New York | Reuters –– CME Group will save US$10 million (C$12.4 million) per year after it shuts nearly all of its futures pits in New York and Chicago, a spokesman said Thursday, as the world’s biggest futures exchange pushes ahead with cost-cutting measures.
While that may be a significant saving in a single step, he said that sum represents only a quarter of the total cost of running the trading floors, where almost 1,400 people work and products ranging from grains to oil are traded.
His comments came a day after the market operator announced plans to shutter the futures pits, a move widely expected but much feared by floor traders who worry they will lose their livelihoods.
The exchange has defended the decision after a years-long decline in volumes as computerized systems have replaced humans. Pit futures volumes have plunged 75 per cent since 2008 and now only account for one per cent of total futures turnover.
Activity levels have been below a benchmark used by the exchange to measure floor trading for years.
According to the exchange’s rulebook, average daily volume of futures traded in the pits should be at least 30 per cent of those transacted on its electronic Globex platform.
Most contracts traded in the pits fell below that marker as long ago as 2008 and all of them have been under it since 2012, the spokesman said.
“Unlike our competitors, we have provided a choice of venue by supporting open-outcry trading for many years, allowing market participants to adapt as volume shifted to the screen,” he said.
Some 1,200 people work in the Chicago floor, including CME staff, but only 300 are traders or clerks in futures pits. In New York, out of 200 people, only 75 are traders in the pits, he said. Many trade electronically and do not come to the floor each day.
Options trading, which is more complex than futures, will continue in the pits, CME has said. But most market participants have said its long-term future is in doubt.
The firm has been on a cost-savings drive. In October, it said it would cut five per cent of its global workforce.
— Reporting for Reuters by Josephine Mason in New York.