CME to close futures pits as outcry volumes dwindle

Otmane El Rhazi from The Bullion Desk.

CME Group will close most of its futures trading pits in New York and Chicago by July 2, the exchange said on Wednesday.

CME justified the move by noting that open outcry activity on the metals, energy and agricultural commodities floors has declined to just one percent of futures contracts traded daily. For many years now, its Globex system has handled most of the volume.

Approximately 300 traders and clerks in the Chicago futures pits and about 75 in New York could be affected. However, many of these market participants also trade electronically, Michael Shore, a CME spokesman, told Bloomberg.

In the metals space, CME trades gold and silver futures through its Comex metals division in New York. It also bought the Nymex in August 2008, where contracts include platinum and palladium.

Options on futures contracts, which continue to trade actively on both the floor and the screen, will remain open except for the DJIA and NASDAQ-100 open outcry equity index options markets, which are designed to deliver into floor-based futures contracts, CME said.

Additionally, the floor-based S&P 500 futures market, which continues to provide an important venue for trading the underlying futures contract for the open outcry S&P 500 options on futures contract, will remain open in Chicago on a single floor in the company’s financial room.

Somewhat ironically, just last week, the London Metal Exchange, which operates the remaining trading floor in Europe, announced that it will move its headquarters to larger premises in about a year. The new space will include an open-outcry ring and offices.

“These new premises will accommodate both the ring and the enhancements the LME has committed to in respect of investing in ring-based technology,” the LME said in a press release.

The LME has had three homes in its 137-year history – all in London’s financial district. Its original location in 1882 was in purpose-built premises in Whittington Avenue, where it remained until September 1980.

It then moved to Plantation House – half a mile away – in Fenchurch Street but outgrew that location within a decade. The move to its present headquarters in Leadenhall Street was made in 1994.

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