When Mark 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.
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"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 speaking about 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 human trading in its 21 trading pits in Chicago and New York. This "open outcry" method is when people establish prices by flashing hand signals and shouting at each other on a trading floor.
But the end of that shoulder-to-shoulder tussle is coming with a whimper, not a bang. Traders in CME pits have dwindled to just a few hundred.
Blame computers. 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 of futures were traded by humans on trading floors — 1 percent of the total.
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, Indiana. "You have to have the technology to keep up with it."
And at least a few humans to step in when it backfires.
In the Flash Crash of 2010, an algorithm gone wrong caused the Dow Jones industrial average to fall 600 points in less than five minutes. And Facebook's initial public offering in 2012 was beset by technical difficulties on the Nasdaq Stock Market, which unlike the New York Stock Exchange does not use human intermediaries. The Nasdaq had to pay $10 million in fines for the computer failures.
When Twitter decided to go public the next year, it was said the social media company chose the NYSE to avoid a Facebook-like debacle. Its first day of trading went off without a hitch, a rare moment of glory for the iconic trading floor, which is quiet most days.
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 the floor trader, acting as a middle man bringing buyers and sellers together.
"You've essentially just made it a virtual trading pit for the world," Quirk said. "That's probably the biggest benefit."
Schwartz, the Chicago trader, had long packed away his trading jacket in a closet in his home, but the memories are still fresh. The challenge of the trading in the pits, he said, was like "playing basketball while doing math in your head."
"You knew it was coming," he said of CME's decision. "But to actually hear they were closing the pits, it's sad."
AP Business Writer Ken Sweet contributed to this story from New York. Funk reported from Omaha, Nebraska.