Men in blazers, ties askew, arms waving, hands signaling frantically, yelling into an incomprehensible din, the floor covered with a snow of paper — that’s how all trading on the futures markets used to take place. It’s called open outcry trading and it is quickly going the way of the dinosaurs.
Electronic trading is gobbling up an increasingly bigger slice of the futures trading pie. Intercontinental Exchange announced that it will terminate open outcry floor trading in currency futures at Dublin’s International Financial Services Centre (IFSC) at the end of February. At its peak, the Dublin floor traded about $400 million in currency per day. It’s another blow for the IFSC which has had trouble luring trading platforms. In 2005, NYMEX halted open outcry in Brent oil futures trading at IFSC after less than a year at the facility. Open outcry currency trading was established in Dublin by the New York Board of Trade (NYBOT). Earlier this year, Intercontinental Exchange (ICE) purchased NYBOT for $1.8 billion.
Nearly 80% of ICE contracts are now traded online. ICE also plans to end open outcry trading in New York for coffee, sugar, cocoa and frozen orange juice. “The exchange’s progressive transition to electronic trading this year has brought many benefits to the market, including growth in volume and participation,” said Tom Farley, president and CEO of ICE Futures in the U.S.
When ICE acquired the International Petroleum Exchange in 2001, it closed the London-based market’s floor within four years in favor of electronic trading. The ICE is moving to a totally electronic trading platform without need for a physical trading facility. Other major American exchanges lag the ICE but are catching up. At the Chicago Mercantile Exchange (CME), more than 60% of trading is now conducted electronically. The New York Mercantile Exchange (NYMEX), one of the last exchanges to rely heavily on open outcry trading, this year began offering its contracts electronically on CME Globex.
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