Exclusive: ABN AMRO to shut grain desk on CBOT trading floor

Thu Sep 20, 2012 5:49pm EDT
 
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By Sam Nelson

CHICAGO (Reuters) - Brokerage ABN AMRO will shut its pit trading grains desk on the floor of the Chicago Board of Trade (CBOT) on November 1, the desk's five members said on Thursday, in one of the clearest signs that the iconic 'open outcry' style of trading is drawing to a close.

The CBOT, the citadel of the global grains trade, has seen business shift from the trading pits where raucous traders in multi-colored jackets execute trades with hand signals to what is considered the more efficient electronic platform.

ABN AMRO's four phone clerks and one runner, an average sized trading desk, had been a mainstay at the 164-year-old exchange.

But, the overall population at the open-outcry venue began to dwindle with the arrival of financial investors about a decade ago who viewed grains as an alternative asset in their large portfolios.

A veteran trader from a prominent brokerage in Chicago said about 1,000 floor traders, phone clerks and runners worked there about two decades ago. Now, there are about 250.

Sources said the services of four people on ABN AMRO's livestock desk on the trading floor at the Chicago Mercantile Exchange, which owns the CBOT, will also end on Nov 1.

"A few companies who consider it a cost of doing business keep staff around, but others look at it as a losing proposition and are taking a sharper pencil to their costs and looking for other ways to get by," an independent CME livestock broker said.

In August, 96 percent of CBOT agricultural futures contracts were traded electronically, according to exchange data, underscoring how the personal relationships fostered by pit traders had given way to quick-hit electronic trades.   Continued...

 
A trader in the S&P 500 options pit at the Chicago Board of Trade looks at an order board. REUTERS/Frank Polich