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marketeye
Veteran Advisor

It's Official! The Grain Floor Is Closing

It’s official! After 124 years, the CME Group announced this week that it will close the farm futures trading pits July 2.
Why?
Open outcry volume has been decreasing by 75% since 2008. This year, open outcry futures contracts now make up only 1% of the company’s business.
The S & P 500 Standard Futures pit, which continues to provide an important venue for trading the underlying futures contract for the S & P 500 options on futures contract, will remain open, as will all options pits in both locations except for the DJIA ($10) and NASDAQ 100 options, according to the CME Group press release.
In addition, in in Chicago, all options pits will be located on a single floor in the company’s Financial Room by September.
Scott Shellady, a regular contributor to Agriculture.com’s Marketing Talk discussion group, and SVP of TJM Investments, says this news has been anticipated for awhile.
“While I have had a wonderful time in the business over the last 27 years, only 1% of the futures volume was done via open outcry,” Shellady says.
He adds, “Options are still 50/50 but the futures pits have been empty for a long time. While I understand the CME's decision, it is still nostalgically sad. Ultimately, someday soon, everything will be done electronically.”
Historically speaking, the Chicago Board of Trade Exchange opened in 1848. Corn, wheat and oats open outcry futures started trading in 1877. Soybean open outcry futures opened in 1936.
“I experienced the closing of open outcry trading in London in 1997 when the open outcry pits went dark and all the trade went to the screen. The exchange thrived in the aftermath. I expect that will do the same here in Chicago,” Shellady says.
 
As for me and my team, we will adapt, roll with the changes and thrive like we/those did in London did 18 years ago. We will embrace the opportunity."

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Reply:

 

As a farmer using the board, or your elevator using the board, what is your response to this news?

 

Thanks,

 

Mike

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27 Replies
luisvieira
Senior Contributor

Re: It's Official! The Grain Floor Is Closing

At least I was ablet to visit it before it closed.

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giolucas
Veteran Advisor

Re: It's Official! The Grain Floor Is Closing

Had a meeting in the Atrium at the CBOT a couple of weeks back and was amazed at how quiet it was, the crazy security and the lack of people walking around.  

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marketeye
Veteran Advisor

Re: It's Official! The Grain Floor Is Closing

Just so everyone is clear, the grain futures open outcry trading will close, July 2nd. All farm futures trading will now be conducted on the electronic Globex platform.

The grain option contract trading will now move into the financial room, next door.

 

As a sidenote, I am on the floor today. The traders are jokingly asking if Home Depot is hiring, and if any other trading offices upstairs in this building is looking for help. Also, there is a meeting this afternoon for CME Group Exchange members and CME leaders. You are not welcome, if you are a member that plans to cause a scene. But, it will not be a surprise if that meeting turns very heated.

 

 Mike

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elcheapo
Veteran Advisor

Re: It's Official! The Grain Floor Is Closing

Where is the market?

Remember..
This is a COMPANY decision ....that has
A direct impact on our wallets.

Nobody can see anything wrong?

I think there should be a new company
That holds to our ideals..
This is the united states....not Europe.

Someone needs to say who owns the
Market, and where they are from

I am so tired of everyone saying so
What, what difference does it make

A lot

If we are all electronic, what will protect us?

If the Pentagon can be hacked in the
Past
Several large retailers

Now.a total breach by the second largest
Health insurance co....

What makes you think we are safe, plus
It must be open frame since everyone must
Be allowed to trade....that opens many doors
to the system.

How can we have a market without humans

We are now all computer simulation.

I myself believe it horrible.

The most disturbing thing is, nobody
Is doing anything about it.

I view it as a matter of security

Out here in the rural, where the crops
Are produced, we do business by handshake
And we want to do away with it all
Becouse someone in a far away place
Wants to do away with that so they
Can make money.

Wake up people

You want to be like Europe?
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Shaggy98
Senior Advisor

Re: It's Official! The Grain Floor Is Closing

How long will it be before we open a 24 hour trading day?
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elcheapo
Veteran Advisor

Re: It's Official! The Grain Floor Is Closing

We already are

Hey people....a closed door meeting....we're
Not invited

Hey this is OUR market....the money we
Make is decided Here.....and we don't
Have a say?

Where is the media

Where are the agencies that are to
Protect us

What about our reps?

History in the making

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giolucas
Veteran Advisor

Re: It's Official! The Grain Floor Is Closing

Pit trading represented too much favoritism, too much inefficiencies (Telephone calls, then Runners bringing the order into the pit)  and too much BULLS...T  .with all the arbitration hearings on trades.   Don't fear technology, we are better for it.

r3020
Senior Advisor

Re: It's Official! The Grain Floor Is Closing


@giolucas wrote:

Pit trading represented too much favoritism, too much inefficiencies (Telephone calls, then Runners bringing the order into the pit)  and too much BULLS...T  .with all the arbitration hearings on trades.   Don't fear technology, we are better for it.


Much easier to manipulate the market with computer software than it is holding orders in your hand. It will happen so fast you will never know you got it.

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hardnox
Advisor

Re: It's Official! The Grain Floor Is Closing

It used to be a member owned non-profit. Now it is owned by a corporation which is, thank God, a person as well.

 

The old system never would have let MF Global or PFG happen because the members had skin in the game. When member firms got in trouble they'd liquidate them and cover it so as to maintain the integrity of the exchange.

 

It should be operated as a public utility.  It is unlike even a stock exchange in that it is a complete zero sum game whose only purpose is to permit participants to pass risk off. Not a casino.

 

Next think you know they'll be moving it to Dubai for more favorable tax treatment.

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