city where it was
born. Many drifted into the octagonal trading 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. He was the last person out of the corn
futures pit.
The CME shut the pits despite resistance from a small group of floor
brokers and traders in Chicago, who 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 said on Monday it would not extend its review. The closures
were not considered "novel or complex" and were adequately explained
by the CME, an agency spokesman said.
A CME spokeswoman declined to comment.
'JUST CLOSE IT'
Long-time floor traders had wanted the CFTC to let the pits die as
planned. They felt it was inevitable that the floor would eventually
close because of the shift of business to computers.
"If it's gonna happen, it's gonna happen," said Tom Cashman, who has
been on the grains floor in Chicago for more than 50 years.
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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, Chicago 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."
(Additional repoting by Christine Stebbins in Chicago; Editing by
Richard Chang and Matthew Lewis)
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