There has been a lot of talk lately about the floor and how bad it has gotten.. Sure there were over 10,000 people on the floors when the CME Group purchased the Chicago Board of Trade (CBOT) but a lot has changed since 2007.
The subprime credit crisis hurt a lot of people’s retirement accounts when Lehman and Bear Stearns went out of business, followed by MF Global and PFG. So are all these changes stopping the action on new, combined trading floors of the CME Group?
We asked the only people with first hand knowledge: our friends and fellow traders in the pits.
MrTopStep.com is dedicated to the education and news aspect of the futures and options trading business and today we present you the MrTopStep “Faces of the Floor Part II.” My name is Danny Riley, and I have been on the trading floor for the last 35 years. Our S&P and S&P options trading desk have been part of every major stock market event since 1985.
While the floor has shrunk over the last few years, so has Wall Street. Sure electronic trading has taken over, but it hasn’t it quite killed all the pits. And yes, we still use hand signals like we did 30 years ago.
Let me introduce you to some of our colleagues.
Brian Coolie [COOL] has been filling orders in the CME’s S&P 500 futures pits for 20 years. “This is what I do. I don’t make the money I used to but I still love filling orders.”
10-yr note options: Danny Salvin [DVN] (32 yrs) filling orders in the pits and his partner Mark Stern [CBH] “We’re doing fine. While more trade may be showing up on the screen we still do a decent amount of biz.”
Rumors of the death of the pits are greatly exaggerated
No one likes change but the traders of the CME Group are no strangers to that. As the trading pits have evolved, 99% of all futures are traded electronically and 70% of all options are traded in the open outcry markets.
From London to Singapore exchange after exchange has shut down its floors. Last week Smith Barney announced it was pulling all its employees off the floor. Morgan Stanley just took the head of futures off the floor and moved him to New York, but none of that is going to deter the few thousand people who still march to the floor everyday. Most traders and desk people have the attitude of Tim and Mike from the soy meal and oil option pit, that “Until the CME turns out the lights we are staying put.” So the next time someone says the floor is dead, tell them MrTopStep said they are dead wrong.