Mar

4

Long faces as NY commods floor trade ends long run
Reuters Friday February 29 2008

The downcast looks came days before open-outcry futures trading on ICE Futures U.S. ends for good when Friday's closing bell rings, concluding a nearly 140-year history of trading agricultural commodities on exchange floors in New York. The contracts will become fully electronic March 3.

As an inhabitant of the pit for many years, I mourn any loss of floor trading. What really disturbs me is that many local members bought into the spin that the exchanges put forth about the benefits of electronic trading and allowed this to happen.  I understand the politics of exchanges, and the fact that the directors don't always have the best interests of the members in mind — mainly their livelihood.  Call me old fashioned, but I prefer the open outcry method to any electronic system.  I haven't quantified the following, but I think that there will be a loss of liquidity and depth once the exchanges all go electronic. I just wonder how the exchanges will adapt in the event of a long term computer glitch, power outage, or other computer disruption.  Somehow, eternal optimist that I am, I think that there will someday be a resurgence of floor trading.

Manuel Bravochico remarks:

Floor traders for the most part were dishonest. But the ones in the NY pits were the absolute worst, many times acting as liquidity takers instead of liquidity makers for screen traders. Thank you ICE and Globex, your success at taking essentially all the pit volume away from the floor traders sends the message. A resurgence of floor trading? Someone forgot to take his meds today.


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