New film captures waning heyday of Chicago trading pits

Fri Apr 30, 2010 9:40pm EDT
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By Michael Hirtzer

CHICAGO (Reuters) - The loud, colorful traders who jostle for deals in Chicago's famed open-outcry pits now face an even greater threat than the advent of electronic dealing systems -- the algorithmic trade, says the director of a new documentary charting the demise of floor trading.

More a living funeral than a eulogy, the film "Floored" that debuted on Friday recounts the transition from the bustling salad days of burly alpha males to a market dominated by faceless computer-based traders across the globe.

It's sink or swim for the veteran pit traders featured in the film, struggling to adapt from a world of multicolored jackets and arcane hand signals to executing trades with a series of keystrokes at home in the suburbs.

"The older guy, the guy basically like me who is not computer orientated, they're gone -- they are out of the business," Joe Bedore, vice president of floor trading for INTL/FC Stone, told Reuters.

But it's not the final chapter, warns director James Allen Smith, who traded mini-stock index futures electronically and spent some time in the pits of the Chicago Mercantile Exchange and the Chicago Board of Trade -- now merged -- before he filmed the documentary over a three-year period.

"We talk about the floor going to a mouse. But obviously what's happened from there is the mouse is now going to completely automated trading," Smith, 37, said in an interview before his first film shows in narrow release in Chicago, New York and Washington.

"Let's say five years ago you jumped off the floor and started trading on a computer, well now you are getting smoked by automated systems. That's the next chapter."

The number of floor traders has shrunk to just 1,000 compared to more than 10,000 during the 1990s, according to the film. Only about a third of all traders successfully make the transition from floor to screen, one veteran CBOT floor trader said on Friday.   Continued...

<p>Trader Patrick Totman (C) works in the Euro Dollar pit at the Chicago Mercantile Exchange April 28, 2010. REUTERS/John Gress</p>