Fighters in the market mourn the slow death of old trading pits

When a young law student made a phone call Leo Melamed arrived at 110 North Franklin, Chicago, for a job interview at what he thought was a law firm in 1952, which devastated him.

Merrill Lynch, Pierce, Fenner & Beane was a real broker, and the job was for a “runner” who sent messages around the Chicago Mercantile Exchange trading pit where financial deals were based on everything from onions to eggs.

The growth of people wearing black jackets screaming and fighting, showing events on large boards and recording the results of the end of the day with Polaroid cameras attracted young people Loneliness. After graduating from law school and quickly resigning as a lawyer, he returned to “The Merc”, and took his seat in 1969.

“We were a group of guys who didn’t know the difference between Turkey or Treasury bills, or Swiss francs and cattle,” he said. “I fell in love right away with everyone and everything.”

Covid-19 kills some of the last of “a loud cry”Marketing. Traders who like to talk to them face-to-face have found a missing victory this week as the London Metal Exchange completely changed its original closing plan. “the ring”- Europe’s last commercial pit.

But last month alma mater, now known as CME Group, announced it would happen completely close the store who were first shut down by the epidemic last year, except for the eurodollar pick-up hole. For many in the Chicago business, it marked the end of the season.

The program of pits for sale where Melamed and many other financial leaders learned their skills – and suffered from a culture characterized by video Marketplace – he was dying slowly even before the plague came. Over the past few decades, trade has changed dramatically into the world of and algorithms. Today, even the New York Stock Exchange is primarily a TV studio, with most of the commercials available at the New Jersey Data Center.

Others have survived, including NYSE’s Arca locations in San Francisco and the Box Options Exchange in Chicago. Growing up, CBOE Global Companies, with Vix index sales, is building new facilities and hundreds of retailers, and will move there in 2022.

By keeping the Sound open, LME is trying to encourage all cultural members, who choose the open pit, and its big business and economic stakeholders, who have helped change the business.

Matthew Chamberlain, LME’s chief executive, said he hoped the integration process would continue. “I love Sound, I think everyone in LME loves Sound – it’s a big part of culture, a big part of why most of us joined the group. We love the community, the fun. In my opinion, I hope you’re 10-20 years old.”

Waylaid Ni, the head of e-electing at DRW, a Chicago-based company, said having someone in the CME eurodollar is still important, and predicted that his cry for survival would be open for years to come.

“Most of the marketing channels with this are complex,” he said. “It’s much better to sell this type of product when all the parties are communicating in real time compared to the appearance on the screen.”

The epidemic provided a living test of what would happen if low-income markets suddenly closed. The results did not encourage an obvious cry, says Thomas Fitch, founder and CEO of RV Assets, a UK-based company that provides marketing strategies to marketers and retailers.

Although the eurodollar stock market is moving about 60% of all hole-to-electric sales overnight, the amount and difference between the prices people will buy or sell has not been affected, according to Fitch.

But once the pit was reopened and hybrid trade resumed, the spread grew by about 0.15 cents per contract. The market sells contracts of 1.5m per day, amounting to $ 1.35bn of additional revenue per user, Fitch said. “Why are you back? He associates with people who are traders, traders and marketers. ”

Many former warriors have lost their jobs because the pit mines will soon be destroyed. “It simply came to our notice then [than people expected], and he never died, but he will die of bloodshed because electronics sales increase volume, “says John Lothian, who first went into the pits before writing a well-read corporate story.

After the death of his former pit-selling colleague in 2011, he embarked on a historic memorial service to collect the ancient monuments of mourning, which were unmistakably changed in the Library of Congress’ Veterans History Project. “We’re losing a lot of traders every day, and I think it’s important to find out how the markets work for the longest time in our history,” Lothian said. It was a face-to-face business, where you could trade for millions of dollars at bargains. ”

Changes have taken place frustrated for the many entrepreneurs who remained relevant to the time, as well as their association and the skills that created it. Melamed remembers how he was chosen by other CME brokers as “Darth Vader” to end up receiving electronic trading, but he admits “sad” at the final closure of his many open positions. “Underneath it was a huge scale,” he said. “That’s what is lost.”

But they have been losing the war that began in the early 1980’s when pioneers like A Thomas Peterffy found their inputs in computer-based startup software that also worked the same way merchants do – looking at the market at a premium price. At that time, people were still trading.

Peterffy still remembers his first day in the trading post, Comex’s New York silver manger in 1967 (an exchange of goods in full yes Marketplace he painted later), which left a memorable mark. “It was a lot of money, and it was fun,” Peterffy said. Numeracy on the computer can also be fun, but not just the way people communicate. ”

He later saved enough money to buy a seat on the American Stock Exchange in 1977, his young brother from NYSE who started as a foreign market on Broad Street in lower Manhattan. But being a little awkward and with a strong Hungarian voice, some ground traders tried to hear and understand Peterffy in the middle of the Amex room, which reinforced his efforts to bring in business in the computer age.

Like many other warriors in the era of public crying, Peterffy is careless, but cool and true. “It was a lot of fun, but things change. It was fun to ride a horse and buggy.”

A slight decline in low sales

1998

The “Bund War” led to Eurex’s German exchange to seize the future market on a long-term national loan from fellow London Liffe. The deals had been sold out with an “open cry” in the UK, but retailers prefer the electronic format because they can be easily sold remotely, moving many more.

2001

The Intercontinental Exchange, which, for a short time, made waves by buying the London International Petroleum Exchange (IPE), where most of the volume traded down. With the help of the Bund war, ICE set up state-of-the-art technology platforms.

2005

ICE has announced the closure of IPE ports, and changed future deals such as Brent crude completely electronic. A few weeks later, IPE’s main partner, the New York Mercantile Exchange (Nymex), unveiled plans to dig a hole in London.

2006

Nymex abandoned its idea of ​​restoring low-volume retail in oil contracts after gaining little interest from retailers.

2012

The Intercontinental Exchange ends 142 years of history by closing down New York’s trading pits as the books go down, in favor of electronic commerce.

2015

After 167 years, CME closed most of its ports in Chicago and New York. Open trading had just dropped by 1 percent of future volume. The move included future Nymex opening pits, which CME had purchased at $ 8.9bn seven years earlier. Only the pits connected to other options are open.

2020

Coronavirus pressured CME and Cboe Global Markets to close their retail outlets in Chicago, but reopened many more this summer. Among other things, traders had to go for testing and wear face shields.

2021

The London Metal Exchange also changed its original idea of ​​closing its open ring after trading was temporarily suspended by the epidemic.