CME Group, the operator of futures markets in Chicago and New York, said it will close most of its open outcry futures trading pits by July 2. The frenzied pits, where traders stood on risers and used a combination of shouts and hand signals to make deals, set the price for an array of commodities and financial contracts for decades. But open outcry has largely been displaced by electronic trading, and now accounts for “just 1 percent of the company’s total futures volume,” said CME Group.
Only a couple of futures contracts will remain open to trading on the exchange floor, the company said, and options contracts, “which continue to trade actively on both the floor and on the screen, will remain open” in most cases.
“An era is coming to an end,” said Business Insider, although the step was not a surprise. “This type of face-to-face trading has basically died out in recent years with the rise of electronic trading.”
CME Group describes itself as “the world’s leading and most diverse derivatives marketplace,” the place “where the world comes to manage risk.” Its exchanges trade futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. The company said it “will make every attempt” to arrange booth space for traders who want to operate electronically after the open outcry pits are closed.
CME Group is the descendant of the world’s first futures exchange, the Chicago Board of Trade, which was founded in 1848, according to a CME history, with the first octagonal trading pit opened in 1870. The Board of Trade and longtime rival Chicago Mercantile Exchange merged in 2007 to form CME Group. A year later it acquired NYMEX, which handled energy and metals contracts. In 2012, the Kansas City Board of Trade became part of CME Group.