First it was done with chalk boards, and then electronic boards with chalk backing it up. Then the e-boards were replaced with fluorescent lighting, backed up by high speed computers. Back in the day it was how the trading business was done but today it’s a lost art. What is this lost art? Its called hand signals, using your hands to bid and offer, to buy and sell, to make money and lose money. Big size trading or small, it didn’t matter, it was all about price discovery and making money fast, and after over 150 years it’s going away, and it’s going fast.
There is not much that can be done. There is only one, open outcry futures pit left in the world and it’s at
141 W Jackson, the former, Chicago Board of Trade (CBOT), now the Chicago Mercantile Group (CME). From the start of the trading floors it took a certain type of person, you had to be quick on your feet and want to make fast cash. In the old days the traders in the pits jumped up and down, buying and selling just as they do today, but the ‘big pits’ are mostly gone. It’s mostly the option pits that are left. The once high and mighty bond pit that used to hold over 600 locals, order fillers and clerks was down to less than 20 traders before the pit was closed last summer. The euro dollars options pit that used to span the length of the upper trading room at 30 S Wacker is down to less than 100 traders. So why do these options pits still exist? Its call price discovery. There is no computer that gives a quote as quickly as a clerk doing a hand signals from the desk to the pit, and in most cases the desk doesn’t even use signals, they have direct lines into the pits. If you had to quote up a 4 way options trade, type it into the computer to get a quote it would take a greater amount of time ,and the other thing is, some customers just prefer calling the ‘pit’ over dialing into some type of options platform. The currencies options pits still exist but it’s down to less than 10 traders. Over in the 5, 10 and 30 year options pits they still do some biz, but more and more of the volume continues to move to the electronic platforms. It’s called the advancement of technology and there is no way to stop that.
At one point there were over 20,000 people on the floor of the CBOT, CME and the CBOE, but those days are gone. Its up to us, the former traders of the floors, to keep the rich history of Chicago’s financial district going. It is, as we say, a ‘never forget’ type thing. I took this picture a few years ago. Back then I knew the time of the trading floors and open outcry style of trading was going away and today it is doing just that. As more option pits pass above their volume thresholds its just a matter of time before all the pits are gone.
I knew when I first walked on the floor, it was bright lights, big city. I knew I had to be there. Good, bad or ugly, it was the best place for a street guy to be, but the bright lights are turning dim and soon the lights will go out. I’ll never forget and I hope you don’t either.
It was a good ride but as we all know…all good things come to an end.
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