CME pit

CME to close most futures pits

By Yasufumi Saito

One of the icons of capitalism is fading out as the world is more digitized.

CME Group Inc., the world’s largest futures-exchange operator, announced Wednesday it will close most of its open-outcry futures trading pits this summer, due to the shift from floor trading to electronic transactions.

Twenty futures and options pits in Chicago and New York will be closed by July 2. All other options pits in Chicago will be relocated on a single floor by September, CME Group said.

Also, the S&P 500 futures market will remain open on the Chicago trading floor because it serves as the basis for floor trading of options on the S&P 500 futures.

The pits in Chicago have been the places where traders in colorful jackets “cry out” with shouts and hand signals to buy and sell contracts for corn, cattle and pork bellies since the first futures exchange was founded in the mid-19th century as the Chicago Board of Trade.

“Futures pits were always very busy before, you know, the day always went by quickly. Over the last 10 years or so, it’s been very slow and kind of sad to see.”
-Lester Crockett, WSP Commodities Trading LLC

But open outcry futures trading have shrunk to only 1 percent of average daily volume, as the computerized system started in 1992 had taken over its central position, the Chicago-based company said in a statement.

Nowadays about 300 traders and clerks are in the futures pits in Chicago daily, and “many of them also trade on the screen and don’t necessarily come to the trading floor,” said spokeswoman Laurie Bischel.

Around 60 jobs will be lost at the CME Group by the decision, the company said. The ripple effect for traders or clerks at the closing pits is yet to come. “They are pretty upset about it on the floor,” one trader said, asking not to be identified.

“I was really sad when I heard about it,” said Lester Crockett, a trader in the remaining eurodollar options pit for WSP Commodities Trading LLC. “Futures pits were always very busy before, you know, the day always went by quickly. Over the last 10 years or so, it’s been very slow and kind of sad to see.”

Dynamic, face-to-face trading has gone away. “I don’t think anybody’s position is safe,” said Crockett, who has been working the floor for more than 20 years.

Photo at top: Corn pit on the trading floor at the Chicago Board of Trade in 1988. (Greg Wass/Creative Commons)