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worldwide open-outcry exchanges, either directly or through intermediaries. |
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Neal: Andy, when I mention trading Chicago style, what comes to mind? What do you think it will evolve into? |
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Andy: Certainly the first things that come to mind when you mention trading Chicago style are the massive S&P and Euro-dollar pits at the CME and the airport hangarlike financial pit at the CBOT. These markets are like no other in the world. It is impossible for the uninitiated not to be awed by the sheer spectacle and physical nature of any one of these markets during active trading hours. Up until very recently, the open-outcry pittrading style of the CBOT and the CME and the membership structure of the exchanges themselves have provided the model for how to transact futures business. |
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But now, the markets that are still open-outcrybased, such as Chicago, have seen their membership seat prices plummet. The current three-pronged strategy is to use electronic trading outside traditional pit hours, provide both methods of order execution during the day, and in some cases develop partnerships with European and Asian markets to route electronic orders to the existing trading floors. But as these exchanges pour resources into supporting each of these initiatives and allow time for membership voting in order to approve actions, the new electronic exchanges are gaining experience and market share. The proliferation of electronic exchanges, the growth in electronic trading volumes on mainly open-outcry exchanges, as well as recent or planned transitions from open-outcry to screen-based systems at the Matif, LIFFE, and SFE have proven that the new business model of an electronic trading environment managed by a for-profit corporate structure will be the model as we go forward. |
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Chicago, like most other financial centers, is currently in a transition phase. The rise in Internet order-routing systems and electronic trading terminals has forced many market participants, such as local floor traders, CTAs, and brokerage houses, |
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