By Darrell Martin
In 1992, when the Chicago Mercantile Exchange, predecessor to the CME Group, introduced its computerized system called Globex for trading futures, there were many who thought this was the beginning of the end of trading as we knew it.
With the announcement made Wednesday by the CME Group, Inc., outlining its plans to close most of its futures trading pits in Chicago and New York by July 2, 2015, that prediction is about to be fulfilled.
Gone will be the days that you picture in your mind of “open outcry” futures trading where crowded traders employ shouts and hand signals to obtain their place in the markets they wish to enter.
Now most investors prefer the speed, efficiency and ease of computerized trading.
When Globex started, the futures volume at Chicago exchanges averaged about 2 million contracts a day. That number now regularly exceeds 15 million contracts per day.
The CME Group reports that open outcry futures trading has fallen to just one percent of the company’s total futures volume.
Anita Liskey, spokeswoman for CME group said, “As the volume in futures slow, having dropped 75 percent in the last five years, customers are choosing the electronic venue.”
The floor-based S&P 500 futures market, which provides an important venue for trading the underlying futures contract for the open outcry S&P 500 options on futures contracts, will remain open on the Chicago trading floor.
Following the expiration of the June 2015 contract on June 19, 2015, equity index futures pits, the DJIA ($10) and NASDAQ-100 will close. As mentioned before, all other futures pits will close on July 2, 2015.
The CME Group also stated that all options pits will be located on a single floor in the company’s Financial Room in Chicago by September.
This announcement brings to the close an era of a familiar way of trading for many. This transition may be difficult for some who are not used to trading electronically.
For those who do most, if not all of your trading by computer, you probably will not notice much difference in your trading. This will be especially true if you trade on Nadex which is already set up for electronic trading.
When you trade on Nadex, you have the speed, efficiency and the ease you need to place your trades. You can trade from anywhere with internet, even on your phone or iPad.
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