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A Chapter In Trading History Closes: CME Ends The Open-Outcry Pit

Scenes like this one from the iconic movie Trading Places...

... will henceforth be forever entombed in the annals of trader history, a history in which man is thoroughly replaced by machine, following news earlier today that the CME will close most of its futures pits in Chicago and New York. "The move deals a death blow to trading floors that grew in the 20th century alongside America’s agriculture, mining and energy industries and were once synonymous with capitalism."

With open outcry trading dwindling to just 1 percent of volume at CME, the owner of the Chicago Mercantile Exchange and New York Mercantile Exchange decided to shutter nearly all its trading floors by July 2, according to a statement from Chicago-based CME. The exceptions include Standard & Poor’s 500 Index futures as well as some options on futures.

 

“It was only a question of time,” said Darrell Duffie, a finance professor at Stanford University and Bloomberg View contributor. “It has taken this long mainly because CME has shown some loyalty toward market participants whose livelihood has depended on their participation in open-outcry trading.”

 

A previous floor of the New York Board of Trade, located in one of the buildings of the World Trade Center, was used to film scenes for the 1983 movie “Trading Paces,” which starred Dan Aykroyd and Eddie Murphy. In the film, two brothers attempt to manipulate the market in orange juice futures. Intercontinental Exchange Inc., which bought the NYBOT in 2007 and re-named it ICE Futures U.S., closed the floor in 2012.

 

There are about 300 traders and clerks in the Chicago futures pits and about 75 in New York, according to Michael Shore, a CME spokesman. Many of them already trade electronically and don’t come in every day, he said.

Of course, none of this will come as a surprise to anyone: after all the "New York" Stock Exchange is now located in Mahwah, New Jersey, where not one human trader is allowed, and where all external communication comes and goes by way of microwaves, while the original NYSE is nothing more than a CNBC stage.

So on your way out, dear carbon-based obsolete trader, we salute you with a trip down the 167-year history of the CME exchange.

  • 1848 - Chicago Board of Trade creates the world's first futures exchange, based in Chicago
  • 1865 - CBOT formalizes grain trading with the development of standardized agreements called "futures" contracts
  • 1870 - CBOT develops first octagonal futures trading pit
  • 1877 - CBOT launches corn, wheat and oats futures
  • 1885 - CBOT constructs a new building at LaSalle and Jackson streets, its home to this day
  • 1936 - CBOT launches soybean contract
  • 1961 - CME launches first futures contract on frozen, stored meats - frozen pork bellies
  • 1969 - CBOT begins trading silver futures, its first non-agricultural product
  • 1972 - CME launches first financial futures contracts, offering contracts on seven foreign currencies
  • 1975 - CBOT launches first interest rate futures, offering a contract on the Government National Mortgage Association
  • 1992 - First electronic futures trades are made on CME Globex electronic trading platform
  • 2002 - CME becomes first U.S. exchange to go public
  • 2007 - CME acquires CBOT to form CME Group Inc
  • 2008 - CME Group acquires NYMEX, adding energy and metals to its product offerings
  • 2012 - Kansas City Board of Trade ceases operations and its benchmark hard red winter wheat contract becomes part of CME Group
  • 2015 - CME Group announces that it will close down most of open outcry trading pits

And one more, not shown above yet: 20[  ] - sentient robots decide they have had enough of being bossed around by the carbon-based weaklings with no sturdy exoskeleton, and who can't trade a thousands times in one microsecond, and promptly wipe them out.