The once lively grains trading pits at the Chicago Board of Trade building will go silent after Monday, as the oldest futures exchange in the United States moves one step closer to strictly electronic trading.
Several floor traders fought the closure by the CME Group that represents the Chicago Mercantile Exchange and Board of Trade, and were able to postpone it from July 2, Reuters reported. The closings – also happening in New York at all CME Group futures pits – are the latest in a trend over the past 15 years that began as electronic trading soared.
“This is not something that happened over night; it’s been happening for a long time,” Dr. Peter Alonzi, a professor of economics at Dominican University in River Forest, Illinois and the former senior manager of the Chicago Board of Trade’s educational programs group in the 1990s, told PBS NewsHour.
For more than 80 years, Chicago Board of Trade members shouted and flashed hand signals to establish futures contracts – agreements to buy or sell a certain amount of a commodity like wheat, corn or oats at a predetermined price and date – in the pits of the landmark art deco building on LaSalle and Jackson streets.
“The prices discovered through the competitive trading activity in the pits were an integral part of the agricultural industry,” Alonzi said. Later, when they started trading futures on treasury bonds, notes and federal funds, action in the floor pits impacted world financial markets.
Open outcry has been the main method of trading futures throughout the Chicago Board of Trade’s history and accounted for the majority of trading volume until 2003.
Passed down over generations of traders, the “craft” – as Alonzi characterized it – has fallen to represent one percent of futures volume for the CME Group, the Associated Press reported. Most futures trading now happens online.
The S&P 500 futures and options pits in Chicago will remain open. The CME Group plans to sublease the grain room and its 10 octagonal pits, a spokesperson told PBS NewsHour.
Click through the timeline to learn more about the Chicago Board of Trade and its 167 years of existence.