For decades, those born and bred on exchange floors knew this day would arrive. However, like a precious friend struggling for another moment at hospice, the news of the CME Group’ shuttering most futures pits brought to mind a funny sort of surprise: Feelings of deep sadness, personal reflections of the untold mysteries and misunderstandings of the industry. I was overcome by momentary reflections on the camaraderie, the characters, the chaos, the self-policing, and the pressure and pleasure of it all. However, sentiment aside, this news draws both a resounding and hugely uncomfortable portrait of a world slipping away.
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Preemptive warning signs, hints of the end drawing nigh, came to me during the spring of 1992 when I hesitantly yet judiciously took CME Globex training – the smashingly successful online trading portal that eventually dismembered open outcry futures trading and forever altered thousands of lives in the process. “Don’t be the last to turn the lights off,” became a familiar chide given by Globex instructors as way of admonishing resistant traders to take part in what was dubbed a better and more efficient way of doing business.
Many floor people battled change; not being able or willing to perceive their skill as a futures pit trader – for better or worse – going the way of the lighthouse keeper or the water-tower builder. It helps prove how difficult it is to consider alternative outcomes as peering into the unknown requires energy; shining light to the unseen is costly and, looking for what you don’t see can be excruciating, because you might find something you don’t want to see.
I can’t blame the CME Group for this decision as they have been agonizing over this reality for more than a decade and, I’m deeply comforted knowing that the commencement of death throes was undoubtedly ordered by a collection of men and women - some of whom cared less for the corporate bottom line and a lot more about the sheer impact it will have on individuals from now until perpetuity.
Every trader remembers their first time walking onto the trading floor as the shear noise smashes you right in the mouth - the electricity, the chaos, the stench, the people surrounding you like Times Square on New Year’s Eve. Yet, as the weeks and months roll on – these sensations almost become you. Like an early morning mist that burns off with the summer sun, the chaos suddenly seems orderly, the hand signals from 50 yards out can now be deciphered in a split second, one can somehow catch and flick trading cards with ease, one suddenly sees the fairness of it all, the sheer emotions – the personal highs and degrading lows – causing a weird sort of transparency amongst fellow traders. The confessions that were shared all being taken to the grave.
The trading pits were a battle ground for price discovery and that proved to be a great equalizer. There hasn’t ever been an industry before or since that provided an equal playing field regardless of religion, gender, or education. Some of the best pit traders were high school drop-outs while some of the worst were newly minted Ivy League MBAs.
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Today it seems prerogative that electronic trading is superior to pit trading – similar to “it’s better” speaking with script-reading customer service agents residing 5,000 miles away -as society points to efficiency, more volume and less cost as justifiers to their thinking and, on a pedestrian level, It’s tempting to slowly buy-in to this societal change.
However, I’m alarmed with this change – speed, efficiency, volume at all costs - especially within the financial markets. It’s hard to argue that more volume is a bad thing, but what kind of volume is it and is it truly adding to liquidity when the markets need it? We don’t know the full measure of what is happening in the electronic atmosphere of the market and, if the long-list of multi-billion dollar “electronic hiccups” isn’t warning enough – bear in mind, the “flash crash” would’ve had a far different outcome if there were human beings present to simply stop the trading. Our country needs viable stock and commodities exchanges – not casinos where trading is tempted to turn into nothing but technology business.
In appreciation of the industry at large, I would like to say thank you for the hundreds of brokers, traders, and exchange personnel with whom I’ve shared both the opportunity and privilege to grow and learn as a trader over the decades. Similar to a modern-day “mosh pit”, I Spent countless hours jammed shoulder-to-shoulder with other traders and trading staff and, it produced a bond – a familial link – that transcends both emotions and time.
I started in this industry as an 18-year old boy. Now, looking back, I reflect on the lessons learned, the emotions, the broken dreams, the vast fortunes made and lost, as well as the raging hostility of my fellow traders at times, and the fear.