As trading pits close, traders yearn for 'roar'
NEW YORK — When Marc Schwartz heard that many of America’s last trading pits were closing down, the veteran commodities trader was hardly surprised. He spent 17 years yelling in the New York pits before moving to a distant office, along with many of his colleagues.
Still, he felt a blow and a pang of nostalgia when he heard the news.
“I liked the energy, I liked the roar,” said Schwartz, 45, as he sat before a bank of six computer screens in an office at DV Trading in Chicago. “There is no more roar.”
Traders are calling it an “end of an era” after news late Wednesday that CME Group, the parent company of the Chicago Board of Trade and other exchanges, is shutting down most trading in its 21 pits in Chicago and New York. Those sites are where people establish prices by flashing hand signals and shouting at each other on a trading floor.
But that shoulder-to-shoulder tussle is coming to an end with a whimper, not a bang. Futures traders and clerks in CME pits have dwindled to about 475, and many of them work remotely using computers and don’t come to the floor every day.
Blame technology. Floor trading has shrunk to a fraction of its volume from two decades ago as faster, cheaper computers take over the process of establishing prices on everything from hogs to cattle to Exxon Mobil’s stock. In total, 2.8 billion futures were traded on CME exchanges last year, but nearly all electronically. Only 31 million futures changed hands on trading floors — 1 percent.
Jim Bower, a 40-year trading veteran, calls the current computerized environment “austere,” and misses the verbal cues that helped him sense where prices were headed. “I could tell whether the market was bullish or bearish just by the tone in the pits,” he said. “It’s not as much fun as it used to be.”
But the global nature of markets today, combined with the information flooding traders every second, makes technology necessary, he said.
“The market is essentially moving around the clock around the world at breakneck speed,” said Bower, 65, president of Bowers Trading, a commodities brokerage in Lafayette, Ind. “You have to have the technology to keep up with it.”
To many, the romance of the pits was best captured in “Trading Places,” the 1983 film starring Dan Aykroyd and Eddie Murphy. In one scene, before entering the pit, Aykroyd famously declares, “Well, this is it, the last bastion of pure capitalism left on earth.”
Schwartz, the Chicago trader, recalled the line with a chuckle, adding: “It didn’t matter who you were, what your education, everyone was equal in the pit.”
Steve Quirk, a senior vice president at broker TD Ameritrade who got his start in the Chicago pits, said he doesn’t think closing trading floors is likely to make markets more dangerous. If anything, computers have allowed more people to fill the role of floor trader.
