On July 6, Chicago-based CME Group Inc closed its historic trading pits – once used to trade in commodities like cattle, gold and corn – giving in to the modern methods and efficient machinery that now dominate the industry. On the final day of trading, a group of Chicago brokers sported their trademark jackets for the last time as they dealt in European futures and soybean in the traditional way in the city where it all started.
[A] group of traders requested the US Commodity Futures Trading Commission (CFTC) to review the potential repercussions to the market
In opposition of CME’s plans to end the 167-year old practice, a group of traders requested the US Commodity Futures Trading Commission (CFTC) to review the potential repercussions to the market. Despite the resistance, the CFTC has brought the investigation to a close.
Following CME’s announcement in February that it would close open-outcry futures trading in both Chicago and New York, crowds of traders flocked in to the famous pit in Chicago to bid farewell. “It felt like saying goodbye to an old friend, someone who’d been with you most of your adult life,” John Pietrzak, a corn broker for more than three decades told Reuters.
Pit trading reached its pinnacle in the late 1990s, when as many as 10,000 boisterous, and often aggressive, brokers would gather on the world’s largest trading floor in Chicago. Soon after this peak, the sharp demise of the practice began as computer technology was introduced to the industry.
Although many are saddened to let the tradition go, CME has held onto it far longer than many other big players in the industry who have already switched over to more efficient and organised electronic systems. The London International Financial Futures Exchange was the first to close over a decade ago, while in 2012 IntercontinentalExchange Inc terminated its open-outcry trading in New York. The end of the tradition in its birthplace is certainly poignant, particularly to those who witnessed the mayhem in its heyday, but it was inevitable given the benefits of electronic trading and the shift of the entire industry.
