Chicago | Reuters — CME Group will shutter most of its open-outcry futures pits by July 2, the world’s largest futures market operator said Wednesday, bringing down the curtain on a once-raucous tradition that has been in decline since the rise of computerized trading.
The decision ousts traders of products ranging from grain and livestock to gold from open-outcry futures pits in Chicago and New York. Options pits, which have stayed active in the face of electronic trading, will remain open.
Futures traders were disappointed but not surprised to hear they were getting evicted. Only about one per cent of total futures volume takes place in the pits, where traders shout and use hand signals to conduct business.
“We all knew it was going to end,” said Jerry Israelov, who has traded futures and options on CME’s Chicago floors for the past 25 years.
Chicago’s 167-year-old grain pits are just the latest to bite the dust. CME’s biggest rival, IntercontinentalExchange Inc. (ICE), in 2012 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.
“My best memory is 20 years ago when it was much busier. The pits were vibrant,” said Scott Shellady, who is in his 28th year of trading and wears a trademark cow-patterned jacket on CME’s agricultural floor in Chicago.
CME will keep open the S+P 500 futures pit because it “continues to provide an important venue for trading the underlying futures contract for the open-outcry S+P 500 options on futures contract,” according to the company.
Equity index futures pits and the DJIA ($10) and NASDAQ-100 options pits will close following the expiration of the June 2015 contract on June 19.
All other futures pits will close on July 2.
— Tom Polansek reports on agriculture and ag commodity markets for Reuters in Chicago. Additional reporting for Reuters by Jo Winterbottom in Chicago and Nayan Das in Bangalore.