CHICAGO - Chalk up another victory of the machines over humans.
The parent company of the Chicago Board of Trade and other exchanges is ending most trading involving people on the floor who establish prices by flashing hand signals and shouting at each other.
CME Group said Wednesday it that it will close most of its futures trading pits in Chicago and New York by July 2.
The move comes as so-called "open outcry" futures trading has fallen to 1 per cent of CME Group's futures volume. Most of the trading is now done electronically.
Scenes of open-outcry trading — with traders crowded on exchange floors using shouts and hand signals to convey bids — has long been associated in the public's mind with the frenzied world of financial markets. But the practice is largely dying out as investors prefer the speed and efficiency of computerized trading.
"As the volume in futures slow, having dropped 75 per cent in the last five years, customers are choosing the electronic venue," said Anita Liskey, spokeswoman for CME Group.
That transition has already been seem on the iconic New York Stock Exchange, where traders once stood shoulder-to-shoulder screaming at each other and into telephones. But now few traders actually work on the relatively tranquil floor toting hand-held devices.
CME Group said options on futures contracts will continue to trade on both of the exchange floors and electronically, with the exception of two stock index-options markets based on the Dow Jones Industrial Average and a basket of stocks trading on Nasdaq.
The trading pits for S&P 500 futures and options on futures will remain open, while equity index futures pits will close, the Chicago-based company said.
CME expects to eliminate a total of about 60 jobs in New York and Chicago as a result of the changes, Liskey said.
To assist floor traders with the transition, CME said it will try to make booth space available to those who want to trade electronically following the closure of the open-outcry futures pits.
CME Group will hold members' meetings in Chicago on Friday and in New York next Wednesday to answer questions and discuss transition plans. Only current member owners will be allowed to attend, the company said.
Shares in CME Group ended regular trading on Wednesday up $1.98, or 2.3 per cent, at $89.25. The stock is up less than 1 per cent this year.