(Dow Jones) — The exchange operator CME Group Inc. said it would permanently close most of its open-outcry trading pits in Chicago, ending one of the world’s last vestiges of old-fashioned floor trading.
CME said Tuesday that a number of trading pits that it closed temporarily in March 2020 to prevent the spread of Covid-19 wouldn’t be reopened. Many U.S. workplaces are coming back to life as the pandemic eases.
Some of the CME pits being shut down include pits for trading agricultural commodities, where traders have for a long time haggled over options on soybeans, wheat, cattle and hogs.
Floor trading for agricultural commodities has existed in Chicago since the mid-19th century and has long been part of the heritage of CME Group, which took its name from the Chicago Mercantile Exchange, now one of the company’s subsidiaries. The rise of electronic trading has made floor traders nearly irrelevant in most financial markets, and exchanges have been shutting down trading pits in Chicago and elsewhere during the past two decades.
The only part of CME’s trading floor that will remain open is the Eurodollar options pit, which the exchange operator reopened in August with social-distancing requirements and other measures to protect traders from the coronavirus. Eurodollars are a type of interest-rate contract and represent one of CME’s biggest marketplaces.
CME is also permanently closing its pit for the trading of futures and options on the S&P 500, the exchange operator said.
Traders who worked on CME’s floor before March 2020 might now need to find new work, or switch to trading electronically, if they haven’t already done so.
Ryan Carlson, an independent futures trader who work on CME’s floor in the 2000s, said he wasn’t surprised that the pits were closing.
“For the people who work down there, it’s sad,” said Carlson, the creator of tradingpithistory.com, a website that documents the hand signals used by floor traders at various exchanges. “But all the people who worked there knew the hammer was going to come down on them.”
Following CME’s move, only a few outposts of floor trading remain in the U.S. Those include the New York Stock Exchange’s trading floor in Manhattan and several options trading floors, including one at CME’s crosstown rival in Chicago, Cboe Global Markets Inc.
Overseas, the London Metal Exchange is considering permanently closing its open-outcry ring, where traders sitting on a red couch swap metals such as copper and lead. Like CME, the LME temporarily closed the ring in March 2020 as a coronavirus precaution. The closure reignited longstanding discussions over whether open-outcry trading was still needed.
In 2016, CME shut down the Manhattan energy trading floor of the New York Mercantile Exchange, one of its subsidiaries. The next year, CME ended a daily auction on its Chicago trading floor that had helped set the national price of cheese, replacing it with an electronic process.